Friend.tech Faces Difficulties Again
In recent days, Friend.tech co-founder Racer posted on social media claiming to be “excluded by the Base community” and implied their intention to move away from the Base network. This has raised concerns in the market, leading to a drop in the value of their native token, FRIEND, which fell below $1. Apart from the apparent breakdown in their relationship with Base, Friend.tech is also facing challenges within its own business.
Due to the unstable relationship with Base, Racer’s warehouse positions have been drastically reduced.
Over the weekend, Racer tweeted, “System Design Bounty: If you can find a way to migrate Friend.tech from Base without causing major issues for users and it runs well, we will use it and pay you $200,000.” In another tweet, Racer explained the reasons behind this, stating that the Friend.tech team has had an unstable relationship with Base. He mentioned that Farcaster’s investors had spread negative rumors about them when they first launched, leading to misunderstandings about their intentions. This put a lot of pressure on the team and users, resulting in their exclusion from the “Base community.” Racer’s tweets have since been deleted, and the account is no longer accessible.
In response, Jesse Pollak, the head of Base, stated that Friend.tech’s product was wrongly labeled with a “negative speculative” culture during its early stages. This caused Friend.tech to feel isolated and disconnected from certain parts of Base and the Ethereum ecosystem. He acknowledged that Friend.tech was at the forefront of innovation and had paved the way for the entire industry. He expressed his hope for a repair in the relationship between Friend.tech and the broader Ethereum or Base ecosystem. However, if the Friend.tech team decides to leave Base, he would be disappointed but would respect and support any path they choose. This is the beauty of decentralization and the online economy.
As a result of these developments, CoinGecko data shows that the FRIEND token has experienced a decline of over 35.1% in the past 24 hours. Since its launch, FRIEND has dropped by approximately 66% from its peak. According to Yujin Monitoring, Huang Licheng, a major holder, has accumulated 4873 ETH (worth about $15.35 million) in purchases of FRIEND tokens since its launch, with an average price of $1.9. Based on the current price, Huang Licheng has incurred a loss of over $6.94 million.
Investment institutions participate in competitive investments, leading to significant declines in various data.
Recently, Franklin Templeton’s Base Season report highlighted the significant increase in Base’s activity in recent months. In addition to the rise in MEME coin trading, SocialFi applications such as Friend.Tech have also played a role, capturing a significant share of the SocialFi activity, accounting for approximately 46% of all transactions related to SocialFi.
Dune data shows that as of May 27th, Friend.Tech’s total historical transaction volume reached 379,000 ETH, with protocol revenue of about 17,000 ETH and total ETH inflow of over 22,000 ETH. Earlier this month, Friend.tech’s V2 version and its airdrop plan created a market frenzy, especially with the popular new feature, Club. According to Dune data, since the release of V2, there have been over 232,000 clubs, with a total lifetime transaction volume of over 42.62 million FRIEND tokens.
At the same time, Farcaster, another player in the SocialFi race and part of the Base ecosystem, has also attracted market attention. They recently announced raising $150 million in funding from Paradigm, a16z crypto, Haun Ventures, and USV. Dune data shows that as of May 27th, Farcaster has generated nearly $1.47 million in total revenue and has a total of 409,000 users.
It is worth noting that Paradigm, an investor in Friend.tech, was also the lead investor in Farcaster’s massive funding. However, Friend.tech managed to convince the venture capital firm to give up token allocations and distribute them 100% to the community.
While Farcaster gains popularity, Friend.tech has repeatedly posted on social media to elevate its own status and indirectly criticize competitors like Farcaster, in an attempt to attract attention. For example, they asked, “For users who don’t have money to use Friend.tech, what encrypted social applications would you recommend?” or “Friend.tech is only suitable for wealthy people, please classify it accordingly.” Both leading players in the social race are engaging in fierce competition.
From the data, although Farcaster’s profitability cannot currently match that of Friend.tech, the latter is facing a significant decline in data. DefiLlama data shows that in the past 30 days, Friend.tech’s Total Value Locked (TVL) has dropped by nearly 67.4%. Additionally, Dune data shows that as of May 26th, the daily creation of Clubs on Friend.tech has dropped by over 99.6% since its launch, and daily trading volume has dropped by approximately 90%. As a response, Friend.tech has introduced new features such as Keydrops, Memeclubs, and Pinned Rooms for Clubs over the past few months. They also plan to start refunding 2/3 of the Club Key redemption protocol fees to users.
With a significant loss of users and increased competition and ecosystem exclusion, Friend.tech finds itself in a difficult situation.
