NiftyNoon: Is Friend.Tech Truly the Future of SocialFi and Crypto?
Friend.Tech has taken the market by storm despite tightening liquidity and difficult market conditions (August 24, 2023)
Nifty Thought
The SocialFi platform Friend.Tech has quickly become one of the most popular decentralized apps in crypto. The concept is simple: purchase keys (formerly shares) in Twitter influencers to gain access to their token gated chat. The hope is that the value of these key tokens will track the popularity of their respective influencer. If a Twitter user sees a spike in online popularity, this would theoretically also lead to a spike in demand of their key tokens as well. Both influencers and the Friend.Tech platform take a royalty on each transaction. Therefore, even without hoarding many of their own key tokens, influencers reap the rewards of increased trading activity within their key ecosystem. Furthermore, people actively engaged with the platform accrue points every Friday that presumably will be relevant for a future airdrop.
Despite Friend.Tech’s popularity, some critics remain. One popular early criticism surrounded the platform’s similarity to BitClout, another SocialFi product that ended up costing most of its investors money. Further critiques circled the product’s lack of a privacy policy along with the founder’s history starting previous failed projects. There are also questions surrounding the project’s bonding curve and the potential for influencers to manipulate the price of their key tokens.
However, there are two more salient critiques that may be worth exploring more carefully. First, there is actually very little tying a key token’s value to an influencer’s popularity. The token itself only grants holders access to the influencer’s friend.tech chat room. This tenuous connection may cause troubles if influencers begin to abandon the platform and therefore these token-gated chats. Another interesting aspect is the project’s ties to the crypto venture capital firm Paradigm. Paradigm invested in the product and received a token warrant. While this warrant does not necessarily mean a token is coming, it does mean a token is at least on the table. This may be where the Friday points will lead. Unfortunately, these token drops from venture-backed startups typically reward insiders such as venture capitalists more than they reward earnest buyers.
Regardless of how everything with Friend.Tech plays out, it is fascinating to watch the entire space commit so much attention and capital here during the bear market. Many people have already made significant gains trading these tokens and it is likely there is still room for future trading profits as well. In the long run however, holding these key tokens will likely not be a winning proposition.
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