Friend Tech transitions from viral hit to deserted platform

The decentralized social media protocol Friend.Tech drew significant attention last year, but it has noticeably diminished from public interest lately.

According to CryptoSlate, utilizing data from Dune Analytics compiled by 21.co, an alarming trend has been identified – the platform’s inability to draw in new users, along with apathy from its current user community. On January 28, the platform attracted only 19 new users who participated in at least one transaction, a stark decline compared to its peak of over 70,000 users in September.

A different dashboard by Cryptokoryo highlights the severity of the decline. On the same day, Friend.Tech recorded merely 5,544 transactions, indicating a staggering 99% drop from its peak volume of nearly 540,000.

Friend.Tech Transactions (Source: Dune Analytics)

Compounding the downward trend, data from DeFillama indicates a continuous negative outflow throughout this month.

According to the data, Friend.Tech registered a positive USD flow only on January 16, with $313,000 entering the platform. However, over $5 million exited on other days, drastically reducing the total value of assets locked on the platform to $30 million.

Friend.Tech USD Flow and TVL (Source: DeFillama)

Additionally, this downturn is further illustrated by the fees generated by the network, which have plummeted from a daily average of nearly $1 million to just $50,000 in the last two days.

‘Biggest lowlight’

There are several factors that could account for Friend.Tech’s declining statistics. However, problems began when multiple users experienced sim-swap attacks due to the platform’s inadequate security. CryptoSlate reported that at least $20 million in users’ assets on the platform were exposed to these vulnerabilities.

Although attempts to resolve security issues were made swiftly, this incident highlighted the platform’s difficulties in keeping up with necessary bug fixes and implementing crucial policies for its rapidly growing user base.

The platform’s viral success also led to the emergence of imitators like Stars Arena on various blockchain networks, including Avalanche. Data from DeFillama indicates that these protocols are similarly struggling to gain traction and usage.

Teng Yan, Head of NFT Research at Delphi Digital, referred to Friend.Tech’s challenges as the “biggest lowlight” of the past year. He pointed out the project’s potential to bring cryptocurrency into the mainstream but criticized the execution by its team.

“[Friend.tech] could have been a leading consumer application bringing crypto mainstream. An on-chain reputation layer built atop existing social graphs. A fantastic idea but poor execution,” Yan remarked.

Friend.Tech’s viral growth

Friend.Tech established a groundbreaking method for users to monetize their popularity within the cryptocurrency realm, enabling users to buy and sell “keys.” These keys allowed purchasers to send private messages to sellers.

As a result, numerous prominent individuals, from the cryptocurrency sector and the wider entertainment industry, utilized Friend.Tech to engage with their communities, and the platform was facilitating transactions on Base, the layer-2 network it was developed on.

Despite this initial triumph, the blockchain-based social network encountered a swift decline, losing 95% of its activity within a month of its launch. Nevertheless, a revival took place in September, with daily trading volumes approaching $10 million. At its peak, the protocol boasted a TVL surpassing 30,000 ETH ($50 million), outperforming major players like Uniswap and the Bitcoin network in generated fees.

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