Friend.tech Faces Difficulties as it Considers Leaving Base Network
Friend.tech, the popular social finance application, is currently facing challenges as its co-founder, Racer, expressed concerns about being excluded from the Base community. This has led to speculation in the market, causing the native token, FRIEND, to drop below $1. Apart from the uncertain relationship with Base, Friend.tech is also dealing with its own business challenges.
Due to the unstable relationship with Base, Racer made a tweet over the weekend, offering a $200,000 reward to anyone who can find a way to migrate Friend.tech from Base without causing significant issues for users and ensuring its smooth operation. Racer later explained the reason behind this in another tweet, stating that the Friend.tech team has faced instability in their relationship with Base. He mentioned the negative publicity from Farcaster investors, who misunderstood their intentions and applied pressure on the team and users. This resulted 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, acknowledged that Friend.tech had been wrongly associated with a negative speculative culture in the early stages, causing them to feel isolated from Base and the Ethereum ecosystem. He recognized Friend.tech’s innovative approach and hopes to see a repair in their relationship with the broader Ethereum or Base ecosystem. Pollak expressed regret if Friend.tech decides to leave Base but emphasized his support for any path they choose, highlighting the beauty of decentralization and the blockchain economy.
As a result of these issues, CoinGecko data shows that FRIEND token has experienced a significant drop of over 35.1% in the past 24 hours. Since its launch, FRIEND has seen a decline of approximately 66% from its highest point. According to Yujin Monitor, a monitoring platform, prominent investor Huang Licheng has accumulated 4,873 ETH (worth around $15.35 million) in 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.
Furthermore, data from Franklin Templeton’s Base Season report indicates that Base has witnessed a significant increase in activity in recent months, with a considerable portion attributed to SocialFi applications like Friend.tech. These applications have captured a substantial share of the SocialFi market, accounting for around 46% of related transactions on Base.
Dune data shows that as of May 27th, Friend.tech has recorded a total trading volume of 379,000 ETH, with protocol revenue of approximately 17,000 ETH and a total inflow of over 22,000 ETH. Earlier this month, Friend.tech sparked market participation with the release of its V2 version and an airdrop program, particularly gaining popularity with its new feature, Club. Dune data reveals that since the launch of V2, over 232,000 clubs have been created, resulting in a total transaction volume of over 42.62 million FRIEND tokens.
However, during this time, Farcaster, another SocialFi project within the Base ecosystem, has also gained market attention and recently announced a $150 million funding round with investors such as Paradigm, a16z crypto, Haun Ventures, and USV. As of May 27th, Dune data shows that Farcaster has generated nearly $1.47 million in total revenue and has a user base of 409,000.
It is worth noting that Paradigm, an investor in Friend.tech, is also the lead investor in Farcaster’s substantial funding round. However, Friend.tech had convinced the venture capital firm to relinquish their token allocation and distribute it 100% to the community.
While Farcaster’s profitability may not yet compare to Friend.tech, the latter is experiencing a significant decline in data. DefiLlama data reveals that Friend.tech’s Total Value Locked (TVL) has dropped by nearly 67.4% in the past 30 days. Additionally, Dune data shows that as of May 26th, the daily creation of Clubs on Friend.tech has decreased by over 99.6% since its launch, and the daily trading volume has dropped by approximately 90%. To address these challenges, Friend.tech has introduced various features such as Keydrops, Memeclubs, and Pinned Rooms for the Club, and plans to start refunding 2/3 of the Club Key exchange fees to users.
As Friend.tech faces a significant user exodus and competition from rival projects, it finds itself in a challenging situation.
This article is a collaboration and originally appeared on PANews.