Introduction

Since its launch in August 2023, Friend.tech has redefined what connecting on a social platform means. With their pioneering decentralized approach, users don't just interact—they can tokenize their social presence and invite others to invest in their digital influence, bringing a whole new dimension to online engagement.

Friend.tech is designed for those who value control and ownership over their data and identity. The platform runs on Base network, the cutting-edge layer 2 blockchain solution on top of Ethereum, putting privacy and self-sovereignty into the hands of its users.

Understanding tokenomics is crucial to evaluating any blockchain network's potential and long-term sustainability. For Friend.tech, the tokenomics revolve around the key token, FRIEND token, points system, and other tokens on the platform. Analyzing how these tokens function provides insight into the platform's incentives, governance, and growth potential.

This article will provide an in-depth look at the different token types on Friend.tech, their purposes, and recent developments that affect the tokenomics outlook. The goal is to enable a more informed understanding of the emerging economics underpinning this new social platform.

Overview of Friend.tech's Technology

Friend.tech is a decentralized social network that emphasizes social interactions. It utilizes a dynamic system where "keys" (previously known as "shares") are central to user interactions. These keys are uniquely associated with X (formerly Twitter) users’ accounts, enabling holders to unlock private in-app chatrooms and exclusive content from specific X users.

The platform operates on Base Network (developed by Coinbase), which supports scalability and enhances transaction efficiency—an essential feature considering the social and economic transactions performed on Friend.tech. The application quickly gained traction within crypto twitter, highlighting its community engagement and potential influence on social media practices within the crypto sphere.

Friend.tech introduced a market-driven model within its ecosystem. Users can buy and sell access to digital content and interactions, thereby monetizing social connections transparently. This marketplace framework is a cornerstone of Friend.tech's operational model and a critical element supporting a gamified and tokenized user experience where interactions are social and transactional.

This system fosters a new way of content creation and consumption, paving the way for a decentralized economy within social networks where every interaction can be quantified and valued.

The key components of Friend.tech's base technology include:

• User Profiles: Each user gets a profile where they can set a username, profile photo, cover photo, bio, and other details. Profiles are stored off-chain, and data is committed via transaction roots.

• Social Graph: Friend.tech maintains a social graph of user connections. Users can follow other users to form one-directional connections. All connections are maintained off-chain.

• Messaging: A fast messaging system allows users to chat with their connections. Messaging data is maintained off-chain.

• Media Sharing: Users can share photos, videos, and other media by posting them to their profiles. Media is stored off-chain via IPFS.

• Wallets: Each user gets a crypto wallet address to receive funds or tokens from other users. Wallet data is maintained on Layer 1.

This image shows an overview of a private chatroom on Friend.tech, showing some of its key holders.

Tokens on Friend.tech

Friend.tech leverages blockchain technology to create a unique ecosystem where user influence is tokenized. This tokenization takes various forms, each with its unique characteristics and uses. In this section, we will delve into the different types of tokens available on Friend.tech, exploring their intricacies and how they contribute to the overall Friend.tech experience. From KEY tokens, FRIEND tokens, and point tokens to creator's tokens, each token plays a vital role in the platform’s ecosystem, providing users with various ways to interact, contribute, and benefit from their participation.

The KEY Token

Friend Tech keys, previously known as "shares," are in-app items that allow users to unlock their friends' chatrooms and access exclusive private chatrooms and other perks on the Friend.tech platform.

In the friend.tech ecosystem, Keys play a crucial role as they are integral to its token-based economy. Initially referred to as shares, these keys signify ownership stakes or fractional interests in different parts of the platform. It empowers users to participate in governance, content creation, and other value exchange mechanisms within this system.

Over 111,000 users have bought account shares (now known as keys) on the application and moved over 45,000 ETH while creating accounts and trading user shares on the platform. This shows the active participation and engagement of users with keys on Friend.tech.

This image depicts buying/selling a key to a private chatroom (@blknoiz06) on Friend.tech.

