What is Friend.tech – the SocialFi sensation on Base?

Friend.tech is a dApp on Base where you can buy “keys” or “shares” issued by influencers that give access to private chats with them. In less than two weeks, it reached $67 million in trading volume. We’ll explain how it works, which influencers use it, and how to join.

What is friend.tech?

Friend.tech is a viral SocialFi dApp on the Base blockchain where you can buy “keys” (initially called shares) - social tokens issued by Crypto Twitter influencers.   In  a way, friend.tech tokenizes popularity on X (formerly Twitter).

Prices are based on a bonding curve, where keys become more expensive the more people own them. The creator earns a 5% commission on each sale, and 5% more goes to the protocol. The top accounts have already made over $100,000.

The app is available for Android and iOS and needs to be connected to one’s Twitter account and funded with at least 0.01 ETH. Among the famous Crypto Twitter influencers who have already released shares are Cobie, Hsaka, Gainzy, Pentoshi, RookieXBT, and many others.

Friend.tech launched on August 11, and by August 28 it had reached $6.4 million in TVL with over $1.5 million in fees collected on some days. With $80 million in trading volume and 125,000 unique traders, it is the most viral thing in crypto after $PEPE.  

So far, the only practical utility such “keys” have is to provide access to a private chat with the crypto personality who issued them. Their value is purely speculative – and it fluctuates wildly. In this sense, frenetic trading in friend.tech shares is reminiscent of the Bitcoin Ordinals and BRC-20 craze in March-April 2023.

Every Friday friend.tech distributes off-chain airdrop points depending on each user’s activity level. These points should have utility once the beta period is over.  

On August 19, the project announced that it had closed a successful seed investment round led by the blockchain investment fund Paradigm. This sent activity on the platform into overdrive, with 250,000 transactions a day.

A few days later shares were renamed “keys” – ostensibly because this aligns with their utility of giving access to chatrooms. Some on Twitter have speculated that it was because the use of the financial term “share” could land friend.tech in regulatory trouble.

Base, the L2 rollup by Coinbase that friend.tech runs on

Base is the new optimistic rollup created by Coinbase together with Optimism. It uses Optimism technology (the OP Stack), and its gas currency is ETH. Base doesn’t have any token of its own, so don’t fall for any scam offers of “BASE tokens”.

Read our detailed article about Base.

Base mainnet went public on August 9, and by August 11 – the day when friend.tech launched – it already had $180 million in TVL and a healthy ecosystem of AMMs, DeFi apps, and NFTs. Uniswap, OpenSea, Sushi, and Compound all support Base.

To bridge ETH to Base, you can use the official bridge (Ethereum to Base and back only), Synapse Protocol, Stargate, Portal by Wormhole, and other bridges. Later in this article, we’ll look at how to send ETH to Base and buy friend.tech shares.

With the release of friend.tech, the average TPS on Base increased by over 150% to 15.88, while the TVL had shot up to $243 million by August 23. It is now the no.5 biggest rollup.

SocialFi and friend.tech’s predecessors

Friend.tech belongs to the niche of SocialFi (also SoFi) - apps that combine DeFi features (like token rewards) with social media, user-generated content, or community management. Other well-known SocialFi platforms include Galxe, Mask Network, and STEEM.

In the past few years, several SocialFi protocols experimented with creator tokens, for example:  

• BitClout – a protocol where users could issue and speculate on “creator coins” associated with influencers. Anyone could create a coin in anyone else’s name. BitClout went viral for a while in 2021 - even Coinbase CEO Brian Armstrong joined.
• DeSo Protocol – an L1 blockchain for decentralized social media that also had creator coins (social tokens). It even reached 2 million accounts, though few will have heard of it now.
• Rally.io – a SoFi platform where creators could issue their own tokens and “build digital economies” together with their communities. It hasn’t tweeted for almost a year.

So what makes friend.tech different? Psyops.capital CEO @0xtuba believes that it’s all about the creator being a crypto-native – someone who actively uses blockchain dApps and invests in crypto. And while some users pointed out that the founder of BitClout was also a crypto-native and had even founded a stablecoin (which later failed), it’s true that friend.tech’s product design shows a deep understanding of Crypto Twitter and of what can generate hype in this space.

The creators of friend.tech and their earlier projects, The Tweet DAO and Stealcam

Friend.tech was created by two pseudonymous developers with a lot of experience in SocialFi: Racer (@0xRacerAlt) and Shrimp (@shrimppepe).

