Friend.tech token plummets on first day after 100% community airdrop

Last year’s SocialFi starlet Friend.tech is hoping to recapture the market’s attention with the launch of its new token.

The crypto-based platform that allows users to buy and sell shares linked to accounts on X distributed 13,349,967 tokens to early users FRIEND token on early Friday morning.

SocialFi is short for social finance, a trend in Web3 that blends social media networks with financialization.

The token traded as high as $169 shortly after launch as users rushed to buy the new token.

By early morning, the token had fallen sharply, trading at just $2.02.

As promised, the entire supply of newly issued tokens was distributed to people who had accumulated “points” by using the protocol.

It was a bold, retail-friendly move by the protocol’s developers. Typically, more than half of a new token’s supply is set aside by the founding team for venture investors, employees, and nonprofit organisations tasked with promoting the project by issuing grants and the like.

Besides today’s airdrop, the project has fallen from its heady days of last year.

For a brief moment, Friend.tech was the most-talked about project in the Ethereum ecosystem, processing roughly $10 million in daily trading volume and luring more than 800,000 cumulative users.

That was in the late summer and fall of 2023.

Since then, those numbers have fallen off a cliff. Thursday’s airdrop will be the latest to test whether free tokens are enough to resuscitate an overlooked project.

What is friend.tech?

Launched on Ethereum layer 2 blockchain Base, Friend.tech lets users buy keys to chatrooms of other users. There is a 10% fee when purchasing a key, with 5% going to the key owner and 5% going to the team.

Within months of its August launch, Friend.tech was growing at a rapid clip.

It attracted crypto influencers and performers from OnlyFans, an online adult content site, and spawned more than a dozen copycats. By mid-October 2023, more than 600,000 accounts had used the site, according to data compiled by pseudonymous analyst Whale Hunter.

Then the venture hit the wall.

Its user base stalled at 800,000 and its monthly protocol revenue fell 90% from its high in September to $1 million in December.

The broader SocialFi ecosystem, which is designed to let users profit off their followers, also cratered after enjoying a fleeting moment of relative popularity.

April bump

Friend.tech got a boost after detailing plans for its airdrop and an upgrade dubbed “V2.”

On March 22, Friend.tech announced it would distribute the entirety of its airdrop to users who had been accumulating points by using the protocol.

In Friend.tech V1, users accumulated points every Friday, primarily influenced by the volume of Ether they deposited into the platform. Some 90 million points were distributed to users in V1 with another 10 million slated for distribution in V2.

Meanwhile, the platform’s founder, 0xracer, shared a preview of V2, which is set to include a native decentralised exchange, tradable collectibles, and enhancements to Friend.tech’s chatroom user experience.

Total transactions, USD deposits, and protocol fees all made yearly highs in early April.

On April 8, the protocol saw over $7.4 million in deposits — the largest single day of deposits since October 25.

The bump was short-lived.

Friend.tech hasn’t seen more than $50,000 in user deposits in a single day since April 16, according to data compiled by 21Shares, a provider of crypto investment products.

Aleks Gilbert is a DeFi correspondent based in New York. You can get in touch by emailing him at aleks@dlnews.com.