The Roles of KEY Tokens on Friend.tech

The KEY token is a fundamental part of Friend.tech. They play a crucial role in the token-based economy of the platform, signifying ownership stakes or fractional interests in different parts of the platform. Here are the purposes of keys on the Friend.tech platform:

Distribution and Allocation

KEY tokens are distributed to users through various incentives like content creation, curation, governance participation, etc. A portion of the supply is also allocated to the community fund and strategic partners.

When a key of an account owner is traded, Friend.tech takes a 10% cut of the key’s price and distributes half to the account owner as commission.

Community Building

Keys facilitate the creation of exclusive communities within the friend.tech platform. Users can join these communities and engage with like-minded individuals, fostering a sense of belonging and collaboration by holding keys.

Tokenomics

The wide distribution and utility of KEY tokens are designed to create a sustainable tokenomics model for the Friend.tech ecosystem. As more users join the platform and engage with content, more KEY tokens get distributed into circulation. This aligns network growth with the token distribution.

Use Cases

The KEY token has multiple use cases on the Friend.tech platform. It can be used for governance voting, staking to earn rewards, accessing premium features, tipping creators, purchasing NFTs, and more. Here is a breakdown:

• Ownership and Access: Owning keys grants users certain privileges and benefits within friend.tech's ecosystem. These privileges include access to exclusive content, participation in premium channels, voting rights in community decisions, and potential rewards based on key holdings. For example, a user might purchase keys to gain access to a private chatroom hosted by a popular creator. This could be a celebrity, influencer, or thought leader whose insights and interactions are highly valued by their followers.

• Content Monetization: Creators often use keys as a monetization tool for their content. By locking certain content behind key-access walls, creators can incentivize their audience to acquire keys, thereby generating revenue and fostering a sense of exclusivity and value. For example, Vombatus was one of the biggest key holders on the platform. They held a significant number of keys, which granted them access to various exclusive content and privileges on the platform. However, they decided to sell 176 keys for $1.5M Ether.

• Key Distribution and Acquisition: Keys can be distributed or acquired through various means. This includes direct purchases from the platform, earning keys through engagement or contributions to the community, receiving keys as rewards from creators, or obtaining keys through the app.

• Economic Model: The circulation and utilization of keys contribute to the economic dynamics of friend.tech. The value of keys can fluctuate based on supply and demand. For instance, if a creator becomes more popular, the demand for their keys might increase, driving up the price and impacting their overall market dynamics and utility. Conversely, if a creator becomes less active or their content less appealing, the demand for their keys might decrease, leading to a drop in price.

• Community Engagement: Keys play a pivotal role in fostering community engagement and interaction. They align incentives between creators, consumers, and the platform itself, encouraging a vibrant ecosystem where value creation, participation, and collaboration are incentivized and rewarded.  For example, a creator might host a live Q&A session exclusively for key holders, encouraging active participation and discussion among the community.

The FRIEND Token

The $FRIEND token is the native utility and governance token of the Friend.tech.  It is pivotal to the platform’s economic model, enabling a range of activities from governance participation to utility functions such as accessing premium features and paying transaction fees.

Tokenomics of $FRIEND

The tokenomics of $FRIEND tokens are designed to support the Friend.tech platform’s functionality, incentivize user participation, ensure economic stability, and foster community growth. Here’s a breakdown of the $FRIEND tokenomics:

Total Supply and Distribution

• Initial Supply (Airdrop Allocation): Upon the release of Friend.tech V2, $FRIEND tokens were airdropped to early users based on their points accumulated through platform activities. Each point was exchangeable for 1 $FRIEND token, but only 10% could be initially claimed. The remaining 90% could be claimed after joining a Club and following 10 people.

• Maximum Supply (Cap and Circulation): As of May 2024, the maximum total supply of $FRIEND tokens is 93 million. However, the tokens have no upper limit according to the contract details.  100% of the $FRIEND supply is circulating with a market capitalization of $FRIEND is approximately $171 million, according to Coingecko.

