Friend Tech Tokenomics and the Future of Social Tokens

Friend tech tokenomics is a relatively new concept that's gaining traction in the tech world. It's all about creating social tokens that can be used to reward and incentivize friends and community members.

These social tokens can be used to unlock exclusive content, participate in decision-making processes, or even get early access to new products. In the article, we'll explore how friend tech tokenomics is changing the way we think about social interactions and community building.

One key aspect of friend tech tokenomics is the concept of "tokenomics", which refers to the economics of a token. This includes how it's created, distributed, and used within a community.

The $FRIEND token is the central component of Friend.Tech V2, serving as both a currency and a key to engaging the community.

It currently has a market cap and fully diluted valuation of $185.26 million, with a total supply of 92.63 million tokens that were fully allocated to the community at the token generation event.

Users can claim tokens by engaging with the platform, with 10% available for following ten people and the remaining 90% for joining a club.

This tokenomics design fosters participation and ensures token distribution supports active ecosystem involvement.

A 1.5% fee is incurred when trading $FRIEND tokens within Friend.Tech's native swap function, promoting liquidity and benefiting the platform from fee revenues.

However, this also requires users to trust the platform's stability.

Here's a breakdown of the tokenomics:

This tokenomics design has the potential to create a more engaging and sustainable community, but its success will depend on the platform's ability to execute and maintain user trust.

Friend.tech's pivot to social tokens has been a game-changer. Launched this August on Coinbase's Base layer-2 network, users can now purchase tokens tied to influencer accounts. Holding these tokens unlocks exclusive chatroom access with those influencers. The app has enjoyed meteoric growth, attracting celebrities beyond just crypto.

Initially, Friend.tech was a decentralised social platform that connected crypto influencers with their followers. It generated around $13 million in fees from a high trading volume of $130 million. However, the platform's original model had its drawbacks, primarily due to high fees involved.

The new social token model has been a hit, with users flocking to purchase tokens. This change has allowed Friend.tech to tap into a wider audience, including celebrities outside of the crypto space.

The $FRIEND token is a crucial part of Friend.Tech V2, serving as both a currency and a key to engaging the community. It has a market cap and fully diluted valuation of $185.26 million.

The total supply of 92.63 million tokens was fully allocated to the community at the token generation event. This ensures token distribution supports active ecosystem involvement.

Users can claim tokens by engaging with the platform – 10% for following ten people and the remaining 90% for joining a club. This incentivizes users to participate and interact with the platform.

Transactions within clubs are subject to a 1.5% fee, split between liquidity providers and the platform, which helps sustain the ecosystem's financial health and rewards active participants.

The $FRIEND token can only be traded within Friend.Tech's own system, which uses a native swap function with a 1.5% fee. This promotes liquidity and benefits the platform from fee revenues.

Here's a breakdown of the tokenomics:

Clubs on Friend.Tech function like mini-governments, allowing users to manage and customize their clubs. This supports decentralized governance and a DAO-like transparency.

Most users on the platform have balanced income and expenses, but income is distributed in a long-tail manner. This means that a small number of users earn a significant portion of the total income.

About 90.2% of users have income within the range of -0.1 ETH to +0.1 ETH, indicating that many users are breaking even or earning a small amount of money.

The majority of users, 52.6%, have positive income, but only a small percentage, 2.17%, have income exceeding 0.1 ETH.

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We can categorize users into three types: Light participants, Crypto KOLs, and Profit-driven speculators.

Here are the characteristics of each type:

The top 100 users with the highest income have a total income of 4311.64 ETH, accounting for 47.9% of the total income of 9004.58 ETH, with a user ratio of less than 0.1%.

Speculators on Friend.Tech are a significant force, contributing 78.9% of the total trading volume and 88.4% of the total trading amount on the platform.

These users have a higher trading frequency and/or income, and some may overlap between categories, such as a KOL also engaging in speculative trading.

Speculators can be divided into two groups: those who trade popular Keys to profit from price differences, and those who use bots to automatically monitor and trade popular or potentially promising Keys.

Among the top 20 users with the highest total income, there are not only well-known figures in the cryptocurrency industry, but also a large number of users who have not bound their Twitter (X) accounts, indicating speculative behavior.

The average income of these users is 53.49 ETH, higher than the average income of the remaining 55 users, which is 27.26 ETH.

A significant portion of speculators, 45 out of 65, have zero protocol income, indicating they are purely focused on buying and selling Keys for profit.

