Tokenization Social Web: Is Friend.Tech a passing fad or the future leader of SocialFi?

Friend.Tech is a decentralized social web (DeSo) based on the Base ecosystem that allows users to tokenize their social networks by buying and selling "shares" of any user on the platform. The project was launched on August 11, 2023, in a beta version by invitation only, and within two days, it generated over 500,000 USD in revenue, making it the hottest SocialFi project in the Base ecosystem.

According to the data panel, as of August 19 at 20:30, Friend.Tech has seen a trading volume exceeding 11,000 ETH and over 39,000 unique users during approximately 10 days of operation, completing more than 518,000 transactions in total. Next, we will delve into the operational mechanism of Friend.Tech and its potential impact.

The Essence of Friend.Tech

Friend.Tech is a decentralized application based on the Base ecosystem. By binding to a Twitter account, users can buy and sell "shares" of any user on the platform using Ethereum on the Base chain. Owning a share of a certain user grants access to that user's private chat room.

This mechanism allows users to earn income through social influence while also participating in the social value of other users. Essentially, this is the tokenization of personal IP, where fans enter private communities by purchasing the corresponding Tokens, gaining the opportunity to directly converse with the user. This process realizes the monetization and quantification of social influence, essentially representing an investment in personal influence.

Currently, Friend.Tech still uses an invitation system. Users need to obtain an invitation code, bind their Twitter account, and inject at least 0.01 ETH into the Base network to use the application. Although the basic functions of Friend.Tech are similar to common group chat applications, its uniqueness lies in organically entering and exiting group chats through "Social Tokens."

The Operating Mechanism of Friend.Tech

Friend.Tech combines the Social Web with a token economy, allowing users to achieve the tokenization of social networks by buying and selling "shares" of themselves and others. This model not only incentivizes users to pay more attention to opinion leaders on the platform but also encourages active participation in content creation, thereby improving the overall quality and efficiency of the social network.

In this tokenized Social Web, users can freely choose to join specific groups, which can be groups of influential opinion leaders or emerging groups that are considered to have potential. By paying the corresponding base price to acquire shares in the group, users can join the corresponding group. This investment behavior often encourages users to purchase more shares in groups considered to have potential in the early stages. Accordingly, if a user wants to exit a group, they can sell the shares they hold in that group.

Business Model of Friend.Tech

On the Friend.Tech platform, users' Twitter accounts are quantified as Social tokens, and other users can purchase shares of these tokens with ETH to enter the corresponding groups. As the number of people in a group increases, the total amount of group shares increases, and the base price of each group's shares also rises accordingly.

However, the value of these "shares" will fluctuate with the market. Group founders attract more users to join by promoting their own fan Tokens, thereby raising the base price of the group's shares. Conversely, when the group loses its appeal, users may perceive that it has lost its investment value and no longer join, resulting in a decline in the base price of the shares.

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

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

Share Growth Model

The group shares of Friend.Tech start growing from 0, and the price per share is determined solely by the number of shares issued. The pricing model adopts a simple supply and demand structure, where the number of shares held by individuals has a quadratic relationship with the next share price. The price per share changes "exponentially" with the increase in the number of buyers, with the formula: Price in ETH = supply^2 / 16000.

Points Incentive

Point incentives are an important means for Friend.Tech to attract Twitter users to become core users of the platform. The platform plans to distribute a total of 100 million points during the 6-month testing period, with distributions taking place every Friday. On August 19, Friend.Tech completed its first point airdrop.

Challenges Facing Friend.Tech

Although Friend.Tech has grown rapidly since its launch and many early participants have achieved considerable profits, the platform's pricing model and data privacy issues still require vigilance. As a tokenized Social Web, Friend.Tech faces the following potential problems and risks:

1. Potential Legal Risks: Due to the platform's nature of issuing tokens through fans and speculating, it may face legal challenges in certain regions.

2. High entry barrier: Currently, the bottom price for shares in the top-ranked groups has reached around 2 ETH, while mid-ranked groups also require 0.5 ETH. This creates a high entry barrier for newcomers, which may deter a large number of potential users.

3. Insufficient Liquidity: Although Friend.Tech is based on Social Web, it is essentially a type of Token trading. Due to the high cost of joining for later users, participating users may be limited by the base price of shares, resulting in insufficient liquidity.

The Future of SocialFi

The SocialFi sector has always attracted attention from the Web3 community, but there has yet to be a truly leading project. Whether the popularity of Friend.Tech will rekindle the enthusiasm for the "Web3 social" concept and related projects, and whether Friend.Tech will become an industry leader, these questions still need time to verify.

Regardless, the emergence of Friend.Tech provides new ideas for decentralized social networks and offers users a new way to monetize social value. As technology evolves and user demands change, we may see more innovative SocialFi projects emerge, driving the entire industry forward.