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News/Friend.tech's Striking Success: Is It Concealing Deeper Challenges?

Friend.tech's Striking Success: Is It Concealing Deeper Challenges?

Aug 22 2023

9 months ago4 minutes read
Cheerful robots giving a thumbs up and waving

An Overview of Friend.tech’s Growth and Popularity

Written by Van

Initiating its journey on August 10, 2023, Friend.tech swiftly amassed a substantial user-base surpassing 100,000. The platform's meteoric rise brought in a staggering $1.68 million in protocol fees within its first fortnight. Other than the prominent Ethereum and Lido, it surpasses almost all on-chain protocols.

As of August 22, 2023, Friend.tech has generated a total of $3,222,783 in protocol fees (more than 1,884 ETH), according to this Dune Analytics dashboard.

friend tech protocol fees by cryptokoryo on dune (1).webp
Source: @cryptokoryo/ Dune Analytics

Surging Success and Expansion 

The platform hovered over 934,000 distinctive transactions, facilitating the trade of 34,320 Ether. With the Ethereum market cap in mind, this trade volume holds an equivalence of an immense $57,101,116 as per crypto coin prices

Friend.tech, keeping pace with the fluctuating crypto price, witnessed a remarkable expansion in its user base, with a four-fold increase in just a week, growing from about 22,500 users on August 15 to a thriving 90,671 users.


Friend.tech’s Influencer Engagement 

Friend.tech has captured the imagination and wallets of notable eSports influencers like FaZe Banks and FaZe Rain, who have earned $73,000 and $19,000 respectively on the platform. Other influential figures, including NBA star Grayson Allen and celebrities FaZe Clan and Nadeshot, have also engaged with the social media platform.


Friend.tech: A Handy Guide Through its Key Features

Two robots, one with a magnifying glass inspecting lines of code while shielding it from the other robot trying to peek over its shoulder (1).webp

As a novel social platform merging social media and cryptocurrencies, Friend.tech operates via an invite code like its contemporaries including BlueSky. Here, users can trade “keys”, initially referred to as “shares”, of their favorite Twitter profiles. 

Owning a key grants membership to private chat spaces and unrestricted profile accessibility, much like having an individual Telegram-like chat group. To gain access, a user needs to purchase shares of their chosen person. When exiting the chat group, they can hand over these shares to interested parties. 

Friend.tech, in essence, digitizes the previous trend where Twitter mavens sold their memecoins to followers. This updated model binds the coins directly to their identity, accompanied by a valuable feature i.e., private chat access.

Favorites can be bet over in long or short forms, an interesting addition to the platform's stark design and the not-so-easy-to-navigate explorer page. 

In addition to these, Friend.tech uses traditional crypto incentives such as fee-sharing and airdrops for rewarding its users. The app doesn't require download via an app store, emphasizing decentralization.


Legal and Regulatory Hurdles

Unsurprisingly, the unique functioning of Friend.tech has incited legal and regulatory debates. The platform had to relinquish the term “shares,” replacing it with “keys” to avoid potential entanglements with the SEC.

There are legitimate concerns about whether Friend.tech's offerings can be considered securities under the strict interpretation of the Howey test.

friend tech changes shares to keys.webp
Source: Friend.tech/ X

Security Measures and Challenges 

Friend.tech has had to reassure users who voiced concerns about potential data leaks that endangered personal information of over 100,000 users. The management maintains that the so-called 'leaked information' was just data culled from its public API, not a consequence of any security breach.

friend tech clarification.webp
Source: Friend.tech/ X

The Trading Edge: Friend.tech and Derivatives 

Derivative action on Friend.tech is heating up, thanks to Aevo's introduction of perpetual swaps linked to Friend.tech. These contracts have seen a trading volume above $550,000, with a staggering $6.7 million in Ethereum making its way into Friend.tech’s contracts. The value of the perpetual swap contract then dropped from $8.83 to $6.84, but traders remain optimistic.

basescan eth deposited (1).webp
Source: Basescan

Friend.tech: A Playground for Speculation and Investment 

Friend.tech, aligning with the trends seen in cryptocurrency charts, provides a unique avenue for astute digital investors to speculate on emerging talent, investing in individuals at the onset of their careers.

This aspect of speculation has been beneficial for Friend.tech, with over 100,000 users now on the platform after just two weeks.


Appraisal and Apprehensions: Friend.tech

Friend.tech is under scrutiny from critics who fear key price inflation and possible user burnout. Crypto analyst Yazan predicts that the platform may see a dip in activity within six to eight weeks. Concerns around potential price manipulation, including 'pumps and dumps,' are also circulating.

