Exploring Tokenization of Social Web: The Rise and Challenges of Friend.Tech

Recently, a decentralized social web (DeSo) called Friend.Tech has rapidly emerged in the Base ecosystem, attracting widespread attention. The project allows users to achieve tokenization of the social network by buying and selling "shares" of any user on the platform. Since its invitation-only beta launch on August 11, 2023, Friend.Tech has generated over $500,000 in revenue in just two days, becoming the hottest SocialFi project in the Base ecosystem.

According to data statistics, about 10 days after its launch, Friend.Tech's trading volume has exceeded 11,000 ETH, with over 39,000 unique users and more than 518,000 transactions completed. These figures fully reflect the explosive growth of the project and the high level of user participation.

The Core Concept of Friend.Tech

Friend.Tech allows users to buy and sell "shares" of any user on the platform using ETH on the Base chain by linking their Twitter accounts. Owning a share of a particular user grants access to that user's private chat room. This mechanism monetizes users' social influence while also providing fans with the opportunity to participate in the social value of their idols.

Essentially, Friend.Tech is a platform that tokenizes the personal IP of KOLs. Fans enter KOL's private community by purchasing the corresponding tokens, becoming investors in KOL's "shares," thereby gaining the right to directly communicate with the KOL. This process not only monetizes the value of KOLs but also quantifies the social value of users, and can be seen as an investment in KOL's influence.

Currently, Friend.Tech still uses an invitation code mechanism. Users need to obtain an invitation code, bind their Twitter account, and inject at least 0.01 ETH into the Base network to use the application.

The Operation Mechanism of Friend.Tech

The core of Friend.Tech lies in combining the Social Web with a token economy. Users can achieve the tokenization of the social network by buying and selling "shares" of themselves and others, thereby gaining potential profits. This model not only encourages users to pay more attention to KOLs on the platform but also motivates users to become KOLs through content creation, thereby enhancing the overall quality and efficiency of the social network.

In this tokenized Social Web, users can freely choose to join groups of interest, whether it's a well-known KOL's group or a potential rising star's group. By paying the corresponding base price to acquire shares in the group, they can join the respective group. Joining a group signifies an investment in that group and its leader, so users often purchase more shares in promising groups in the early stages. Similarly, users can exit a group by selling the shares they hold in the group.

Friend.Tech's Business Model

The core business model of Friend.Tech revolves around quantifying users' Twitter accounts into social tokens on the platform. Other users can purchase shares of these tokens using ETH to join the corresponding group. As the number of people in a group increases, the total shares of that group and its floor price will also rise accordingly.

However, like other digital assets, the value of these "shares" is volatile. The group founder promotes their fan tokens to attract more users to join the group, thus driving up the floor price of the group's shares. Conversely, when the group loses its appeal, users may perceive it as no longer having investment value, leading to a decrease in the floor price of the shares.

Throughout the trading process, all transactions are recorded and can be queried on-chain. It is worth noting that whether buying or selling, the platform charges a 10% fee on each group share transaction, of which 5% is distributed to the holders of the shares being traded, and the other 5% serves as platform revenue.

The economic model of Friend.Tech mainly includes the group share growth model and the points incentive system.

Stock Growth Model

The group shares of Friend.Tech start from 0 and the only variable affecting the price per share is the number of shares issued. According to the speculative pricing model, there is a quadratic relationship between the number of shares an individual holds and the price of the next share, with the price per share exhibiting "exponential changes" as the number of buyers increases.

Points Incentive

Point incentives are an important means for Friend.Tech to convert Twitter users into core users of the platform. The platform plans to distribute a total of 100 million points during a testing period of the next six months, with distributions taking place every Friday. This mechanism leverages the potential expectations of Token airdrops, equipped with practical points to encourage user participation.

Challenges and Future Prospects Facing Friend.Tech

Despite the explosive growth of Friend.Tech since its launch and the substantial profits gained by many early participants, the platform still faces numerous challenges and potential risks:

1. Potential legal risks: As the platform essentially issues Tokens and speculates through fans, there may be legal risks in certain regions.

2. High entry barrier: The current share price of popular groups has reached a considerably high level, which poses a high barrier for users who join later.

3. Insufficient liquidity: Although Friend.Tech is based on the Social Web, its essence is still a form of digital asset trading. Due to the high cost of user entry in the later stages, participating users may be restricted by the base price of shares, leading to insufficient liquidity.

4. Insufficient information transparency: The platform currently lacks common project information, such as roadmaps, founder backgrounds, or white papers, which may raise user concerns about the sustainability of the project.

5. Data privacy issues: Given the close connection between the platform and users' social accounts, data privacy protection will be a key issue.

Despite these challenges, Friend.Tech's innovative model has sparked renewed interest in the Social Web sector. However, whether the project can sustain its growth and become an industry leader, or if it is merely a flash in the pan, still needs time to be verified.

Overall, Friend.Tech represents a new attempt to combine the Social Web with blockchain technology. It not only provides content creators with new monetization avenues but also opens up new channels for ordinary users to participate in social value investment. However, to truly achieve sustainable development, Friend.Tech needs to continuously improve and innovate in multiple areas such as user experience, legal compliance, and privacy protection.