Giving up development rights and dumping income from the sale agreement, is the friend.tech team, once a leader in SocialFi, soft Rugging?

Original | Odaily Planet Daily ( @OdailyChina )

Author | Asher ( @Asher_0210 )

On September 8, the friend.tech team announced that it had set the Admin and ownership parameters to 0x000...000, which means that the teams developers have given up control of the smart contract and the protocol will not be upgraded or improved in the future. As soon as the news came out, the price of the protocol token FRIEND fell by more than 20% yesterday, falling below 0.06 USDT at its lowest.

The team announced that it has given up control of the smart contract

As the news spread, the community was filled with complaints about the friend.tech project:

• Its been a year. friend.tech has finally eliminated the centralized risk of the contract. The owner is gone, and the project is about to die.

• The FRIEND token has fallen from its high of nearly $3 in May this year. Dont be sentimental about any project easily. The market will tell you how cruel it is.

• Friend.tech, as a brand new project invested by Paradigm, did receive a lot of support last year. I didnt expect it to be so desolate now, which has led to the markets lack of confidence in the entire socialfi project.

• I lost $500,000 from Friend.Tech. I never thought the founder would be so unethical as to cut leeks.

The protocol income is profitable, while retail investors lose money by buying coins

Various negative opinions about friend.tech, such as running away and cheating leeks , continued to ferment on social media, forcing the official to respond.

On the morning of September 10, friend.tech posted a message saying: “ The team has no plans to shut down or stop the friend.tech website application; the previous operation of giving up contract permissions was mainly to ensure that no future changes can be made to the smart contracts deployed on Base, which may increase or generate new fees; these operations will not affect the current functions of the friend.tech website application in any way, and everything users know and use remains unchanged.”

The teams response to questions

Although the official explanation gave people the feeling that the team is still working on things, users did not buy it. The chain detective found through data that friend.tech has been selling coins to cash out.

According to Dune dashboard data, Friend.tech has generated approximately $90 million in fees since its launch, of which $44.67 million was allocated to creators, and the rest belongs to the Friend.tech team. At the same time, according to Arkham monitoring, the Friend Tech project transferred a total of 19,477 ETH obtained through protocol income to Coinbase during the six months from December 2023 to June 2024. The specific data is recorded as follows:

• Through friend tech: Fees address transferred 7821 ETH to Coinbase in December 2023;

7821 ETH transferred to Coinbase

• Through friend tech: Gnosis Safe Proxy address transferred 11,656 ETH to Coinbase from January to June 2024.

11656 ETH were transferred to Coinbase

Therefore, the total amount of ETH transferred to Coinbase by the Friend.Tech team is 19,477. If they sold ETH every time it was transferred to Coinbase, their profit should exceed 50 million US dollars.

The team made a fortune through protocol fees, but the price of its project token FRIEND continued to fall from $3 at the opening to the current $0.08, a cumulative decline of 97%. Retail investors suffered heavy losses, among which Big Brother Maji became the biggest buyer.

According to previous Lookonchain monitoring, from May 3 to June 8, Big Brother Huang Licheng spent a total of 4,975 ETH (worth about $15.6 million) to purchase 8.6 million FRIEND at an average price of $1.81. Since then, Huang Licheng has continued to buy FRIEND in small amounts and provide liquidity for its trading pairs. He currently holds a total of 11 million FRIEND. If calculated only based on the holdings on June 8 and the current price of FRIEND of $0.092, the FRIEND he previously bought for $15.6 million is now only worth $1 million, with a floating loss of at least $14 million.

SocialFi leader is now lonely

In the summer of 2023, friend.tech emerged and set off the entire SocialFi sector.

With the support of Paradigm, the enthusiastic participation of many well-known KOLs, the design of limited invitation codes, the attractiveness of expected airdrops, and the innovative gameplay of KOL value and IP, friend.tech quickly grew from 0 to more than 100,000 users in just two weeks; after the release of friend.tech V2, the number of clubs on the platform also exceeded 220,000 in just two weeks. At its peak, the platform had more than 70,000 daily active users and a daily transaction volume of more than 1,000 ETH.

However, friend.techs prosperity did not last long. According to data from The Block, friend.techs daily active users have been less than 100 since the end of May this year; on August 7, friend.tech had only 5 daily active users, including 3 independent buyers and 2 independent sellers, a record low. From the peak to the decline, Friend.Techs life cycle was less than a year.

( friend.tech’s daily active users hit a record low on August 7 )

Why is friend.tech declining? On the one hand, it is because of the attacks of the wool party, sending a large amount of spam to earn tokens. The platform lacks a filtering mechanism, which damages the rights and interests of real users and leads to its gradual decline. On the other hand, it is difficult to maintain prosperity with the collapse of the coin price, and eventually falls into a death spiral. After all, the main motivation of users is speculation, and they just hope to make a profit or even get airdrops by trading KEY, and interacting with their favorite creators is incidental; when the price of the coin falls, the actual value is not enough to maintain users continued participation, which eventually leads to the decline of the platform.

In fact, most SocialFi products have a common problem: a high reliance on financial token incentives. As incentives decrease, user engagement also decreases, forming a vicious cycle, which is common in the field of blockchain games, such as Axie Infinity. Financial token incentives should be a feature, not the main driving factor, and practicality should serve as the value support of Web3 social products.

In terms of practicality, friend.techs competitor Farcaster does a very good job.

Farcaster is a decentralized social networking protocol designed to facilitate the establishment of direct connections between users. Developers can access public data without permission through Farcaster, while supporting diverse and flexible client and application development. In fact, one of the most important features of Frames is to support the use of Frames plug-ins.

With the popularity of Meme tokens, more and more Meme projects have begun to release information through Farcaster. The Frames plug-in can reach users with these messages in a timely manner. The timeliness of obtaining information in Meme token trading activities has become the key to obtaining it. A large number of users have begun to flock to Farcaster to obtain the most timely information. At the same time, users can use Frame to receive airdrops, mint NFTs, and other operations, eliminating the need for users to switch back and forth between social platforms and wallets, greatly improving efficiency. This is also the main reason why the Frames plug-in has brought a hot effect to Farcaster. In July this year, the peak period was more than 100,000 daily active users, and even now it still maintains 70,000 daily active users.

(Daily activity data of Farcaster, from Dune)

summary

Although there is no clear evidence that the friend.tech team has soft rugged, this once popular encrypted social application is now dead. On the one hand, the developer transferred control to an empty address of Ethereum by calling the smart contract function. On the surface, the platform is still operating, but giving up control almost makes it impossible to introduce new features. On the other hand, since the platform went online, the friend.tech team has indeed transferred nearly 20,000 ETH to Coinbase, and it is very likely that it has been cashed out.

There is never a shortage of new players entering the SocialFi sector, but whether it can remain long-lasting remains to be tested by the market.