Web3 is often referred to as the next generation of the Internet, and crypto wallets are considered the gateway to the world of Web3. To fully prepare you for a Web3 adventure, ViaWallet has introduced a series of Web3 know-how articles, illustrating the current status and future development of the Web3 industry.
In our previous article, SocialFi: All-New Social Networking in Web3, we discussed the emergence of SocialFi and the problems it aims to address. As Friend.Tech, a social application, has gone viral recently, SocialFi and Web3 social networking have once again captured the spotlight.
The Rise of Friend.Tech
Friend.Tech, launched on August 10, is a SocialFi app built on BASE. Users can link their X (formerly Twitter) account to Friend.Tech to access their Web2 social identity. Social identity and networks are frequently regarded as key assets. With algorithmic pricing, Friend.Tech has turned this concept into reality, as it strives to help users monetize their social identity.
In Friend.Tech, you can discover other users, as well as who’s popular at the moment. To start a conversation with someone, you’ll need to purchase his or her key. The price of keys, which fluctuates based on supply and demand, is calculated with the formula: price in ETH = supply^2/16,000. In other words, a key becomes more valuable when more people are buying it. The rising price also indicates the user’s popularity on social media, which is genuinely reflected in the price of his or her key.
Friend.Tech has implemented an elegant economic design that facilitates quick reputation monetization, turning social relationships into decent investment targets. Plus, when a user’s key is traded by other holders, he will get 5% of the transaction fee. This incentive structure motivates both key holders and users to drive up the value of the key.
Many investors and users are now confident in the prospect of keys from top KOLs, as they try to profit from speculation. As a result, Friend.Tech has seen a surge in trading volume within a short period. As of September 13, the app has accumulated over 4.3 million transactions, generating a total protocol fee of $7.6 million and nearly 100,000 ETH in total inflows. This makes it one of the hottest apps in the crypto space over the recent weeks.
Challenges Facing Friend.Tech
Beneath the hype, however, Friend.Tech faces a number of challenges. After the initial frenzy, users started to dive deeper into the investment value and use cases of the app, which led to a plunge in its trading volume.
To start with, Friend.Tech remains an invitation-only app. This entry barrier means that most of its users are from the crypto community. Second, the app offers limited functions, and users are mostly excited by the financial prospect of its SocialFi mechanism. In contrast, its social attributes are somewhat weak, and there is still room for improvement in terms of KOL operations. Apart from that, not so long ago, Friend.Tech also faced criticisms about data privacy and security. Facing pressure in multiple respects, the app quickly encountered a bottleneck and has had to grapple with a common challenge for blockchain apps: long-term survival.
Following the decline in trading volume, the Friend.Tech team announced a point campaign, stating that points will come with special use cases in the future. Many users believe that the campaign hints at airdrop rewards, which has recently led to a substantial rebound in trading volume.
The Future of SocialFi
Over recent years, the crypto industry has seen plenty of social graphs, including iconic projects like CyberConnect and Lens. Specifically, CyberConnect boasts over 500,000 accounts, while Lens has built a user base of over 360,000, with over a hundred projects built on its ecosystem. That said, both lack social incentives, and many of their users stay active chiefly for potential airdrops.
Despite the recent criticisms facing Friend.Tech, especially its obsession with finance, the project remains a bold innovation in the SocialFi category. A well-designed monetization mechanism can help social projects, particularly projects lacking social incentives, get through the initial hurdles and achieve stable growth over the long term.
In the case of Friend.Tech, the well-designed key mechanism helps KOLs effectively monetize their knowledge. Besides, the price curve of keys is more consistent with the market demand. With the dynamic pricing of keys, knowledge payment is no longer a one-shot deal, which is the case in the conventional subscription model. Instead, KOLs have to keep upgrading their content in order to attract more holders, which allows them to earn more by driving up the price and trading volume of keys. Key holders can also make profits by inviting more friends or acquaintances to purchase keys.
From the lightweight product model depending on Web2 social networking (i.e., Twitter) to the key economics built on algorithmic pricing and a new avenue for knowledge monetization, Friend.Tech has opened up new paths of development for Web3 social networking. There are many scenarios where social networking and knowledge can be monetized. For instance, every year, plenty of people bid for the chance to dine with Warren Buffett, hoping to learn from the Oracle of Omaha. On the Internet, however, such pay-for-advice or pay-for-knowledge models are still rare. Perhaps more SocialFi projects will build upon Friend.Tech’s legacy and refine the algorithms to strike a perfect balance between social networking and finance and foster a more sustainable model of knowledge monetization.
ViaWallet now supports multiple public chains and Layer2 applications, including Ethereum, BASE, Optimism, Arbitrum, Polygon, and more. Download ViaWallet now to try out more Web3 apps: https://viawallet.com/download
*The article is for reference only and offers no financial advice.
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