Liquidity on Bunnyswap (DEX)

• Liquidity Provision Rewards (Incentives for LPs): Liquidity providers earn rewards in $FRIEND tokens on Friend.tech's DEX to encourage liquidity provision. A total of 12 million $FRIEND tokens are allocated as incentives over the next 12 months.

• Fee Distribution (Transaction Fees): Fees generated from trading activities, specifically a 1.5% fee on transactions, are shared with liquidity providers. This includes fees from both the FRIEND/ETH pool exchanges and Club Key transactions.

Control and Ownership of Tokens

Friend.tech has implemented a notable move towards decentralization. The platform has proposed a new ownership model by offering its shares to its users. This initiative was made possible through an agreement with previous shareholders, including Paradigm, who have consented to transfer the rights of selling tokens directly to the platform’s users. Friend.tech takes a significant step towards a user-centric model, ensuring that token control remains largely with the users themselves by enabling this transfer.

Utility of $FRIEND Token

The $FRIEND token is integral to FriendTech's ecosystem, streamlining operations and enriching user experience through various applications. Its role extends from facilitating transactions to governing club dynamics and distributing revenue.

The use of $FRIEND token on Friend.tech is particularly tied to Clubs, a new feature that was introduced in V2 of the platform.

Clubs are paid groups within the Friend.tech ecosystem, where users can join to access exclusive content, interact with like-minded individuals, and engage in specialized discussions. They are designed to monetize social interactions and content, providing a unique way for creators and influencers to generate revenue while fostering a community around their content or interests.

This image shows an example of a club (Hog McCrankerson club) overview on Friend.tech.

How $FRIEND is Used in Clubs

Here is a comprehensive outline of how the $FRIEND token is used within Clubs and the Friend.tech platform in general.

Medium of Exchange

• Joining Clubs: Users need to purchase Club Keys, which provide access to exclusive groups created by influencers, content creators, and community leaders. These Clubs offer a space for members to interact, access exclusive content, and participate in specialized discussions.

• Purchasing Keys: Users can buy keys to Clubs using $FRIEND tokens. All Club keys are transacted using $FRIEND, unlike in private chat rooms where $ETH is used. These keys, as mentioned above, are social tokens that allow holders access to exclusive content and interaction opportunities with creators.

• Selling Keys: The keys can be sold back to the market, allowing users to convert their $FRIEND holdings into ETH or other cryptocurrencies. This promotes liquidity within the Friend.tech ecosystem.

Transaction Fees

• Fee Structure: Each Club transaction related to keys (buying or selling) incurs a 1.5% fee.

• Distribution:  These fees are directed toward liquidity providers (referred to as 'farmers') on the FriendTech DEX, rewarding those who contribute to the system’s stability and availability.

Governance

• Platform Governance (Decision Making & Voting Rights): Holding $FRIEND tokens grants users governance rights, allowing them to vote on key decisions affecting the platform. This includes voting on feature implementations, development priorities, and other community-driven initiatives.

• Club Governance/Management: Within individual Clubs, members (Keyholders) utilize their $FRIEND tokens to vote for the club president, who oversees club management and appoints moderators, fostering a democratic governance structure.

Incentives And Rewards

• Liquidity Provision/LP Farmers: Friend.tech offers LPs (also called farmers) participating in FRIEND/ETH swaps on the platform’s DEX (Bunnyswap) benefit from a 1.5% transaction fee levy on the DEX. This fee-based incentive is in addition to the 1.5% fees from Club keys transactions and the additional pledged 12 million $FRIEND as extra rewards for LPs.

This image shows Bunnyswap (Friend.tech’s DEX).

• Activity Rewards/User Engagement: Active participation in the platform, such as engaging in Clubs, creating valuable content, or interacting with other users, can earn rewards in $FRIEND tokens. This incentivizes users to remain active and contribute positively to the ecosystem.

• Club Presidents and Moderators: Individuals in these roles earn a share of the transaction fees generated from their respective clubs, incentivizing them to actively manage and promote community participation.

