Tokenization Social Web: The Rise and Challenges of Friend.Tech

Friend.Tech is a decentralized social network (DeSo) based on the Base ecosystem, allowing users to achieve tokenization of the social network by buying and selling "shares" of other users on the platform. The project was launched on August 11, 2023, in a beta version with an invitation code mechanism, and within two days of going live, it generated over $500,000 in revenue, making it the hottest SocialFi project in the Base ecosystem.

According to data statistics, as of August 19 at 20:30, the trading volume of Friend.Tech has exceeded 11,000 ETH in just 10 days, with over 39,000 unique users and a total of more than 518,000 transactions completed. This article will delve into the operational mechanism of Friend.Tech and its future development prospects.

The Essence of Friend.Tech

Friend.Tech is an innovative platform that combines Social Web with token economy. Users can tokenize the Social Web by buying and selling "shares" of themselves or others. This model not only incentivizes users to pay more attention to key opinion leaders (KOL) on the social platform but also encourages users to become KOLs by contributing high-quality content, thereby improving the overall quality and efficiency of the Social Web.

In this tokenization Social Web, users can freely choose to join a certain group, which can be a group of an influential KOL or a group that is considered to have potential. By paying the base price corresponding to the group to obtain group shares, users can join the corresponding group. Joining a certain group is essentially an investment in this group and its leader. Therefore, investors often choose to buy more shares of groups they believe have potential in the early stages. Correspondingly, if they want to exit a certain group, users can sell the group shares they own.

Friend.Tech's Business Model

The core business model of Friend.Tech revolves around the buying and selling of social tokens. Users' social accounts are quantified as social tokens on the platform, and other users can purchase shares of these tokens with ETH to enter the corresponding groups. As the number of people in a group gradually increases, the total amount of group shares increases, and the base price of each group's shares also rises accordingly.

Like other digital assets, the value of these "shares" is subject to fluctuations. Group founders attract more users to join their groups by promoting their fan tokens, which in turn raises the bottom price of the group's shares. Conversely, when a group loses its appeal, users may perceive it as lacking investment value and choose to exit, leading to a decline in the bottom price of the shares.

Throughout the trading process, all transactions will be recorded and can be viewed on the chain. For each group share transaction, the platform charges a 10% fee, of which 5% is allocated to the shareholders involved in the transaction, while the remaining 5% serves as platform revenue.

The Economic Model of Friend.Tech

The economic model of Friend.Tech mainly includes two aspects: the group share growth model and the points incentive.

1. Group Share Growth Model: The group shares of Friend.Tech start growing from 0, and the only variable affecting the price of each share is the number of shares issued. Share pricing uses a simple supply and demand structure, and the number of shares held by individuals determines the price of the next share through a quadratic relationship. The price per share changes "exponentially" as the number of buyers increases.

2. Points Incentive: Points incentive is an important means for Friend.Tech to transform social platform users into core users of the ecosystem. The platform plans to distribute a total of 100 million points during the testing period over the next 6 months, with distributions occurring every Friday. This incentive mechanism aims to leverage the expectations of potential token airdrops and is equipped with practical points to attract and retain users.

Challenges and Risks Facing Friend.Tech

Despite the exponential growth of Friend.Tech since its launch, many early participants have also gained substantial profits, but the platform still faces some potential challenges and risks:

1. Potential legal risks: Due to the nature of Friend.Tech, which is to issue tokens and speculate through fans, there may be potential legal risks in certain countries and regions.

2. High entry barrier: Currently, the base price of shares in some popular groups has reached a relatively high level, making it difficult for new users who want to join the groups. This high entry barrier may deter a large number of potential users.

3. Low liquidity: Although Friend.Tech is based on the Social Web, its essence is still a form of digital asset trading. Due to the high cost of joining for later users, participants are limited by the base cost of shares, which may lead to liquidity issues.

4. Privacy and security concerns: As the platform requires users to bind their social media accounts and conduct transactions, this may raise users' concerns about the privacy and security of their personal data.

5. Lack of Transparency: Currently, there is little public information available about the project, lacking common elements such as a project roadmap, information about the founding team, or a white paper, which may raise concerns among some users.

Conclusion

The SocialFi sector has been a focal point in the Web3 space, but a true leading project has yet to emerge. The popularity of Friend.Tech has undoubtedly injected new vitality into the concept of "Web3 social." However, whether this platform can maintain its momentum and become an industry leader or will fade away as a fleeting phenomenon still requires time to verify.

As more users participate and the market further develops, we will be able to better assess the long-term value and sustainability of Friend.Tech. Regardless, its emergence has already provided a new idea and possibility for the development of decentralized Social Web.