Friend.Tech has SocialFi PMF
Many have tried and failed, but FriendTech is thriving in the Bear Market
It’s been one month since Friend.Tech launched on Base and it’s captivated the attention of the remaining Web3 world. Love it or hate it, FT is at the center of every conversation between friends, VCs, NFT collectors, DeFi traders, and has achieved PMF through its simple key accessible rooms, which can be traded on a bonding curve with $ETH.
I was very bullish after experimenting and it’s worth reading about my initial impressions and thoughts here before continuing:
I am not shocked at the pace of growth and how the onchain crypto crowd has embraced Friend.Tech, but it’s continued growth during an environment where narratives and liquidity have shorter and shorter shelf lives is very surprising. Friend.Tech has dragged crypto and NFT OGs off their couches, away from their AI investments, and made them convert stables to $ETH in order to jump on the biggest ever SocialFi craze.
FT is rewarding the survivors of 2022/2023 shitstorm of a crypto market, which has wiped out many investors, funds, founders, and has lead to persistent contraction in liquidity. Couple that with the fastest interest rate hikes in 50 years and it’s been an extremely difficult environment for investing success. The winners and survivors have been huddled together in group chats and crypto Twitter, and are hopeful in preparation for a bull market with Bitcoin’s halving in 2024 alongside quantitative easing. Simply being around and paying attention has handsomely rewarded the early adopters to FT.
The deposits are now over $30.5m and liquidity is very sticky as users are engaging with their friends, networking with influencers and investors, and providing value to boost the value of their keys.
Why has this particular meta gotten so big? Several reasons:
Traders can speculate on the value of keys to make profits - It’s obvious there is a lot of liquidity flowing in and it’s a hot narrative to trade
Creators can earn trading fees by providing high quality content to their key holders
Anyone can earn points based on a nebulous set of criteria in anticipation of an airdrop (buying, engaging, trading, etc)
FT’s big winners
Content creators who were active on crypto Twitter and moved their audience to FT
Successful traders and researchers who were subdued on Twitter, but engaging directly on FT
New creators who have seen the potential growth of the platform and are evangelizing
DeFi participants and observers who have situational awareness and know who’s who in crypto
Builders who are creating Dashboard, share sniper bots, abstracting the UX into a Desktop enabled site
Racer, the FT dev team, and Paradigm
FT ecosystem development
Wrapped keys composable in DeFi
Derivative projects
Index funds - As large liquid funds see the inflows and are interested in a potential airdrop, many will elect to hold a basket of top keys rather than trading every day. I assume there will be indices available to trade soon. Currently, $FRIEND can be traded on Hyperliquid. What a chart!
NFTs - It’s likely we’ll see keys be wrapped as NFTs for gated access outside FT.
Future platform growth
FT enabled the best application of account abstraction I’ve seen before in DeFi. Any user with an Ethereum wallet can simply access FT via a mobile phone webpage, deposit some ETH, and start using the app. The sky is the limit for growth with this level of AA
Who’s left to join?
There is a large cohort of retail investors who haven’t been involved for months that will be interested in FT once there’s better clarity on the airdrop and news spreads about trading fees
Creators from Web3, specifically the NFT crowd, as they’re familiar with navigating crypto and have large audiences who will follow them
Protocols - I mentioned this in the first article, but a new DEX recently spent 180E on keys advertising their project on FT
Usual top signals - celebrities, politicians, etc
Points pontifications
Nobody knows how points are calculated nor what they mean, but many speculate they will be redeemable for a future airdrop
Valuations have ranged from $100m-$10b, and so far only 1 investor (Paradigm) is backing the protocol. Likely other raise conversations are happening, and there should be a significant pool of liquidity available for early users to cash in.
Airdrop options
Hold based on accumulated points
Redeem keys for points to create a points-based economy for rooms and retain users. This would also help fix the rigidity of the current buy/sell bonding curve.
Distribute points to key holders - make this simpler for the rooms other than making them manually account. Otherwise you’ll have lots of angry customers who feel the split is unfair if it doesn’t account for time held, price bought at, etc
If there’s no good resolution between the 6 months points farming and key values, this crashes to zero. There will most definitely be pullbacks along the way, but the allure of a payday and a new narrative are going to keep people engaged.
FriendTech Points Value
If FriendTech goes with a simple airdrop, everyone on the protocol would be very happy, but a VC isn’t going to love seeing the protocol bleed out after 6 months
FriendTech points could have much greater value to the protocol should they be composable outside in the broader Web3 world. Imagine your FriendTech Points being your DeFi passport and giving you access to varying perks across projects…there would be a lot of value created for the protocol through network effects and partnerships. FriendTech could become the social layer for all of web3 and become a monster entry point and launchpad for users and protocols alike.
Ace’s winning strategy
Double and triple down on winners - There’s a reason many accounts’ keys are up only…they provide unprecedented access to their thoughts, which have lead to their own success, and are now helping others. This is a positive sum game and they are bought into the meta, want FT to succeed, and will continue to stay on top of the trends.
Provide high quality content - Your keys and trading fees will increase if you are engaging, authentic, and provide unique perspectives on what you know. For me, I try to stay current with the market movements, app development, and share opportunities with my key holders.
Buy big accounts that entered early and went quiet as they are discounted - There was a wave of early FT signups from big crypto influencers, but people got busy or distracted, and are now returning since there’s real traction. Also, this week has had 2 major conferences (Token 2049 and Permissionless), so I anticipate lots of activity next week.
Ask around who to follow for the best data and content, and use the many tools that are providing data analytics to make good trades.
Flipping new keys is a losing proposition - Don’t try to beat the bots, unless a huge influencer or account joins. You’ll likely get frontrun and dumped on in this mini PvP arena.
Couple more cool resources
Dune Dashboard showing exponential growth
Listen to one of my favorite people, Jason Kam, talk about the opportunity for FT:
That’s all for now. I’ll be reporting back in a month with any updates and having a blast in the meantime!
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None of this is financial advice