On May 4, friend.tech officially released version V2 and introduced a major new feature, club. According to the airdrop claiming standards released by friend.tech, only by joining the club can you have the opportunity to claim all airdrops. Subsequently, according to Dune data, the number of clubs has reached 107,000 today, with a total transaction volume of over 16.46 million FRIENDs and club fees of 246,142 FRIENDs. Crypto researcher FRANCESCO analyzed the new mechanism of V2 based on the old and new version mechanisms of frend.tech. He believes that V2 may just be an experimental product launched by the team for the new version.

frend.tech (FT) is one of the most successful Web3 decentralized applications in SocialFi, achieving an all-time high revenue to net deposit ratio, with over $2 million in revenue in the first month and over $33 million in net deposits.

This was supposed to be a big week for FT as they launched V2 of their product and the platform token FRIEND, introduced major changes to enhance the sustainability and appeal of the protocol, etc., but it turns out that this may be the end of it.

Previously, some people were optimistic about these developments while others remained pessimistic, but after today's developments, everyone feels incredible.

In this article, we’ll take a deep dive into FT V2’s new mechanic, FRIEND, explore any mistakes it has gone through or is still going through, and discuss whether this business model is sustainable.

Let’s start by analyzing the challenges faced by the early version of frend.tech.

About frend.tech V1

FT is the first decentralized social application to generate sustained revenue by aligning the interests of well-known cryptocurrency figures with the interests of ordinary users.

This consistency has resulted in one of the largest user base growth, activity growth, and revenue growth of any new project during the bear market.

However, this model is not sustainable due to the fees charged by the platforms.

While KOLs and FTs earn a handsome income, ordinary users lose money every day. Due to a 10% tax on purchases and sales, they can only make a profit by selling their keys at a price at least 20% higher than the purchase price.

This is only possible during periods of high platform activity and inflows, and is the main reason for the volatile behavior observed in the chart below.

Ultimately, the cost became a barrier to entry for many, causing the FT V1 to leave a bittersweet feeling for many.

Even so, FT v1 achieved some milestones in 6 months that few protocols achieve in their entire lifespan:

Incurred approximately $13 million in expenses:

· $130 million in transaction volume (likely the highest volume ever achieved by the SocialFi dapp):

Distributed approximately $6 million in revenue to its users:

About frend.tech V2

FT V2 was released on Friday, March 3, 2024. As part of the much-anticipated update, users could finally claim their FRIEND tokens. However, the release seemed to fall short of expectations, with issues such as a lack of surrounding information.

This is the only official announcement on Twitter since V2 was launched.

As you can guess, this left many confused as to the status of the airdrop claims.

Users can only claim 10% of their airdrop (provided they follow at least 10 people), and need to join a club to claim the remaining 90%.

However, the requirements were unclear as there were no pop-ups or guidance within the app, and in most cases users were unable to claim the airdrop even after joining the club.

What is club?

club is one of the major new features introduced in FT V2.

Anyone can create a new club. Clubs are defined as "group spaces" owned and managed by key holders; however, we do not know what their role will be in the future.

Here’s how the club works:

Key holders vote to elect club organizers

· The organizer manages the club and selects the host

All club keys are traded using FRIEND

Each club transaction is subject to a 1.5% transaction fee, which is distributed between farmers and FT

Some interesting things we observed when using the Base Scan contract interface, changeBestFriend and changeBestFriendfee, we can speculate that these will be used to allow anyone to add a best friend so that we can get less or no fees when trading our keys.

We can also speculate that FT will soon introduce referral fees (point 7), and we also know that club keys are transferable (maybe even user keys will be transferable?).

The Fight Club in the picture below is the first club represented by FT#1, and Racer is actually its organizer, which can be seen from the key price.

However, he did not create the club himself, as can be observed from the picture below.

When creating a club, users can select the following:

Name

· describe

Price curve (standard or exclusive)

How many keys to purchase

However, it is fair to say that these are mostly just assumptions and it is expected that FT will provide more information about the club and its mechanisms.

There are also some elements that users need to be aware of when interacting with a club: Anyone can transfer a club share to someone else and name them as the host. Therefore, you have to be very careful about considering well-known people nominated as hosts: they may not even know they were nominated. For example, this morning we created a random club and invited Racer to join.

Note that clubs can have the same name, so always check the club's FT# to make sure you are purchasing the right club. In addition to these changes, the homepage of the Web App has also changed. New elements are now displayed, including "Farm" (LP), Airdrop Claims, and Rewards.

Currently, users can only claim their airdrops, create clubs, buy and sell tokens, and add them to farms to earn rewards.

Furthermore, many have stressed that the role of the keys has not actually changed, their usefulness has not expanded, and the social media element that was supposed to change the direction of the platform seems to be dissipating. However, we don’t know if this is the final version or a new update will be released soon.

Just as importantly, many people had higher expectations for the price of the FRIEND token. Coupled with the fact that there was no new use case for the key, which could be the difference between whether the airdrop was worth it or not, many people sold their FRIEND tokens in a panic. All of these factors combined make it harder to imagine the long-term sustainability and success of this model, and given the current design, it is difficult to determine whether it is the final version.

Another point worth mentioning is that there is a delay between actions completed on-chain and what is reflected in the FT UI, we observed a delay of about 3-4 hours.

Is the frend.tech model sustainable?

Many have questioned the sustainability of the FT model, and while initially dismissed due to the dApp’s incredible initial traction, these critics have become increasingly vocal as the FT hype appears to be fading.

As FT V2 moves away from the influencer-centric model that launched with its V1, the protocol aims to reduce its dependencies and become more sustainable.

In fact, reliance on influencers is a single point of failure: a social network is only as valuable as its users. Without many important names, the FT would become less attractive.

What’s the value of Hsaka or Ansem if they’re rarely connected to the app, let alone sharing alpha there? This is probably one of the key reasons why the team has recently moved to a more community-focused (read: degen) approach.

This is a key question for FT: how can they ensure that users are incentivized to choose their app over other apps like Twitter, Farcaster, Lens, etc.? Although after the token launch, FT did not attract the same level of attention as the previous two times.

Many had speculated that with the release of FRIEND, the protocol would gradually gain more attention. However, current indicators are far from expectations. Will this be another case of "selling the news"? Or will the long-awaited V2 release turn frend.tech into a leading social finance application and attract new user groups?

The current FT V2 version seems to be missing several key features that have been removed from the app. For these reasons, it can be speculated that this will not be a complete version of FT 2, and an updated version may be released next.

We want to end this post with a reflection: Is this all that FT could develop in 8 months with crazy funding, resources, and hype? Or is it another careful planning by the team to gather all the negative feedback, iterate, and release the final version of the app?

It seems to be the latter.