Research Summary
The report discusses the rise of Friend.tech, a social app launched on Coinbase’s rollup Base, which has gained significant traction due to its token-gated private chats. The app has attracted over 125k users and generated $8M+ in fees. Friend.tech has gone viral due to its Twitter integration, simple onboarding process, and bonding curve dynamics. The report also discusses the challenges faced by the platform, including bot activity and scalability issues, and potential future developments.
Key Takeaways
Friend.tech’s Rapid Growth
- Significant User Traction: Friend.tech has attracted over 125k users and generated $8M+ in fees, with half of the fees accruing to creators. Active daily users have settled at around 20k/day.
- Key Features: The core feature of Friend.tech is token-gated private chats, where users can create group chats and others can join by minting the “keys” of the creator. The price of keys increases with each minting and decreases with each redemption based on a bonding curve.
- Attracting Big Names: Friend.tech has attracted big names from various industries, not just crypto natives. Large Twitter accounts are incentivized to join Friend.tech, as they can earn risk-free money and accrue fees from trade volume on their keys.
Challenges and Issues
- Bot Activity: Bots sniped a significant number of keys from popular accounts, resulting in quick profits for the snipers. This made it harder for new accounts to build an organic audience.
- Scalability Issues: The bonding curve and associated fees have led to a drop in volume on Base. Prices of keys become prohibitively expensive after a certain number, creating a hard psychological barrier.
- Lack of Exit Strategy: Creators currently rely on trading fees for income, but alternative revenue streams, such as staking ETH and selling premium items, could be explored. Implementing key caps and a clear exit strategy for creators could address issues of bot sniping and provide a graceful exit option.
Future Developments
- Emerging Tools: Tooling has emerged recently, including points farming and Friend.tech integrations/rewards, which may contribute to continued FT usage.
- Potential Changes: The future of FT is uncertain, but there may be some changes in the coming weeks/months. Consideration should be given to starting the bonding curve with a Dutch auction and allowing customization of the curve.
- Non-Trading Uses: There is potential for FT to be used in non-trading ways, such as curated token gates for developers.
Actionable Insights
- Monitor User Engagement: The average in-app minutes per day is an important metric to monitor for understanding user engagement and the app’s overall performance.
- Address Bot Activity: Measures need to be taken to address the bot activity that is making it harder for new accounts to build an organic audience and is affecting the platform’s overall user experience.
- Explore Alternative Revenue Streams: Friend.tech could explore alternative revenue streams for creators, such as staking ETH and selling premium items, to reduce reliance on trading fees.
- Implement Exit Strategy: Implementing key caps and a clear exit strategy for creators could address issues of bot sniping and provide a graceful exit option, enhancing the platform’s sustainability.
- Consider Non-Trading Uses: Friend.tech could consider expanding its use cases beyond trading, such as curated token gates for developers, to diversify its offerings and attract a wider user base.
