The new and decentralized social network Friend.tech has garnered quite a lot of attention within three weeks of its launch. Controversy has struck as critics are already deeming the network as “dead.” This follows the recent downward trend in critical metrics such as network activity, monetary inflows, and transaction volume.
Activity Metrics
| Date | Activity Metrics | Change |
|---|---|---|
| Aug 11 | Launch | — |
| Aug 19 | Transaction Fees exceed $1 Million | ▲ |
| Aug 21 | Peak Fees at $1.7 Million | ▲ |
| Aug 26 | Fees drop by 87% to ~$215K | ▼ |
The Friend.tech platform was launched as a beta version on Coinbase’s layer-2 Base on August 11. Just a week later, on August 19, its fees surpassed $1 million in just 24 hours, overshadowing other forces in the crypto world, such as Uniswap and the Bitcoin network, both highly respected and established platforms.
Despite this promising start, the fees on Friend.tech began to taper off significantly soon after. After reaching a daily peak of $1.7 million on August 21, they experienced more than an 87% drop to around $215,000 by August 26, according to DefiLlama. The number of transactions also declined dramatically from nearly 525,000 at their peak on August 21, to just over 51,000 transactions on August 27, based on data compiled by Crypto Koryo as reported by Dune Analytics. This steep fall triggered a wave of RIP messages for Friend.tech on social media platforms like Twitter.
Rest In Peace Friendtech
August 2023-August 2023 via Twitter
The concept behind Friend.tech revolves around “keys” that can be bought and sold; these keys enable buyers to send private messages to the sellers. The platform reportedly takes a 5% cut on these transactions. This unique and innovative model attracted both crypto and non-crypto influencers, including famous figures like Cobie, the host of the UpOnly podcast, YouTuber Faze Banks, and Russian protest group Pussy Riot.
Not everyone is positive or optimistic for the future of Friend.tech. On August 27, Coinbase‘s Payment Risk Manager, Lisandro Rodriguez, wrote a post on Twitter stating that the platform is “dead” in his eyes. As far as he is concerned, the reasons for this failure are “greed and poor execution”.
Frientd.tech is dead because of greed and poor execution…
Lisandro Rodriguez via Twitter
The drop in fees is not the only metric showing a downward trend. The number of buyers and sellers on the platform has too taken a hit: on August 27, the platform could muster only around 10,000 buyers and approximately 7,800 sellers. This was a steep fall from the highs of August 21, when the platform boasted over 58,000 buyers and 27,000 sellers, as per data revealed by Dune.
Friend.tech buyers (green) and sellers (orange) have both steadily declined since the peak on Aug. 21… (Image Source: Dune Analytics)
Besides these metrics, Friend.tech has also seen its inflow of money nosedive since the peak on August 21. From a lofty high of $16.8 million, the figure dropped to a measly $1.6 million on August 27. That is a stunning drop by almost 90.5%.
Protocol inflows had peaked on Aug. 21, but have since been on a steady decline… (Image Source: Dune Analytics)
Even before these sharp losses over the past week, rumors were rife in the community with some predicting a bearish outcome for the platform. As early as last week, renowned cryptocurrency commentator Yazan conveyed his belief to Cointelegraph that Friend.tech was left with only six to eight weeks before user key prices and activity experienced a downfall. The basis of his prediction was that the user key price increases were unsustainable and demanded an answer to the question: Why would so many people pay more than one Ether (ETH) just “to be able to see a private chat”?
Some critics have tried drawing parallels between Friend.tech and the 2021 DeSo app BitCloud. The pseudonymous marketer, Legendary, studying Web3 developments, said he believes the Friend.tech network “will collapse as BitClout did.”