The Swift Decline of Friend.tech: Crypto's Latest Fad Loses Steam
Friend.tech, a blockchain-based platform that allows users to buy and sell digital tokens connected to their favorite influencers, has lost steam after its splashy debut.
The project became the highest-earning service provider in decentralized finance shortly after its release. However, its rise was short-lived, with fees plummeting and user numbers dwindling.
On August 21, friend.tech, which splits 10% of every token transaction between the influencer and the platform itself, generated nearly $1.7 million in fees.
Crypto personalities like Cobie and HsakaTrades, as well as renowned figures like Grayson Allen and Garry Tan, joined the platform, bringing their dedicated followers with them.
In an attempt to widen its user base, friend.tech even attracted creators from platforms like OnlyFans, offering them access to exclusive content and private group chats.
But as the initial fervor waned, friend.tech has seen a sharp decline in fees and number of active users.
According to data from DeFiLlama, the project has generated just over $161,117 in fees over the past 24 hours, down by more than 90% compared to its all-time high.
The exact reason behind the decline remains unknown, but user complaints about high trading fees, slow load times, and an intricate pricing curve have been noted.
Friend.tech's model is built on the notion that influencers play a pivotal role in the success of crypto startups.
Operating on Coinbase's blockchain network Base, friend.tech initially injected some excitement into a chain that had been plagued by token scams.
Its rapid increase in activity, largely driven by automated trading bots seeking to capitalize on the platform's success, even pushed Base to momentarily surpass Ethereum in terms of transactions per second.
Friend.tech Faces Scrutiny Amid Privacy Concerns
Friend.tech has faced increasing scrutiny over a privacy loophole that has led to the unauthorized disclosure of sensitive information pertaining to more than 101,000 individuals.
Last week, Banteg, a core contributor to the popular DeFi project Yearn Finance, published a repository of publicly available scraped data on GitHub, revealing critical details of over 101,000 users on the Friend.tech platform.
The exposed information includes wallet addresses on Base and corresponding Twitter usernames.
“101,183 people have given friend.tech access to post as them, leaked db (database) indicates,” Banteg said in a tweet.
Furthermore, friend.tech has faced regulatory problems, prompting developers to rename influencer tokens as "keys" and distance them from possible securities regulation.
Notably, friend.tech is not the first attempt to tokenize crypto influencers.
BitClout, a platform backed by prominent investors, encountered legal challenges when it used influencers' information without their consent. The project later underwent a rebranding.