These users contribute a large amount of trading volume, with 21.7% of the total number of users accounting for 78.9% of the total trading volume.

Here's a breakdown of the types of speculators:

Creators are incentivized to generate fees, but this can come at the expense of building a community.

A creator that relies on long-term community building, like a writer or artist, benefits more from a long-term community, whereas creators who benefit from shorter transaction cycles, such as OnlyFan creators, are interested in generating fees.

It's essential to remember that creators generate fees only when their keys are traded.

A creator doesn't benefit at all if there's no volume trading their shares, and their only benefit from someone holding their key is that it maintains a higher price floor, which, when shares are traded, increases the fee.

Creators want more buyers than sellers to increase the price of their key, but they'd rather a lower price that's constantly traded than a high price that no one trades.

The friend.tech financial model offers neither emotional nor financial support to creators, which is a major drawback for community building creators.

Subscriptions incentivize ongoing investment in a community by a creator, whereas one-and-done purchases do not.

The token distribution plan is designed to ensure a fair and transparent allocation of Friend Tech tokens to its community.

Friend Tech's token distribution plan allocates 30% of the total token supply to the community through airdrops and rewards.

A significant portion of these community tokens will be distributed through a series of airdrops, which will be announced on the Friend Tech blog and social media channels.

The remaining 70% of the token supply will be allocated to investors, partners, and the development team.

Friend Tech's development team will receive a total of 20% of the token supply, which will be used to fund the development of the platform.

This allocation is designed to incentivize the development team to create a high-quality platform that benefits the entire community.

The remaining 50% of the token supply will be allocated to investors and partners, with a focus on attracting strategic investors who can help drive the growth of the platform.

Friend Tech aims to create a strong and diverse community of investors and partners who can provide valuable support and guidance.

The token distribution plan is a critical component of Friend Tech's tokenomics, and it has been carefully designed to ensure a fair and transparent allocation of tokens.

The Friend Tech tokenomics model is built on a unique token distribution strategy. This strategy is designed to incentivize long-term engagement and community growth.

Friend Tech's token distribution is divided into three main phases. The first phase allocates 30% of tokens to the community through a series of airdrops and giveaways.

These airdrops and giveaways are designed to reward early adopters and encourage word-of-mouth marketing.

In the token economy, book value increases in a specific way. For every increase of 1 in holdings, the book value of Keys increases by a certain amount, but the exact amount isn't specified.

The relationship between holdings and book value isn't linear, as the book value increases by a different amount for every increase of N in holdings. This suggests a more complex token economy system.

The project's token economy is designed to promote certain behaviors, but it's not clear how it encourages social interactions. This is something to consider when evaluating the project's overall design.

Here's a breakdown of the token economy's key components:

Bad incentives can lead to bad outcomes, and it's essential to align incentives with your product goals. In the case of Friend.tech, the incentives have been mis-designed, which will likely result in negative consequences.

Incentives matter, and good incentive designs lead to good mechanisms and product outcomes. This is a fundamental principle in crypto economics, where game theory and mechanism design play a crucial role.

To evaluate incentives, you need to understand the product goals and narratives surrounding the app. Friend.tech's product goals and narratives will be analyzed in the next section.

Bad incentives can be identified by looking at how they align with the product goals. In the case of Friend.tech, the incentives have been mis-designed, which will likely lead to bad outcomes.

Here are the key points to consider when evaluating incentives:

By understanding the importance of incentives and how to evaluate them, you can build better apps and avoid the pitfalls of mis-designed incentives.

Verification and Regulation is a crucial aspect of Friend Tech's tokenomics. Friend Tech's token, FTT, is built on the Ethereum blockchain, which uses a proof-of-stake consensus algorithm to secure transactions.

This means that FTT holders can participate in the validation process, earning rewards for their contributions. The FTT token also has a fixed supply, with a total of 10 billion tokens created.

To ensure the integrity of the FTT token, Friend Tech has implemented a robust verification process. This includes onboarding and KYC (Know Your Customer) checks to prevent suspicious activity. Friend Tech also has a strict anti-money laundering policy in place.

On-chain data verification is a crucial step in ensuring the integrity of digital assets. It involves using blockchain technology to verify and validate data in real-time.

This process allows for transparent and tamper-proof record-keeping, reducing the risk of data manipulation and errors. As mentioned in Section 1, blockchain's decentralized nature makes it an ideal solution for secure data storage.

On-chain data verification can be applied to various use cases, including identity verification and regulatory compliance. For instance, Section 2 highlights the importance of identity verification in preventing money laundering and terrorist financing.

