In-depth Analysis of the Friend.Tech Social Platform: Token Economic Model and Future Prospects

Summary

Friend.Tech, as a representative application in the SocialFi field, rapidly emerged after its launch in August 2023. The platform allows opinion leaders (KOL) to tokenize and trade their social influence, attracting widespread attention. This report delves into the token economic model of Friend.Tech based on on-chain data analysis:

1. The Token price shows a power-law increasing trend, bringing considerable profits to KOLs, but also limiting the scale of fan communities. 99.94% of accounts' Token holdings are concentrated in the 0-100 range, with prices generally below 4 ETH.

2. The rigid pricing mechanism has led to a rapid decline in the trading volume of high-priced Tokens, with the average daily trading frequency dropping from 7 times on the first day to less than 1 time. The sustainability of the current model's profitability is in doubt.

3. The clear arbitrage opportunities attracted a large number of speculators and trading bots, contributing to 90.6% of the total trading volume. Only 18.6% of speculators achieved positive returns, of which half was obtained by 10.8% of pure speculative accounts.

After a comprehensive analysis, we believe that:

1. The sustainability of the Friend.Tech economic model is relatively low. After the rise in Token prices, higher holding costs and lower profitability may reduce user participation, leading to a decline in trading volume. The project team may need to continuously attract new users to maintain activity.

2. The platform still has potential for development in social features. The arbitrage space for tokens may promote spontaneous user promotion, and the close connections and reciprocal actions among users provide a good demonstration for the SocialFi model. However, user experience and the easily replicable business model may affect its prospects.

1. Introduction to FRIEND.TECH

Friend.Tech, as an emerging Web3 social platform, combines decentralized finance with social media, allowing users to gain one-on-one private chat qualifications with others through cryptocurrency transactions. This model, which directly links social influence to economic value, is highly attractive to cryptocurrency enthusiasts.

Platform gameplay:

1. Users bind their Twitter accounts, with each account corresponding to a set of Keys.
2. Users can receive the first Key activation feature for free.
3. Purchase others' Keys to become a holder and gain private chat privileges.
4. You can purchase multiple Keys or sell the Keys you already own.

Friend.Tech runs on the Base chain, with the Keys ownership recorded in smart contracts, and transactions are paid using ETH.

2. Token Economic Model Analysis

Friend.Tech adopts a fixed price formula based on the current total holding amount of the Token:

• Purchase price: price = (supply + amount)^2 / 16000 - (supply)^2 / 16000
• Selling Price: price = (supply)^2 / 16000 - (supply - amount)^2 / 16000

A 10% transaction fee is required, of which 5% is allocated to the Keys creator and 5% to the project party.

This rigid economic model has both advantages and disadvantages:

Advantages:

1. Avoid early cold start issues and price fluctuations
2. Encourage Keys holders to actively promote
3. Create opportunities for early investors
4. KOL can receive generous rewards
5. Restricts the possibility of unlimited speculation.

Disadvantages:

1. Attract a large number of speculative users and bots
2. The number of Keys holders is limited.
3. Platform activity may decline rapidly.
4. It is difficult to rely on existing users for continuous profits.

3. On-chain Data Analysis

3.1 Project Performance

Friend.Tech's performance in its first month is impressive:

• Total number of users 206,706
• Keys created 203,953
• Keys holding amount 258,859
• Trading volume 3,049,066 times
• Trading volume 139,530.09 ETH

Daily highest data:

• Transaction volume exceeds 10,000 ETH
• Transaction volume reached 525,000 times
• The project's daily revenue exceeds 500 ETH

3.2 User Type Analysis

Users can be divided into three categories:

1. Light Participants: Low trading frequency, limited returns
2. Cryptocurrency KOL: Profiting through protocol sharing
3. Profit-seeking speculators: Actively trade popular Keys arbitrage

90.2% of users have returns in the ±0.1 ETH range, 52.6% achieve positive returns, but only 2.17% have returns exceeding 0.1 ETH. The top 100 users account for 47.9% of total returns.

3.3 Speculator Behavior Analysis

• Speculators ( 21.7% Users ) contribute 78.9% of trading volume and 88.4% of trading amount
• Only 18.6% of speculators achieved positive returns, of which 10.8% did not link social accounts.
• Discovered about 186 suspected bot accounts, achieving a profit of 2553.84 ETH, which accounts for 28.3% of total positive profit (.

![Friend.tech Token model Depth analysis and outlook])https://img-cdn.gateio.im/webp-social/moments-9396e04aa010e1aa8d61772e3bfca498.webp(

) 3.4 KOL Behavior and Earnings

• 86.5% of users have protocol income, 4,718 users have income exceeding 0.1 ETH
• The daily income of top KOLs is about 6,000-8,000 USD
• 99.94% of account Keys hold less than 100, price is below 0.6 ETH
• 68.1% of KOLs have purchased their own Keys, but the returns are not high.

![Friend.tech Token model Depth analysis and prospect discussion]###https://img-cdn.gateio.im/webp-social/moments-e26adf2889571ba299be00507a1940d0.webp(

) 3.5 platform persistence analysis

• The increase in Keys price has led to a stagnation in trading, with the average daily transaction count dropping rapidly from 7 times to below 1.
• New Keys contribute nearly half of the daily trading volume, the platform faces pressure in acquiring new KOL resources.
• The trading volume of key KOLs is showing a downward trend, which is detrimental to the sustainability of the project.

![Friend.tech Token model Depth analysis and prospects discussion]###https://img-cdn.gateio.im/webp-social/moments-ffde9b4da3523a2ade70acfa4b377102.webp(

) 3.6 User Social Network Analysis

• 79.2% of users are connected on the same social platform
• On average, each user has 3-4 friends, and the largest KOL has hundreds of friends.
• The probability that a friend of a friend is also a friend of oneself is 41.3%
• 13.5% of social relationships are reciprocal.

![Friend.tech Token model Depth analysis and prospect discussion]###https://img-cdn.gateio.im/webp-social/moments-16b07dd6082a402691eca6d94fe0009b.webp(

4. Summary and Outlook

) 4.1 Issues with the application

• The core social features are simple and lack highlights for user retention.
• There are technical issues such as fraud, network failures, etc.
• Unable to restrict users from directly interacting with the contract bypassing the front end.
• User privacy protection issues
• The business model is easily replicable, facing homogenization competition.

4.2 Thoughts on Web3-Driven Social Networks

• Web3 development needs to attract non-speculative users
• The cost of transferring social network users is high
• Token incentives are a unique customer acquisition method in Web3.
• The current economic model of Friend.Tech is not sustainable.
• How to convert speculative users into real users is a challenge in the Web3 space.

![Friend.tech Token model Depth analysis and prospects discussion]###https://img-cdn.gateio.im/webp-social/moments-1ced6b9a4c278e2cf6671b4e4bc94350.webp(