Friend.tech's Short-lived Journey: Turmoil Strikes Just Weeks After Launch

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The highly anticipated decentralized social network, Friend.tech, has been pronounced “dead” by industry critics three weeks after its launch.

The platform, which promised to revolutionize private messaging through blockchain technology, suffered a major setback due to a significant drop in overall activity, inflows, and volume. This swift decline has left users and experts questioning the sustainability of its business model.

Friend. Tech’s journey began with a turbulent beta launch on Coinbase’s Layer 2 base on August 11 this year. Within a week of its launch, the platform’s overall fee surpassed a remarkable milestone, crossing the $1 million mark and surpassing competitors like Uniswap and the Bitcoin network.

However, this early success was short-lived, as the platform faced a subsequent fee plunge that has cast a shadow over its future.

DefiLlama data reveals that the platform’s daily fees hit an impressive peak of $1.4 million on August 22, only to plummet by an astonishing 87% to around $215,000 by August 25. The downward spiral continues, with the 24-hour revenue at a mere $161,117.

Transaction counts on Friend.tech paints a stark picture of its declining popularity. Once boasting almost 525,000 transactions, the platform’s activity has dwindled to just over 51,000 by August 27—a jaw-dropping decline of over 90%. This prompted many X (Twitter) users to express their condolences for the network’s demise.

RIP Friendtech

August 2023-August 2023💀 pic.twitter.com/Fb0bh23Fyo

— Beanie (@beaniemaxi) August 26, 2023

Notably, buyers and sellers have followed a similar trajectory, with the numbers dropping significantly from a peak of over 58,000 buyers and 27,000 sellers on August 21 to only 10,000 buyers and 7,800 sellers by August 27.

This sharp contraction in users has been accompanied by an almost 90.5% reduction in inflows, dropping from $16.8 million on August 21 to a mere $1.6 million on August 27.

Crypto Community’s Foreshadowing

Friend.tech was designed as a platform centered around the buying and selling keys that facilitate private messaging between users. It enables users to buy shares of their friends and influencers. These shares allow them to access personal chats with the chosen user.

However, the rapid decline has ignited skepticism about the platform’s viability. Lisandro Rodrigues, the payments risk manager at Coinbase, highlighted the platform’s demise, attributing it to a combination of greed and poor execution.

Friend tech is dead because of greed and poor execution. We can see that after the initial influencer pump volume has fallen off a cliff. Let's dig into how this failure came to be 👇🏾 pic.twitter.com/WDQncTQJ21

— Lisandro (@TheRealLisandro) August 27, 2023

The criticisms didn’t stop with Rodrigues. The writing may have been on the wall even before the recent plunge. Members of the crypto community had voiced concerns over Friend. Tech’s sustainability and predicted a downfall in user key prices and activity.

Yazan, a prominent crypto commentator, expressed skepticism about the feasibility of individuals paying substantial sums to access private chats. He questioned the profitability of content creators benefiting from group chats that reportedly malfunction, further compounded by the platform’s limitation on direct replies to users.

The way prices are set on the platform is being criticized for seeming unreasonable and having the potential for exploitation. Moreover, there are allegations of abrupt and artificial surges followed by sharp declines in value.

Let me tell you one thing.

Something isn’t right about @friendtech.

🚩 Creators making money from a group chat that doesn’t even work when you can’t even reply directly to people?

🚩 The way pricing works is ridiculous and can be easily taken advantage of.

🚩 Pumps and dumps. pic.twitter.com/TJqcktEM6P

— Yazan (@YazanXBT) August 20, 2023

Yazan’s sentiments were echoed by several analysts who argued that the unsustainable increase in user key prices, charging more than a single Tether for private messages, was fundamentally flawed.

Parallels to BitCloud: A Grim Omen

As the turbulence unfolded, comparisons between Friend.tech and the DeSo app BitCloud became more apparent. Industry insiders have voiced concerns that Friend.tech might suffer a fate similar to Bitcloud’s eventual collapse.

This turn of events comes after the company disclosed publicly on August 19 that it had secured initial funding from the crypto venture capital company Paradigm. This led to widespread speculation about the possibility of a future airdrop and the potential launch of tokens.