Friend.tech, the decentralized social media platform from the creators of NFT project Kosetto, crossed 100,000 users yesterday morning, another sign that the new project is going viral. While most of the users are still crypto natives, some celebrities have caught onto the craze, including prominent e-sports figures and NBA players.
According to DefiLlama, the platform ranks second out of all Web3 decentralized applications and blockchains in fees, bringing in $1.68 million. It is only behind the entire Ethereum blockchain, which had $3.45 million in fees for the same period. Dune Analytics, another Web3 statistics website, tells another part of Friend.tech’s rise:
- 1.7 million transactions on the platform since its launch
- The total quantity of ETH on Friend.tech is estimated to be over 12,000
Since its launch on August 10th, it has become the latest crypto craze, despite users needing invite codes to access the platform. Friend.tech is part of a popular social token business model where users buy “keys” to gain access to another user’s exclusive content (in this case, a private chatroom).
Theoretically, the keys can rise in value, leading to a profit for the buyer if they were to sell them. On Friend.tech, every transaction comes with two separate 5% fees — one goes to the company while the other goes to the person who is supplying the exclusive content. As such, it is a lucrative business model for those who have a built-in following.
But, while the platform has seen a meteoric rise, there have been criticisms.
Friend.tech ‘Privacy’ Issues Cause Concern
To understand the privacy concerns surrounding Friend.tech, first we must provide a brief overview into how the platform works. To access Friend.tech, a user needs to link their X (formerly ‘Twitter’) account, then deposit a certain amount of ETH through a crypto wallet. While anonymity is a priority among crypto denizens, some X accounts are doxxed.
Yesterday, the platform suffered a data leak, with over 100,000 wallets and their corresponding X accounts made public. After the publication of the leak, Friend.tech responded by saying that all that information was available through its public API, and that someone had scraped the data, making it easily available to the public.
X influencers had fun with the news, as all wallets are public and verifiable through blockchain explorers. But the story turned a spotlight on Friend.tech’s privacy issues:
- By linking your X account, you grant Friend.tech the ability to post for you
Overall, Friend.tech is still a very new decentralized application, and as such it may not be surprising that all the components haven’t been set up yet.
Friend.tech’s Business Model May Draw SEC Attention
There is no doubt that Gary Gensler, who heads the Securities and Exchange Commission (SEC) in the United States, has been on a warpath against cryptocurrency in the past year. Ever since the collapse of FTX, he has gone after various crypto exchanges, including Coinbase, and cryptos in general by labeling them securities.
Now, there is Friend.tech.
The Friend.tech business model for creators relies on “keys,” which users can buy to access exclusive content. But the company originally called those keys “shares,” a term that may indicate users can profit from the buying and selling of those assets. As such, if a user could reasonably expect profit from the assets, they would be subject to the Howey Test and labeled securities.
We’ve renamed Shares to 𝗞𝗲𝘆𝘀. The original name was a placeholder during development and we think Keys better illustrates their purpose as in-app items used to unlock your friends’ chatrooms pic.twitter.com/phkZky13VL
— friend.tech (@friendtech) August 21, 2023
Changing the name from “shares” to “keys” may bode well for Friend.tech going forward, especially if it manages to avoid the ire of the SEC. And much depends on if the platform continues to go viral. More popularity may lead to more scrutiny.
Crypto Twitter Has Fun with Friend.tech
Despite the possible risks, Crypto Twitter (CT) has taken to Friend.tech in a big way. Major influencers like Cobie and Zeneca have created accounts, offering keys for exclusive content. And some of the perks for buying a key have already occurred — in the form of high-profile NFT giveaways.
Take Dingaling, a prominent NFT buyer who has major stakes in Bored Ape Yacht Club and Azuki. At turns, he has given away Beanz (a collection within the Azuki ecosystem) and other NFTs just to people who have bought keys to his Friend.tech account. Others have followed suit, turning the platform into a way to elevate their brand, gain new followers, and, of course, have fun.
Sassal, a crypto influencer who specializes in knowledge about Ethereum, has even noted some of his earnings on Friend.tech to various organizations. For now, the platform has become another way to generate revenue and has brought excitement to an otherwise dull and difficult bear market.
Time will tell if Friend.tech continues its rise to become a competitor to X and other social media platforms, or if enthusiasm for it will drop in the next few weeks. But for now at least, despite some of the concerns, people are having fun with it, and there’s certainly a plus to that.
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