Short-lived success
In a surprising turn of events, the highly anticipated decentralized social network, Friend.tech, has been swiftly deemed "dead" by critics less than three weeks after its launch. The platform has experienced a significant decline in key metrics, including activity, inflows, and volume.
The beta version of Friend.tech made a flashy debut on Coinbase's layer-2 Base on August 11, garnering significant attention. Just a week later, the platform's fees skyrocketed, surpassing $1 million in a span of 24 hours on August 19, outperforming both Uniswap and the Bitcoin network.
A rapid downfall
However, the fees took a nosedive shortly after reaching their peak. Daily fees peaked at $1.7 million on August 21 but plummeted by over 87% to approximately $215,000 by August 26, as reported by DefiLlama.
Not only have fees declined, but transactions on Friend.tech have also taken a severe hit. Dune Analytics data compiled by Crypto Koryo reveals that transactions dropped by over 90% from nearly 525,000 on August 21 to just over 51,000 on August 27. The platform's decline has prompted an outpouring of condolences on Twitter.
A network centered around 'keys'
Friend.tech operates on a unique premise wherein users can buy and sell "keys" that grant them the ability to send private messages to others. The platform reportedly takes a 5% cut from these transactions.
The platform managed to attract a diverse range of influencers, including podcast host Cobie from UpOnly, YouTuber Faze Banks, and the Russian protest group Pussy Riot.
Blaming greed and poor execution
The demise of Friend.tech has been lamented on social media, with Coinbase payments risk manager Lisandro Rodriguez denouncing the platform as "dead" in an X post on August 27. Rodriguez attributed this collapse to "greed and poor execution."
The decline has not been limited to fees and transactions alone. Buyer and seller activity has also taken a significant hit, with a mere 10,000 buyers and 7,800 sellers on August 27, compared to the peak on August 21, which saw over 58,000 buyers and 27,000 sellers, as revealed by Dune data.
Moreover, inflows have also suffered a steep decline, dropping by almost 90.5% from the high of $16.8 million on August 21 to approximately $1.6 million on August 27.
Predictions of a downfall
Even before the recent decline, some community members had expressed their bearish outlook for the platform. Crypto commentator Yazan warned Cointelegraph last week that he believed Friend.tech had a limited lifespan of six to eight weeks before experiencing a decline in user key prices and activity. He questioned the sustainability of the high user key prices, particularly when it came to paying over 1 Ether (ETH) "to be able to see a private chat."
Friend.tech has drawn parallels to the 2021 DeSo app BitCloud, with pseudonymous Web3 marketer Legendary predicting that Friend.tech "will collapse as BitClout did."
