Research Summary
This report discusses the rapid growth of the social app Friend Tech, its profitability, and the speculative activity driving its trading volume. It also delves into the challenges traders face due to the Bonding Curve Pricing Mechanism. The report further explores the influence of Bored Ape Yacht Club (BAYC) in the NFT space, the decline in ApeCoin and BAYC valuations, and the active governance proposals within the ApeCoin DAO.
Key Takeaways
Friend Tech’s Rapid Growth and Profitability
- Impressive Growth: Since its launch in August, Friend Tech has attracted 270K users and achieved a TVL of $48M, generating over $30M in trading fees.
- Profitability: The app has become the third most profitable crypto protocol in the past two months, only behind Ethereum and Tron.
- Speculative Activity: A significant portion of the app’s activity is speculative, driven by anticipations of an airdrop.
Challenges in Friend Tech’s Trading Mechanism
- Bonding Curve Pricing Mechanism: Traders face difficulty in exiting positions without a loss due to this mechanism. To break even, a trader’s key price needs to increase by a minimum of 22% after purchase.
- Trading Despite Challenges: Users continue to trade keys, likely believing that the future airdrop will compensate for their losses.
- Beneficiaries: The protocol and creators seem to be the real beneficiaries, consistently earning trading fees from speculative activity.
Bored Ape Yacht Club’s Influence and Valuation Decline
- Influence: BAYC stood out as one of the most influential projects in the NFT space in 2022, attracting mainstream celebrities.
- Valuation Decline: Both ApeCoin and BAYCs experienced a valuation decline of >85% from their respective peaks.
- Active Governance: Despite the downturn, the ApeCoin DAO remains active with proposals for governance.
ApeCoin DAO’s Governance Proposals
- Approved Proposals: Two highly debated ApeCoin DAO proposals were approved after extensive community discussion.
- Impact on BAYC: The introduction of these proposals had varying impacts on BAYC’s floor price.
- Future Speculation: The report advises against short-term speculation of Yuga NFTs based solely on these proposals.
Actionable Insights
- Understanding Friend Tech’s Mechanism: Traders should understand the Bonding Curve Pricing Mechanism and its implications before engaging in trading on Friend Tech.
- Consideration of Speculative Activity: Investors should consider the high level of speculative activity on Friend Tech and its potential impact on the platform’s sustainability.
- Insight into ApeCoin DAO’s Governance: Stakeholders should keep abreast of the ongoing governance proposals within the ApeCoin DAO and their potential impact on the value of associated NFTs.
