By
Godfrey Benjamin
May 10th, 2024
Transactions on Friend.tech fell by over 90% from its peak on August 21.
Social token-driven platform, Friend.tech has seen its key metrics decline in less than a month of launch. The crypto platform was the buzz in the cryptocurrency space only days ago. Now, critics claim the metrics suggest a project on the verge of collapse.
Friend.tech launched its invite-only beta version on the Base network on August 11. By August 19, it generated over $1 million in 24 hours, necessitating comparisons to Uniswap and the Bitcoin network. Within two weeks, the platform reportedly gained over 100,000 users and made about $25 million.
Again, the platform attracted a massive pool of 35,000 daily traders and recorded nearly 525,000 transactions. However, key metrics such as activity, inflows, and volume have all cratered.
Meteoric Growth and Current Realities
According to DefiLlama, daily fees on the platform declined on August 26 by about 87%, resting at $215,000. Transactions on Friend.tech also fell by over 90% from its peak on August 21. Likewise, the platform’s daily trading volume plummeted from $16.9 million to $953,000.
Data from Dune Analytics suggests the number of buyers and sellers fell from 58,000 buyers and 27,000 sellers on August 21 to 10,000 buyers and 7,800 sellers, respectively, on August 27. Again, a massive pool of 35,000 daily traders shrank to 6,000, signaling an 83% decrease. Also, Dune data reveals that inflows dropped by about 90.5% to around $1.6 million on August 27.
Friend.tech Approach Responsible for Imminent Decline
Ryan Wyatt, former president of Polygon Labs, noted that the social platform’s features were not enough to retain customers. He said, “In its current form, you’re looking at an unintended Ponzi with first in/first out.”
On his part, Coinbase payments risk manager Lisandro Rodriguez opined that greed and poor execution caused the death of the product. Other users cited exorbitant trading costs, poor platform performance, and steep pricing structures.
In all, Friend.tech’s challenges may have occurred because the project grew too fast. According to one of the pseudonymous founders, Racer, the project was not due for a full launch yet. Rather, the initial launch was to test the system’s performance under real-life load conditions.
He said:
“We initially shared the app to start load testing and didn’t expect it to go viral.”
Since then, there has been a rush to upgrade the platform’s infrastructure and address any issues.
Will the project crash like Bitclout, or will it survive this decline? The days ahead will tell.