Attracted NBA Influencers. So Why Does Everyone Think Crypto’s Latest Trend Will Die?

Despite its initial success in attracting celebs, the portents aren’t good for the latest “Twitter-killer.”

AccessTimeIconAug 21, 2023 at 6:35 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now, a decentralized social media app that launched two weeks ago, has officially leapt over hamster racing as the latest crypto trading craze. Judging by the numbers alone, the platform, which counts an NBA player and e-sports juggernaut as early users, and venture capital heavyweight Paradigm as a seed round investor, might already be one crypto’s most successful attempts at dislodging Big Tech nemeses like Facebook and TikTok even at this early date. Unfortunately, none of that means it’ll still be worth any attention at the end of the week.

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Something like 64,500 unique addresses have already interacted with the app. However, with pseudo-anonymous blockchains, it’s impossible to say whether that means over 60,000, 600 or just 60 people are actually using FriendTech. Many were rushing to create an account before a possible future airdrop, which hasn’t yet been confirmed. Either way, FriendTech has already made a meaningful impact on crypto.

On a sleepy summer Sunday, for instance, FriendTech generated $1.12 million in fees in just 24 hours (and $2.8 million total since launching Aug. 11 in beta). That’s more than the entire Bitcoin network in the same period and enough to push Base, the Ethereum scaling layer built by Coinbase where FriendTech is housed, above rival networks Arbitrum and Optimism as the largest “layer 2,” after months of jockeying between the two.

In crypto, this meteoric growth obviously means someone is getting rich. The app itself is like an adjacent monetary layer for Twitter profiles, designed for fans who want to buy “shares” in their social media friends and influencers. Although even schlubs like me can claim an account, what we’ll call “celebs” earn a portion of trading fees. The app itself is probably the biggest winner because it takes almost all of the 5% trading fee cut.

FriendTech has already been praised among crypto folk for its reportedly easy UX and UI, a notoriously long issue in an industry where devs seem to take inspiration from Windows 95. It’s mobile-only right now, but does give people the ability to DM the celebs they’re betting on — a unique selling point at a time when Elon Musk’s X has throttled private messaging for most users.

Other winners? A bunch of accounts are already worth more than 3 ETH (~$5,200). “Racer,” who is speculated to have created FriendTech, is the most valuable profile with close to 150 people owning a tokenized share in the profile. Other Twitter influencers like Cobie (who is looking more and more like Elliot Smith these days), Hsaka and Ansem are not far behind. Like many crypto apps since DeFi exchange Uniswap unleashed the innovation, FriendTech also uses a bonding curve algorithm to set prices, a math-heavy system that means trading can happen even when there’s no buyers.

Bonding curves have been tried in decentralized social media before. The main benefits are economic: it theoretically makes it so anyone can cash in on their reputations and incentivizes people to jump in as early as possible because token prices automatically rise in proportion to the number of tokens in existence. But previous experiments have also left a bad taste in people’s mouths.

Remember BitClout? The flash in the pan social media experiment launched in the waning days of the “Crypto Supercycle.” That app, which later rebranded and expanded into a full-fledged blockchain called DeSo, gripped people’s attention on social media because it pre-funded influencers’ accounts with its shitcoin. It was also given a veneer of respectability by mega-VC backer Andreessen Horowitz and its crush of early adopters looking to get in before the bonding curve slope went asymptotic — before it became toxic to even look at.

Bitclout’s rise and fall is a plus and minus for FriendTech. Predictably, many think FriendTech will also go the way of the dodo given how hard social media on the blockchain has been. However, pseudonymous developer Racer, if he is the creator, apparently was watching and learning from those attempts.

You can count me in the camp that sees this as another bummer summer spectacle, to be quickly forgotten. For one thing, this route of decentralized social media doesn’t really take advantage of blockchain’s actual selling points to increase autonomy and limit “tech censorship.” But also, for many (maybe most?) people watching people monetizing their status is d i s t a s t e f u l. I mean, it’s not the 90s anymore and no one is going to give the NBA’s Grayson Allen trouble for s e l l i n g  o u t (Faze Clan was launched to sell out).

This doesn’t mean I am against economic experimentation with social media. The 1,000 true fan hypothesis has been born out over 1,000 times already, and nearly anything is good that makes it easy for people to go “indie” (some things from the 90s will never die). I like Nic Carter and Eric Wall’s Orb project (which isn’t related to Worldcoin). It uses a blockchain to allow influencers like them to monetize their deep crypto knowledge and parasocial relationships. Pay to hold the Orb, get to ask a question. It’s also a working example of the Harberger Tax, a thing of behavioral economic beauty rarely seen in the wild.

Decentralized social media has also been difficult to pull off, even for platforms that don't carry the stain of crypto like Mastodon. Though I’m not sure if that’s because fairer social media itself is hard, or because almost all “decentralized social media” platforms are literally clones of Twitter, including the hip ones like Farcaster, Bluesky and Nostr. Crypto Twitter is the industry’s townsquare, but,  guys, have a little imagination.

This is to say nothing of the serious allegations being made about FriendTech, often by people who would likely be able to cash in big if they just shut up and used the app. For one thing, FriendTech seemingly launched without a privacy policy — a huge red flag considering blockchains are troves of personal and financial information. Speaking of, just by signing up, users reportedly grant the app the ability to post on their behalf and there’s evidence FriendTech is leaking wallet information through its API.

Banteg, DeFi legend and crypto dev who posted about many of those perceived issues, crossed the proverbial rubicon today by actually publishing a list of 101,183 FriendTech user accounts, connecting their Base wallet addresses to their Twitter profiles after reportedly seeing a "leaked" version of FriendTech’s code repository on Github. Should Banteg be tarred and feathered for doxxing, or would the information have always gotten out? Will it motivate FriendTech to try to fix its problems sooner or accelerate its likely demise?

For its part, FriendTech called The Block irresponsible for reporting on the issue, adding the so-called leak is “like saying someone hacked you by looking at your public Twitter feed” because all the information was gotten through scraping public channels. But, then, that’s exactly the trouble and why people go to lengths to separate their IRL and on-chain identities (that and tax evasion). Banteg pretends to be a rabbit, for instance. Not to put too fine a point on it, but in recent weeks a number of crypto owners have died in mysterious and often very brutal circumstances.

That said, prominent crypterato have said they intend to give FriendTech a fair shake. @0xCygaar said Saturday “I'll be using friendtech to share more raw/opinionated thoughts on various crypto topics” after posting a thread about the protocol’s unique economic incentives. And, even though many early social token experiments petered out, a number seem to be going strong — with FriendTech getting a lead on becoming the central repository for them.

So, in the end, depending on your risk tolerance or motivation for even being interested in crypto, FriendTech may be for you. Unlike July’s hamster racing trend which was just crypto stuck on a wheel, at least social media networks can grow and develop. Then again, the all important first mover advantage that helps explain why Facebook is still a multi-billion dollar platform today doesn't really apply in crypto. Its relatively easy to steal code, make a few tweaks and become the thing everyone is talking about on Twitter that day.


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Daniel Kuhn

Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.

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