I've been using friend.tech every day for four weeks
A deep dive into the friend.tech platform and ecosystem
Welcome to the alpha please newsletter. This is the start of a new weekly series where we look at what is happening on-chain and see if we can find opportunities.
I’m sure you’ve all heard about Friend.Tech. It’s hard to miss when it’s the only crypto app popping off in any significant way right now. For those of you still unaware:
Friend.Tech TL;DR:
Friend.Tech is a platform that combines social media with crypto.
Users can buy and trade “Keys” that are linked to specific X (twitter) accounts, essentially buying a share of that person who signs up to the platform.
The price of a key increases on a bonding curve. At a 1 ETH key price you usually have ~100 people in a room.
Owning a key grants you access to that persons’ in-app private chat room.
Creators earn from a share of the buy / sell tax on every transaction (5% to the protocol & 5% to the creator) of their Keys.
App available on phones and uses a unique “Progressive Web Application” to bypass app stores.
Built on Coinbase’s BASE chain.
At first glance it just seems like another hyped app with a fresh coat of speculation slapped on it (remember Bitclout?) Is this really the case though? This is something that I have pondered over the last few weeks as I thoroughly tested the platform for myself.
Today I want to talk about what I found on my journey and offer you my unique perspective as someone with a Twitter following who has been using the platform since the second day it launched. I have created my own strategy for FT, and I was one of the first people to lean in pretty hard with a new approach, which I will discuss at the end.
My overall thesis? This might be a great investment (if you play it right), but you might also genuinely find a lot of value beyond the speculation on keys and the airdrop.
A look at the numbers
Looking at the on–chain metrics of Friend.Tech tells a story that looks quite bullish.
First of all, FT is by far the leading app on BASE. This can be seen in the percent of fees generated by FT on the base chain, which sits at an average of ~20%. It's insane that one app generates 20% of the total gas fees. What’s even more insane is that BASE is now the leading Optimistic rollup and 2nd place across all L2s, which gives even more weight to the fact that FT accounts for so much of the chain’s activity.
How fundamental FT is to the BASE chain can also be seen in its share of active users, which currently sits at an average of ~10%.
This activity has resulted in over $8m being distributed to the users of the platform in a little over a month. Pretty impressive for an app in beta.
Coinbase releasing their own chain is a huge deal that can’t be underestimated. As hype for crypto starts to pick up again, Coinbase will be the one onboarding the masses to their new decentralized homes. It’s not a huge leap to assume that as BASE grows in popularity so will its premier app.
If we take a look at the daily active users, we see a steady increase over the last two weeks. You should also take into account that this activity only tracks people making a trade and not the users holding and participating in group chats, so this number is likely significantly higher.
The returning users chart is also very bullish, showing that users are steadily returning to the platform.
Now take a look at the TVL. Up only.
It also did more in earnings than Ethereum yesterday.
So what do these stats tell us?
People are steadily streaming back onto the app, sticking around, and keeping their ETH on the platform. These are fantastic retention rates for a new social app and show strength going into the future.
One of the things driving this retention is an incredibly powerful flywheel.
We have seen this play out before with DeFi apps, where mercenary farmers come in, take the yield and leave. The increasing number of returning users says something different is happening with FT though.
If a platform offers no real utility, then you tend to see the TVL go down with it and the death spiral begins. FT is showing stickiness. FT is showing it may just have the utility to stick around for a while.
FT analysis and thoughts
One of the things I like about the app is that it doesn’t compete with mass market social apps like X, IG, TikTok etc. It has its own niche, which is small, intimate, exclusive rooms. Anyone can create a small community that truly values being a member of that room.
This is what people missed about the bonding curve. It means that the total number in a room is realistically capped to a small group. It’s a feature, not a bug.
For myself, I actually find it really rewarding being able to share ideas, trades and information that I wouldn’t be comfortable posting to a big audience online. I have really enjoyed the vibes in my room and many others, and have genuinely profited with access to information I wouldn’t have found anywhere else.
FT is composable and you are starting to see a lot of people building on top of it. We are going to see a lot of new products in the ecosystem - the full DeFi suite (perps, borrowing/lending, interfaces for buying/selling etc.), analytics platforms, tools to better utilize FT, etc.. A lot of it is already here and it will only get better.
