Rivaling well-established networks like Uniswap and Bitcoin, a relative newcomer, Friend.tech, has managed to sway a substantial part of the crypto ecosystem within a short time. In a single 24-hour period, the decentralized social network (DeSo) generated over $1 million in fees, demonstrating its meteoric rise and potential. Introduced on Aug 11 in beta, the platform allows users to tokenize their social connections, similarly to buying and selling shares. The innovative model indeed receives applause, yet it also sparks concern about the sustainability of the business model.
Key to the platform’s functionality is its unique ability to enable private messaging between share purchasers, in addition to the standard transaction capabilities that other blockchain networks offer. Running on Coinbase’s layer-2 Base, Friend.tech charges a 5% fee on transactions, the spread from trades marking the profit to the owner. To date, the total project revenue is over $800,000 with more than 650,000 transactions and 60,000 diverse traders.
Interlinked with nonfungible tokens (NFTs) networks TweetDAO and Stealcam, Friend.tech draws in crypto influencers with vast fan bases and Web3 projects seeking to fortify connections with venture capitalists and vital players in the crypto industry. The recent surge of attention equally triggers the dissection of the platform’s revenue model, potential risks, and future projections. As shares sell, prices can dramatically increase, potentially encouraging the creation of smaller or alternative groups within the platform. One critique, according to Ignas, a decentralized finance researcher, is that the current business model doesn’t ensure revenue from having more shareholders, just trading fees. Thus, in this context, controversial personalities or fear, uncertainty, and doubt (FUD) might be strategically employed to generate fees.
While the excitement and progress of Friend.tech can’t be understated, it’s equally important to examine the implications and sustainability of such a model. With its unique approach to tokenizing social connections, the platform brings a refreshing twist to the crypto space. But it must also address the complexities arising from its revenue model while fostering an environment that doesn’t incentivize controversy or FUD for profit. Novice platforms often come with challenges, and how Friend.tech navigates those will determine its trajectory in an industry keen on disruption and innovation.