Is the excitement around Friend.tech viable? Analysts predict it may last just a few months.

Friend.tech, a novel decentralized social media (DeSo) application, has swiftly emerged as one of the most talked-about innovations in the crypto space, attracting over 64,000 new users and generating more than 24,000 ETH in trading volume since its beta version was launched on August 11.

While numerous prominent figures in the crypto sector have commended the app for onboarding thousands of users onto the blockchain and encouraging registrations from non-crypto personalities — including gaming YouTuber Faze Banks and the Russian protest group Pussy Riot — some have cautioned that it may face a risk of burnout.

Developed on Coinbase’s layer-2 network Base, friend.tech enables users to buy shares of their friends and influencers, thereby granting them access to a private chat with that individual.

In an interview with Cointelegraph, crypto commentator Yazan highlighted several concerning elements that led him to believe the app has approximately six to eight weeks before both share values and overall activity start to decline.

Let me tell you one thing.
Something isn’t right about @friendtech.
Creators earning money from a group chat that doesn’t even function properly when you can’t reply directly to individuals?
The pricing mechanism is absurd and can be easily exploited.
Pumps and dumps. pic.twitter.com/TJqcktEM6P

— Yazan (@YazanXBT) August 20, 2023

Yazan contended that the rate at which share prices have surged is not sustainable.

“The problematic market making ensures that the app profits the most alongside creators — the price escalates too quickly,” he stated.

“How is it that there are 100 holders and the price is 1 ETH — 1 ETH just to access a private chat?”

According to the pseudonymous software engineer Cygaar in an August 20 X thread, the price of an individual’s shares on friend.tech is proportional to the square of the total supply. As the supply grows, the price rises exponentially.

It looks daunting, so let’s simplify it. Let’s assume that you only want to buy/sell a single share (amount = 1). This is also known as the spot price.
Using our middle school algebra skills, we can expand out the function and we’ll get:
price = supply^2 / 16000

— cygaar (@0xCygaar) August 19, 2023

Drawing comparisons to BitClout — a previous DeSo application from 2021 — the pseudonymous Web3 marketer Legendary expressed his pessimistic outlook on the sustainability of Friend.tech.

“Absolutely not. I believe the platform will collapse just like BitClout did. We are in a bear market, and there’s nothing to engage with. Everyone seizes an opportunity to profit, but I think the platform will be finished within the next weeks to months,” he wrote.

The bull case for friend.tech

Conversely, others presented a much more optimistic perspective on the new decentralized social media platform, commending it for its innovative advancements in user experience for crypto applications — an area where crypto app developers have historically faced challenges.

David Phelps, cofounder of Jokerace and EcoDAO, characterized Friend.tech’s user experience as the “best crypto has seen,” identifying three primary reasons why the app represents a significant advancement for crypto.

Firstly, the app does not necessitate users to download it through an app store account, which strongly aligns with the concept of decentralization. Secondly, it automatically connects funds to the app, minimizing the need for complex transactions.

Lastly, the app enables users to deposit their ETH once and subsequently buy and sell shares without needing to sign a transaction again. The ongoing requirement to confirm transactions via Metamask signatures has been a major critique of many DApps in the crypto ecosystem.

Related: Friend.tech generates over $1M fees in 24h, surpassing Uniswap, Bitcoin networks

Regardless of the differing forecasts regarding the app’s future success or failure, it is undeniable that it has made a significant impact in the crypto realm.

On August 19, Friendtech announced that it had secured seed round funding from the crypto venture capital firm Paradigm, igniting speculation about a potential future airdrop and token launch.

Earlier this year, we partnered with @paradigm to build tools for new online social interactions.
We’re grateful for the community’s warm reception and excited to continue growing with you all pic.twitter.com/yINDMXkpuZ

— friend.tech (@friendtech) August 18, 2023

According to data from DefiLlama, Friend.tech has accrued $1.42 million in fees over the last 24 hours, and $4.2 million since its public launch.

Total Friend.tech fees and revenue since launch. Source: DeFiLlama

At the time of publication, the total revenue for the project stands at $1.88 million, with over 724,000 transactions recorded from more than 64,500 unique traders.

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