I don’t know how that will end, but it does increase the network effects of FT. It wouldn’t be a big step for FT to activate a grants programme, further exploding the building happening around it.
The potential TAM of FT is pretty enormous. So far, the product market fit seems to be a marketplace of tokenized paid groups, and you can see all of those groups in one mobile app. Paid groups have existed as a category by themselves for a long time. They have captured that market and made it frictionless for anyone to spin up their group, and simultaneously taken away the stigma at the same time.
This app has the potential to go far beyond just crypto users, traders and enthusiasts. Word on the street is that the music industry is another big go to market strategy for FT. Imagine being able to have intimate access to the world’s biggest artists, you can bet there are a few hundred people that would pay the cost of such an exclusive group.
From a technical point of view, FT is at its absolute worst right now and has still managed to gain a lot of attention. As they add more features, more people will be able to find creative ways to use the platform. Being able to add a video to a room will bring in a completely different crowd.
Onboarding with ponzinomics is the best strategy for getting a shit ton of people to do something quickly, but obviously isn’t sustainable.
I do think FT will need to add different revenue streams for creators on the platform. Right now you earn from the buy/sell tax on keys. Creators take 5% of the transaction fees. However, if key holders want to hold for long periods of time then the creators won’t be seeing any additional revenue. Right now they are earning the airdrop and their share of the platform, which is great, but long term there will need to be clearer incentives for anyone to maintain their room with value.
Some ideas could be, one off fees to post in a room for someone that doesn’t own a key, time sensitive passes to a room, simple tips on posts. The options are definitely there for them to expand.
Another random shower thought:
Let’s balance things out
Since I've been quite positive about FT so far, let me be balance out my opinions and address the stuff I’m not sure about:
I think 3,3 (people buying and holding each other’s keys) is a ponzi that ends with people losing ETH because they bought people's keys at wild prices that are completely unjustified versus the value that person can offer in their chat room.
It's great if you are early, but terrible if you are late when people start selling each other's keys off. It will happen at some point.
People are buying each other’s keys at wild valuations and those keys won’t be able to justify that price at some point in the future. The sole goal of this strategy is to accumulate the most points and hope the airdrop makes the ETH investment worth it. Maybe it works out, but it’s incredibly high risk. I can’t deny the movement has been very powerful for the early growth of the platform.
Indexes mirroring chats are a big issue that the app needs to solve and I don't have any good answers. Some are already starting to be banned from Opensea, but where there’s a will there’s a way, so we can expect these types of projects to continue.
A lot of the alpha in the chats was being mirrored for free on the internet.
www.friendbook.tech/ had popped up and you could read the most valuable key chat for free. This hurts the app’s value proposition. Not completely, because people still value being able to interact directly with people and enjoy the status of holding a key, but it definitely hurts the value of the keys by taking away some exclusivity.
As I am editing this I am hearing the FT team have taken steps to somehow shut it down. Will be interesting to see how this develops.
I think it is inevitable that some of the larger accounts will stop sharing certain things in their rooms because if their chats are streamed to potentially thousands of people on the internet.
For many, FT's USP was sharing things you wouldn't usually share with larger audiences.
I think eventually utility will be one the most important aspect to keys, as you can’t stop the chats leaking and can’t rely solely on the value of that.
Another issue is the sniping. Bots are sniping all the keys before anyone has a fair chance to buy. Although there are some solutions to this like
Manifold are offering snipe prevention services for large accounts. I still think FT will need to do something themselves about this.
I'm still very much enjoying my time on FT, but wanted to say I am not blind to problems I am seeing.
And obviously FT will have to contend with potential
We must not forget the project is in Beta though, and this is exactly why you release a Beta - to find and solve problems before pushing out to a wider audience.
Earning the Airdrop
Friend.Tech recently unveiled its points distribution system. People have found a few ways to accumulate points:
Referrals
Your own key value rising
Holding volume
Trading volume (to a lesser extent)
The platform seems to value the total amount of keys held and daily in app activity. You can’t simply hold keys and receive points. You must be active to receive points. It is designed to program user behavior, creating habits and retention.
Your points total is revealed every Friday, which has been driving a huge event on social media each week.