The Tweet Dao

Racer first became known as the lead developer of The Tweet DAO, which went viral in April 2022. It was a collection of NFT eggs where each holder was granted the right to tweet from the official @TheTweetDAO handle once every 24 hours.

It was an interesting experiment in self-expression. As the tweets weren’t moderated, NFT holders could post without the fear of repercussions. As you can imagine, this resulted in some crazy and even offensive stuff, and eventually the account was suspended.

In The TweetDAO, Racer experimented with some concepts that were later used in friend.tech:

1) Algorithmically increasing mint price. The first eggs minted at 0.1 ETH, but for every 100 NFTs sold, the price went up by 0.1 ETH to the maximum of 1 ETH. This way it’s not just the minters that have an advantage over secondary buyers - early minters also get an advantage over those who mint later, creating more hype.

2) Leveraging Twitter. Twitter is where all crypto trends start, so basing a SocialFi app around tweets is a more efficient move than trying to build a brand-new blockchain-based social network, for example.

3) No promises of utility or gain. The project never promised any financial yield or future utility. Users were aware of that and still paid thousands for the opportunity to tweet – and then brag about it.  Of course, many managed to re-sell their eggs for a profit – but once the account was suspended, people were left holding worthless NFTs.

The lesson for other SocialFI projects here is that there are things that the Crypto Twitter community values more than monetary gain: clout, for example, or being early to new trends, or just some good fun.

Stealcam

Racer’s next SocialFi project – this time together with Shrimp – was Stealcam, launched in March 2023 on Arbitrum. In it, a user uploads a picture – often a selfie - to the site, where it’s turned into an NFT. The image is also pixelated so that you can’t see what’s in it – unless you “steal” it.

Stealing is like buying, only you don’t need the seller’s agreement. The first person to “steal” an NFT gets it absolutely free, but all subsequent stealers have to pay to reveal the image. If your NFT gets stolen, you’ll suddenly see that there’s more ETH in the wallet but the image is gone.

With Stealcam, we see the next step in the evolution of the ideas that later went into friend.tech:

1) Algorithmically increasing sale price. This time, it’s not the minting price that changes as the mint nears its end, but rather the secondary market price. The user who steals an image off the original stealer has to pay 0.001 ETH, and each subsequent steal of the same image costs 0.001 more plus 10% more than the previous one. There is no price ceiling.

2) Splitting proceeds. The previous NFT holder gets what they’ve paid to steal the image plus 45% of the difference between the new steal price and the previous steal price. 45% of the price difference goes to the image creator and the remaining 10% to the protocol. This way content creators earn much more than the standard 5% NFT royalties. For example, digital artist Shloms made $10,000 in one month.

3) Leveraging Twitter. Stealcam app includes a Share to Twitter button that helps creators and buyers promote their images to attract potential stealers. There are also filters to show only images offered by people with more than 1k or 10k Twitter followers.

4) No promises of utility. It’s not like you’re paying for great NFT art – you don’t even know what you’re paying for! If an image is released by a popular model in the NSFW section, you may think that it’s a revealing selfie of her… but it can turn out to be a picture of a random object. In that case, if nobody steals the image you’d paid for, you could end up holding a useless picture of a couch.

All this examination of The TweetDAO and Stealcam should demonstrate that friend.tech didn’t just pop out of nowhere: it builds and improves on its creators’ earlier ideas. Let’s now see how friend.tech works in detail.

How friend.tech works

How to register on friend.tech

Friend.tech is currently available only as a mobile app: you can’t use it on desktop. To join, visit friend.tech on your phone, agree to add the site to the home screen to install the app, then sign in with your pFriendMEXhone number, Gmail, or Apple ID. Note that since there is no privacy policy, there’s no way to know what the app will do with your phone number and other login data!

Friend.tech is currently invite-only, so users need to procure a referral code to register. To find a valid code, go to X (Twitter) and search for “friendtech code” or “friendtech invite code” in Latest. New codes are posted often, so keep trying if the first code you find is already unavailable.

A more privacy-friendly alternative is using FriendMEX - a trading app that allows you to buy and sell keys without creating a friend.tech account. You won’t have access to the private chats and the airdrop, though (see below).

Further, friend.tech has its own built-in wallet, which needs to be funded with ETH on Base from another wallet like MetaMask or Coinbase Wallet. The first step would be to get ETH on Base: the easiest way is to bridge it from Ethereum using the official Base bridge or Synapse Protocol. The app requires a deposit of at least 0.01 ETH, but you’ll need some extra for gas fees.