By leveraging on-chain data verification, organizations can establish trust and credibility with their stakeholders. This is especially important for regulatory compliance, as it ensures that all data is accurate and up-to-date.

On-chain data verification can also be used to automate regulatory checks and ensure that all transactions are compliant with relevant laws and regulations. As noted in Section 2, this can help reduce the administrative burden on organizations and improve overall efficiency.

Friend.tech initially labeled their assets as "Shares", which could have triggered the SEC's Howey Test, implying ownership stakes with profit potential. This raised concerns about inadvertently falling under SEC authority.

The company has since renamed "Shares" to "Keys", clarifying that tokens are utility-based in-app items rather than speculative securities. This change aims to avoid SEC scrutiny.

Experts note that this renaming may not entirely eliminate risks, depending on how influencers market and structure the benefits of holding tokens.

As the Friend Tech ecosystem continues to grow, it's exciting to think about the future possibilities. Friend Tech's tokenomics are designed to incentivize long-term participation and community engagement.

The token distribution model, outlined in the Token Allocation section, ensures that a significant portion of tokens are allocated to the community, fostering a sense of ownership and responsibility. This approach has the potential to create a loyal and motivated community.

Friend Tech's focus on community-driven growth is a key factor in its future success. By prioritizing community engagement and participation, Friend Tech can build a strong foundation for long-term growth and sustainability.

As we look ahead, it's essential to address the issues that have led to community dissatisfaction. Industry analysts believe the concentrated airdrop model contributed to this problem.

Friend.Tech must focus on rebuilding trust by addressing the airdrop issues and providing clear explanations for scrapped features like POINTS. This will be a crucial step in winning back the community's faith.

To attract and retain users, Friend.Tech needs to demonstrate the utility of its FRIEND token and the long-term viability of the Clubs feature. In a competitive Web3 landscape, this will be a challenge.

Here's a snapshot of the competitive landscape:

By focusing on user experience, fostering a healthy community, and delivering on the promise of a truly decentralized social media platform, Friend.Tech can carve a niche for itself in this competitive landscape.

Friend.tech has seen massive adoption since its launch, attracting over 300,000 users and amassing millions in trading volume.

Its exponential growth has sparked criticism, with some comparing it to a Ponzi scheme due to rapidly inflating token prices.

Creators are benefiting far more than users, a concern that has raised questions about the app's incentives being misaligned.

Friend.tech maintains that its model is sustainable, with plans to expand functionality and utility for token holders.

Regulating uncertainties persist in interpreting how securities laws apply to emerging crypto social media platforms, leaving Friend.tech's future uncertain.

As I dug deeper into the world of friend tech tokenomics, I realized that there are some key lessons to be learned from the narratives of successful projects.

Token distribution is a crucial aspect of friend tech tokenomics, with some projects allocating up to 20% of their tokens to community members.

The narratives of successful friend tech projects often highlight the importance of community involvement, with many projects incorporating community-based governance models.

Friend.tech has a strong narrative that engages with the community and convinces people to give the product a try.

One of the prevailing narratives around friend.tech is that it helps creators be valued properly, through key prices and rewards earned by engaging with their community.

This is a significant departure from platforms like Patreon, which take a fee from creators. Friend.tech's approach is designed to make creators more financially stable.

Another narrative surrounding friend.tech is that it unlocks the ability to invest early in creators and reap the rewards, much like investing in an early-stage startup.

This narrative taps into the idea that investing in creators early on can lead to significant returns, making friend.tech an attractive option for those looking to support emerging talent.

Friend.tech's narratives also include speculation as a way to bootstrap a user base, but this is not a primary focus of the platform.

Different users have different motivations, and tokens only work well on the financial level.

Some people are motivated by exercise, money, or other factors, and tokens can't address these motivations effectively.

Friend.tech incentivizes financial speculation driven users, not long-term socially oriented ones.

This approach leads to churning users, as there's no real usage by actual creators, fans, or long-term investors.

Once speculators lose interest, they bail out, making it impossible to reverse the decline.

We haven't learned from history, as the mistakes made by friend.tech and crypto Twitter influencers are similar to those made two years ago.

Previous attempts like Bitclout and social tokens failed because being a content creator who builds a community with financial value is extremely challenging.

Mixing up the user base and incentives often proves to be a fatal mistake.

Most creators don't want to engage and provide value to justify their financial valuation, as it's time-consuming and demanding.