Friend.tech, a social media platform built on the Ethereum blockchain, aimed to celebrate the launch of its version 2 protocol with an airdrop of its native token, FRIEND. However, the well-intentioned initiative turned into a cautionary tale, with the token’s price experiencing a dramatic nosedive and user frustration reaching a fever pitch.
Friend.tech: Building A Social Network On Blockchain
Launched in 2023, Friend.tech positions itself as a Web3 social media platform that leverages blockchain technology to foster a more “authentic” and “decentralized” online experience.
The platform utilizes a unique “key” system, where users gain access through exclusive invites. These “keys” are essentially social tokens built on the ERC-20 standard, allowing communities within Friend.tech to establish their own governance and economic structures.
FRIENDly Faux Pas: Airdrop Chaos And Price Plunge
On May 3rd, Friend.tech airdropped FRIEND tokens to its user base in conjunction with the version 2 protocol rollout. Initial excitement was quickly dampened as the token’s price exhibited a dizzying rollercoaster ride. Soaring to a high of $167 shortly after launch, FRIEND then plummeted to a value under $2 within a matter of hours.
“It’s free money bro why is CT upset”
Um, it wasn’t? Users paid $60 million in fees, and $30 million(!!!) of that was extracted by Friendtech.
So collectively, users paid $30m in farming costs for a token that has a liquidity pool of only $3m ETH liquidity… pic.twitter.com/aCrpmVUaNQ
— Average Joe’s Crypto (@AvgJoesCrypto) May 3, 2024
Analysts point to two primary culprits behind the crash: liquidity issues and a sell-off frenzy. Friend.tech’s initial liquidity pool, the readily available funds for buying and selling tokens, appears to have been insufficient to handle the trading volume.
This lack of liquidity meant that even small sell orders had an outsized impact on the price, pushing it down rapidly. Further exacerbating the situation, a significant number of users who received airdropped tokens opted to sell them immediately, likely capitalizing on the initial price spike. This mass sell-off further depressed the price, creating a vicious cycle.
— MaxBid24 (@MaxBid24) May 3, 2024
Claiming Challenges Add Fuel To The Fire
Adding insult to injury, the process for claiming airdropped FRIEND tokens reportedly proved cumbersome for many users. Technical glitches and an unintuitive interface hampered the claiming process, leading to user frustration and accusations of a poorly designed launch.
Related Reading: Bitcoin Back In The Bullpen: Whales Spark Rebound With $2.8 Billion Purchase
A Silver Lining, Or A Statistical Mirage?
Despite the initial chaos, there have been some signs of life for FRIEND. Liquidity has improved somewhat, and the number of token holders continues to grow. However, this growth might be misleading.
Bitcoin is now trading at $63.274. Chart: TradingView
With the token price so low, the barrier to entry is minimal, potentially attracting new holders who are simply curious or hoping for a rebound. More importantly, the number of sellers continues to outpace buyers, indicating a lack of long-term confidence in the token’s value.
Featured image from Pexels, chart from TradingView