After depositing, you’ll be able to both buy and sell keys (shares), as well as issue your own. A person who issues keys is called a subject. Essentially you create a pool with the ETH you deposited and your shares, and others will trade into that pool, adding ETH and taking out shares.

Fees

friend.tech charges a 5% protocol fee on each transaction, plus a 5% fee that goes to the share issuer. Since around $7.8 million in fees have been collected so far, the founders of friend.tech have earned around $3.9 million - though hopefully most of it will be used for project development.

Chats and benefits for shareholders

As we’ve mentioned, key buyers get access to a gated chat with the subject. But while any shareholder can send direct messages to the influencer, the latter can’t respond individually – only to all the chat members at once. Holders can’t see each other’s messages, so it can seem like the creator is talking to himself or herself.

Technically, share issuers don’t have to do anything for their share buyers beyond responding in the group chat – but many do. For example, leverage trader RookieXBT shares his revenue with the shareholders who have at least two shares and adds them to his MagnetMoney community, where he literally gives away money.

MEV bots and tools for friend.tech users

As soon as people realized that you can make serious money trading friend.tech shares, a whole batch of tools popped up to make the process more efficient. Just like on Uniswap, there are MEV bots, which compete to snipe new keys issued by popular influencers. According to on-chain analyst @tomwahnn, 125 MEV bots have made $2.1 million in profit so far - even though most of the bot transactions fail.

There are also special bots to notify you when a new account joins the app. However, the presence of MEV bots means that regular users have almost zero chance of buying quality new shares as soon as they are issued.

Another useful tool is FriendMEX, where you can buy and sell keys, as well as view the price chart for any key, recent trades, market cap, etc.

There is also a special Dune Analytics tool that allows you to view the chart of buys and sells for a specific address.

Share pricing

The pricing of keys follows a bonding curve - a formula that describes the relationship between the supply and the price, where every purchase makes the asset a bit more expensive for the next buyer. The x*y=k formula used by AMMs like Liquidswap on Aptos and Uniswap is also a bonding curve.

You buy your own first share for 0 ETH, but the next one will already have a very low price attached to it. After that, the price grows exponentially with the growth of the number of outstanding shares (those purchased and held by users). In other words, the more popular your keys are, the more each new buyer will have to pay.

You can withdraw ETH from the app, but not the keys themselves. As a result, you can’t trade them on Uniswap or another DEX. However, crypto influencer @0xfoobar built a tool for “wrapping” shares into ERC-20 tokens, called WrappedFriends. These ERC-20 can be traded on any Base DEX, and you can already buy tokens representing the keys of @0xSisyphus, @RookieXBT, etc.

Tokens can also be unwrapped back to release the shares, at which point the tokens are burned. Importantly, there is just one canonical ERC-20 address per Twitter user handle.

Wrapped Friends charges a 5% fee on each mint or burn transaction, half of which goes to the influencer and half to @0xfoobar himself.

Points airdrop

On August 18, friend.tech launched an airdrop campaign that will last 6 months (until the end of the beta period) and see 100 million points distributed in weekly batches each Friday. These points aren’t tokens – they exist off-chain.

The app interface has a special Airdrop tab where you can request points. The amount depends on one’s activity on the platform. Points should have some utility once the beta period ends, but so far it’s not known what.

Attention: there are lots of “friend.tech airdrop” scams floating around. The standard scheme is to make a user connect their wallet to “check eligibility” - at which point your funds will be drained.

A typical scam friend.tech airdrop post and website. Note that the website address is wrong - don’t fall for such tricks!

Potential Friend.tech risks and issues

• Share prices are extremely volatile and speculative. As mentioned by crypto influencer Yazan, paying 1 ETH to access a group chat is “ridiculous”.

Remember: these aren’t tokens of serious crypto projects with useful products. If a creator gets bored and leaves the app, for example, the price can quickly go to zero. Also, the hype around friend.tech can simply die down as it usually happens with any meme project in crypto.  

• The app’s surging popularity has led to lags and freezes. Users reported that screens often didn’t load and actions took over 10 seconds to complete.
• The app isn’t available in Google Play Store or App Store, meaning that it hasn’t passed their review for safety. There’s no way to know where data is stored, either.
• There is no privacy policy: clicking on “Check out our privacy policy” on the app’s home screen, you’ll get a “Coming soon!” message. So there’s no way to know which types of user data the app collects, how it uses it, if it sells your data to third parties, etc.