How much will these points be worth? At the moment we only have speculation. We don’t know the ratio at which points will be converted to tokens, how much of the total supply will be distributed as an airdrop, or the market conditions when they release the token, so it is hard to put an exact monetary value on the points.
Some have thrown around ballpark numbers and come up with some educated guesses as to what an airdrop may be worth depending on a few different scenarios:
As you can see above, a conservative estimate puts us at ~$0.50 per token. Not bad if you are investing in people you enjoy and gain utility from being in their group.
Here is some more analysis by 0xjaypeg on what the APY could look like.
The Ecosystem
Another great thing about FT is the ecosystem of tools that have been built to serve the community. I’ve curated the best of the bunch to help you jump in.
Defi
A perp dex dedicated to FT. Go long or short on influencers using a typical perps interface.
Hyperliquid offers a way to speculate on the FT ecosystem as a whole by trading perps based on the TVL. Good way to broadly gain exposure before they launch their token.
DerpDEX’s ERC20 Wrapper
DerpDEX have created a wrapper that turns a FT key into a freely tradeable ERC20 token, allowing you to use your keys outside of the FT ecosystem in any way you want.
Tools
A simple chrome extension that overlays key FriendTech information directly onto your X feed. Extremely handy in helping you keep an eye on the market without having to spend any extra time searching.
A great place to check the top accounts with a clean UI. One of my favorite features is the “recently joined” section, where you can try and spot people before they blow up.
You can also gain valuable info on each user and see who else is holding their Key.
For all you power users this is your go-to front end.
Friendex by Spotonchain
A nice and clean KOL aggregator that groups accounts by their follower count. Best feature is the ability to sort the “recently joined” section by follower count.
Another great analytics platform that shows you all of the stats related to any FT account. The market cap of the FT founder is now $5.7M and it costs $15k to buy his key.
Unibot (invite to get a discount on fees)
Now that sniper bots have entered the arena, you should consider trying one out to stay competitive. Unibot will be entering the FT game shortly.
If telegram isn’t your bag, then Meowl has recently added FT options to their Discord bot.
My strategy and value proposition
Keys that have real utility beyond speculation.
My plan is to ensure that there is always clear tangible value to the keys. I can’t control speculation or the market, but I can ensure that you get something back in return, beyond just my ideas and research.
Holding my keys will get you premium access to platforms/tools that make you a better trader/investor for as long as you hold my key:
• Artemis - any blockchain data into sheets/excel, build awesome valuation models (Value $200 per month)
• Bubblemaps - check the historical and current distribution of any coin + a lot more (Value $680 annually)
• Octav - accurate dashboard of your cross chain P&L & cost basis - export reports, makes taxes a breeze (Value $250 annually)
New announcement:
• Revelo Intel - a powerful research platform that will 100x your fundamental analysis. Institutional grade unbiased research reports on almost every protocol/chain you would want to invest in. Daily notes of the biggest and best podcasts in the crypto space (Value $600 annually)
• + more utility coming (I am cooking up a lot)
I am very active in the chat and the vibes are great.
You will earn points each week, earn your share of the network and I do honestly believe it is still very early days (not a meme).
I wanted to showcase how creative you could be with the platform, and a community of people upgrading their investing/trading skills with the best platforms/tools in crypto seemed like a cool idea to me.
I’ve put a lot of energy and effort into making this happen. It’s an experiment I’m committing to for the long run.
Current value of my keys sits at 0.62 ETH (including transaction fees).
I understand the cynicism about the current state of friend tech, but you only need to use your imagination to see what it could become.
Most apps don’t go anywhere in this space, maybe this will be no different, but there’s potential for this to be a vehicle to onboard users that don’t care about crypto.
I can get behind that.
Some codes for people that want to join the app:
ft-5wz3dczi, ft-2q60qzx6, ft-oane8tqy, ft-9lcsou8s, ft-gredi0zl, ft-lqkx5e2e, ft-qjoluz8h, ft-unlfjpra, ft-ppjogz4v
And that’s your alpha.
Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Do your own research.
Great article ser
Great suggestion for octav.fi
Might be just what I need to get off the expensive and not-so-effective drug that is CryptoTaxCalculator