Analysts are drawing parallels between Friend.tech and BitClout, expressing apprehensions that the former might also collapse like the latter. Conversely, the platform is receiving commendation for its user-friendly experience, esteemed by some as the "greatest crypto has seen." Friend.tech's future shows a mixed forecast of growth and uncertainty.


Base’s Rocketing Popularity: Underpinned by Friend.Tech 

The newly unveiled layer 2 network by Coinbase, known as Base, has been trending with a surge in transactional activity. Visibly outshining illustrious players like Arbitrum and Optimism on August 24, Base recorded a staggering 16 transactions per second (TPS) on August 21. The driving force behind this burgeoning activity, as pointed out by Coinbase CEO Brian Armstrong, is Friend.Tech. 

layer 2 tps.webp
Layer 2 TPS. Source: L2Beat

Subsequently, Base's TPS activity has leapt above the layer 2 market frontrunners Arbitrum and Optimism. Furthermore, Base's TPS value showcased a momentous increase of over 75% within one week, signifying Base’s compelling growth story.

Significantly, Friend.Tech’s function as a web3 crypto-social media dApp has largely propelled Base’s activity. Friend.Tech, which enables users to deal in the shares of distinct Twitter (X) profiles, successfully accrued $5.3 million in network charges over just a week, bolstering Base's platform.


The Layer 2 Market: Rapid Developments and Competitive Rivalries 

layer 2 TVL.webp
Layer 2 TVL. Source: L2Beat

Taking a wider look at the layer 2 ecosystem, Arbitrum One holds a commanding grip with a substantial total value locked (TVL) of $5.4 billion, thereby acquiring a 55.12% market share. Optimism trails with a $2.6 billion TVL and a 27% stake in the layer 2 market. 

Distinctively, Base, despite being in its nascent stages, has managed to lock in $245 million, securing 2.5% share in the L2 ecosystem. A striking evidence of Base’s accelerated growth further accentuated by the Friend.Tech's influence.


Coinbase and Legal Quagmires 

However, Base’s swift success has attracted its share of legal skepticism. ChainArgos' General Counsel and CEO have leveled allegations, asserting that Coinbase might be contravening terms of several states' money transmitter licenses. 

Presently, Coinbase operates without a national exchange license, possessing money transmission permits on a state-by-state basis. Therefore, the allegation raised questions about whether Base, Coinbase's Ethereum 'layer 2' platform, could potentially violate these transmitter license provisions since it works with any anonymous Ethereum wallet and utilizes ETH to settle all fees.


Comparing Base with the Competitive Landscape 

Users celebrating coinbase base chain swift success.webp

Nevertheless, Base's competitive edge, aided by its affiliation with Coinbase exchange and Optimism, positions it uniquely in the market. Despite a host of competitors including Shibarium, Base’s strategic alliances and inherent functionality have created substantial ripples in the layer 2 marketplace, underscoring Base as a potent player in the ongoing crypto evolution. 

Base's tackling of impending legal hurdles and sustaining its growth momentum will be crucial in determining its future in the fast-paced layer 2 environment.


FAQs

1. What is the basic operating principle of Friend.tech?

Friend.tech allows users to buy and sell “keys” that grant access to specific Twitter accounts. By owning a key, a user can access private groups and directly connect with profile owners.

2. How did Friend.tech attract such a significant user base?

Friend.tech’s innovative model of social interaction and investment, coupled with engagement from notable influencers, has contributed to its rapid user base expansion.

3. What are some legal concerns involving Friend.tech?

There is an ongoing debate about whether tokens offered by Friend.tech may be classed as securities, subject to SEC regulations. The platform has replaced the term "shares" with "keys" to navigate potential legal issues.

4. Were there any reported security breaches at Friend.tech?

Friend.tech dismissed reports alleging a data leak involving personal information of over 100,000 users. The company clarified that this information was gleaned from its public API and not due to a security failure.

5. What are the investment opportunities on Friend.tech?

Friend.tech allows users to speculate on the future popularity of accounts, essentially investing in rising stars early in their digital career. This unique aspect of the platform has been majorly beneficial for user acquisition.


Friend.tech: A Gamechanger?

Friend.tech, with its novel concept of tokenizing social media profiles, represents a sensational disruption in the crypto social media landscape. Balancing the delicate trifecta of legal scrutiny, potential security issues, and the need for continuous innovation and growth, will be vital in determining its future impact.

This article has been refined and enhanced by ChatGPT.

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