As your Twitter handle is now linked to the friend.tech account, anyone can match the ETH wallet used to fund friend.tech with your Twitter account.

Who’s on the platform?

The list of the most popular subjects on friend.tech reads like a “who is who on Crypto Twitter”:

• Cobie (real name Jordan Fish, crypto investor and host of the UpOnly podcast)
• Pentoshi (legendary trader)
• Hsaka (extremely influential and mysterious trader)
• RookieXBT (trader and NFT flipper)
• Inversebrah (Crypto Twitter record keeper, formerly known as Stardust, a successful trader)
• Zhu Su (CEO of the collapsed hedged fund Three Arrows Capital)
• ben.eth (creator of the controversial $PSYOPS memecoin)
• ZachXBT (Crypto Twitter’s most famous on-chain investigator)
• loomdart (NFT influencer and project founder, trader)
• Cold Blooded Shiller (trader)
• Crypto Kaleo (trader, investor and engineer)
• CryptoCred (successful trader and creator of videos on technical analysis)
• CryptoDonAlt (successful trader and TechnicalRoundup YouTube channel host)
• …and many others.

Cobie is the most successful subject so far with over $160,000 earned. His shares trade at 1.65 ETH on average.

And here are just a few prominent non-crypto personalities who are active on friend.tech:

• eSports influencers FaZe Banks (real name Richard Bengston II) and FaZe Rain (Nordan Shat)
• Grayson Allen (NBA player)
• Gracie Hartie (OnlyFans creator)
• Garry Tan (Y Combinator CEO)

Friend.tech performance

• According to the data in @Cryptokoryo’s Dune Analytics dashboard, friend.tech’s total share trading volume has reached $80 million (47,710 ETH) as of August 28.

• 125,000 unique users made at least one trade on friend.tech for a total of 2,400,000 transactions as of August 28, generating over $7.8 million in fees. Altogether, creators have earned almost $3.9 million.

• Paradigm involvement caused a sharp rise in activity starting from August 19. There were over 250,000 transactions on August 19 – that’s 25 times more than on OpenSea

• @tomwahnn also discovered that the percentage of Base accounts that were using friend.tech rose from 1.7% to 25% between August 10 and August 21 - the latter being the day of peak activity for the app. On that day, Friend.tech collected almost $1.7 million in fees, second only to the Ethereum blockchain itself and ahead of Lido, Uniswap, and the Bitcoin network. The app’s gas fees accounted for almost 44% of all the gas expenditure on the Base blockchain.
• After that, however, activity began to slow down. There were 111,000 transactions on August 24, 141,000 on August 25, only 55,000 on August 26, and 51,000 on August 27.

What’s next for friend.tech?

Though friend.tech activity has cooled down considerably, it’s still too early to say that most of the hype has died down. As the platform continues to distribute airdrop points, it will likely attract more users. Kaleo noted that every Friday there is an influx of new users and influencers as the airdrop distribution is shilled on Twitter, and prices also rise. Then the prices go down, only to peak again the weekend after, and so on.

Meanwhile, users point out many improvements that can be made to the app:

• pricing curve adjustment to reflect different benefits that subjects offer to key holders;
• an ability to see what other key holders write in the chat;
• possibility for creators to share images and other content, etc.

It will also be interesting to see if similar apps appear on other blockchains. Friend.tech isn’t open-source, but it shouldn’t be difficult to re-create it. It’s a different question though, if the same influencers will want to join another app.

At Pontem Network, we bring you analysis of the latest trends and narratives in Web3. Follow us on Telegram, Twitter, and Discord so that you don’t miss the next article!

About Pontem

Pontem Network is a product studio building the first-ever suite of foundational dApps for Aptos. Pontem Wallet, the first wallet for Aptos, is available for Chrome, Mozilla Firefox, Android, and iOS.

Use Pontem Wallet to store and send any tokens on Aptos. The wallet is integrated with our Liquidswap DEX, the first DEX and AMM for Aptos, Topaz and Souffl3 NFT marketplaces, Ditto and Tortuga liquid staking platforms, Argo and Aries lending protocols, and all other major Aptos dApps.

Our other products include the browser code editor Move Playground,  the Move IntelliJ IDE plugin for developers, and the Solidity-to-Move code translator ByteBabel – the first ever implementation of the Ethereum Virtual Machine for Aptos.