In the depths of crypto winter when everyone is struggling to find a leading narrative, out of the darkness rose a revolutionary new platform that allows you to buy and sell shares (well, now deemed "keys" for obvious legal reasons) of your friends for access to their exclusive chat room.
Although not actually a revolutionary concept as platforms like Bitclout have attempted this before, infrastructure has come a long way since then. Now friend.tech’s almost entirely abstracted wallet experience, thanks to Privy, opens the doors to onboard the masses (albeit we're still trading in decimal points of some magical internet bean in the ether but at least private key management isn’t so frightening for the average user).
This is the first platform to be mobile first, effectively enabling seamless wallet creation by linking a social account, circumventing the app store as a progressive web app.
This could quite arguably be what Elon Musk had in mind when Twitter applied for money or currency transmitter licenses across multiple US states. Did he just get frontrunned by friend.tech?
While it is an innovative new way to add another layer to Twitter, to financialize your social network, I don’t quite believe that friend.tech has the mechanisms right to keep people here long term.
So join me as I attempt to answer what makes people actually want to use this app, beyond the obvious: airdrops. Before getting into this it must be said that the majority of trading volume happening on the platform right now is likely in anticipation of the free money everyone hopes to gain while our favorite digital assets continue to trade in a brutal range or slide slowly down into the depths.
The value of your network
I had an interesting conversation the other day with my buddy Svan about the quality of one's social following on apps like Twitter. An account's following can be broken down into one or more of the following categories:
Most of these categories aren't "sticky" when it comes to giving people a reason to hold onto your shares. People buy the shares of a large account in hopes of that account's network being large enough to use other followers as exit liquidity. There's no real incentive to hold on other than profit.
But this is a dangerous game if you do the math. Any speculative trade on friend.tech is looking at a hefty 20% take rate:
- 5% buy to the platform
- 5% buy to the influencer
- 5% sell to the platform
- 5% sell to the influencer
Not to mention the ~2.5% influence of the bonding curve on price.
So in reality it is the influencer and the platform cashing in on all this degenerate buying and selling of people.
One thing you can always count on is humans finding creative ways to extract value from something. And extract they have. Friend.tech is rampant with bots, sniping key of influencers up to sky-high valuations at launch, only to dump back down to oblivion. Or employing aggressive points farming strategies with “equal value” key swaps.
So then what happens after the airdrop? Will people dump the token, abandon their followings, and forget about friend.tech altogether?
What makes this platform sticky?
Take another look at the categories of account followings above and think about who you follow on Twitter. Who are you genuinely interested in interacting with?
It's obvious that an account providing valuable information is worth following because you either a) get smarter because of it or b) get richer because of it. You can feel the direct impact of it.
But accounts that provide intangible value are harder to measure. People join them for the culture, to be a part of something that they resonate with. You can hold board meetings with your peeps. Release exclusive art for them. Give them free memberships to your services. Send them photos. The absolute exclusivity.
What makes this different from the token-gated ecosystem model is an identity behind the community. The value of token-gated communities are primarily driven by the information that people are able to extract from it, secondarily by the vibes (with the exception of the tight-knit group of OG’s in each community that never leaves), whereas friend.tech communities give creators the chance to let their vibes drive the value. Modern day, paid tribes.
Not a lot different from the emotional value that NFTs introduced to the crypto space. Before NFTs no one "felt like a breakup" selling their bags, no one was emotionally connected to their investments (well, with a few exceptions like the cults of XRP, DOGE, SHIB etc). What’s really dangerous, however, is the emotional roller-coaster that comes with financializing yourself… putting an explicit value on your social identity is opening a Pandora's box for mental health. Some things in life were just meant to be priceless.
Maybe it's all just a ponzinomic fad just like the rest of these trends in crypto and will die out once the next money making narrative enters the room. Because we all know how bonding curves and 3,3 memes went last time.
The real question is if the value and user experience is sticky enough for the non-crypto folk. Some of the OnlyFans influencers have started coming over, but we have a long way to go if we’re going to make this sustainable.
Thanks Svan for the intellectual sparring and input.