Economic Stability and Growth

• Tokenomics: Within the platform, supply and demand have an impact on the value of $FRIEND tokens. As more users join and engage with Friend.tech, the demand for $FRIEND tokens increases, potentially driving up their value. This economic model supports long-term platform growth and user retention.

• Liquidity and Market Value: By incentivizing liquidity provision and maintaining high trading volumes, Friend.tech ensures sufficient liquidity for $FRIEND tokens. This stability is crucial for fostering a reliable trading environment and maintaining the token’s market value.

Monetization for Creators

Revenue Generation (Earnings for Creators): Content creators and influencers can monetize their influence by creating Clubs and charging $FRIEND tokens for membership. This provides a steady income stream and rewards creators for their contributions to the platform.

Platform Revenue

Revenue Stream: The transaction fees collected from various activities on the platform contribute to Friend.tech’s revenue, ensuring its financial sustainability and its ability to fund future developments and improvements.

Future Development and Expansion

• Upcoming Utilities: Friend.tech plans to introduce new features such as Keydrops, Memeclubs, and Pinned Rooms, all of which will utilize $FRIEND tokens. These additions will expand the token’s utility and create more opportunities for user engagement and monetization.

• User Acquisition and Growth: Friend.tech aims to attract more users by continually enhancing the platform’s features and providing attractive incentives, which increases the demand for $FRIEND tokens and fosters community growth.

POINTS as a Token on Friend.tech

On Friend.tech, points were introduced as a form of reward system aimed at incentivizing early users and testers of the platform. These points, often referred to as reward POINTS, played a significant role during the app's beta phase.

Earning Points on Friend.tech

Points on Friend.tech were primarily earned through user activity on the platform. The exact mechanisms for earning points were not fully disclosed, but several key activities contributed to point accumulation:

• Trading Volume: Users earned points based on the volume of KEYS (formerly shares) they traded on the platform. Higher trading volumes typically resulted in more points.

• Transaction Fees: The number of points given out depended on how much money users generated in transaction fees. Every transaction incurred a 10% fee, split between the platform's treasury and the shareholders.

• Chat Activity: Engaging in private chatrooms, which were accessible by holding someone’s key, was another way to accumulate points. The more active the chats, the more points a user could potentially earn.

• Inviting Friends (Referrals): Users can earn points by inviting friends to join the platform. The more friends you invite, the more points you can accumulate.

• Having a Large Following: If you have a large following on friend.tech, you can earn fees and revenue whenever one of your followers buys or sells your keys.

Distribution of Points

Points were distributed via airdrops to beta testers over six months. The distribution was structured as follows:

• Weekly Airdrops: Points were airdropped every Friday based on users' activities logged until Thursday at 11:59 pm UTC of each week, starting from August 18. This weekly distribution continued for six months.

• Total Points: A total of 100 million points were distributed during the beta period.

This image shows Friend.tech’s announcement of airdrop of points.

Usage of Points

While the specific uses of points were not fully disclosed during the beta phase, several anticipated uses were speculated and hinted at by the platform:

• $FRIEND Token Airdrops: It was widely speculated that points would correlate with future token airdrops once the app was officially released. This speculation was fueled by the platform’s hints and the practices seen in other decentralized platforms.

• Conversion to $FRIEND Tokens: After the beta phase, the POINTS received through the airdrop were converted into $FRIEND tokens and airdropped on a 1:1 ratio to the beta testers. These tokens empowered users and served as a reward to early adopters.

Legal and Ethical Considerations for Friend.tech

Regulatory Landscape

Friend.tech, as a platform that allows users to tokenize social connections and trade "shares" of their social network, navigates a complex regulatory environment. The main regulatory challenges include:

• Securities Regulation: Given that users buy and sell KEYS (previously shares) of social connections, regulators may classify these tokens as securities. Due to this classification, Friend.tech would be subject to strict securities laws and regulations, such as those that the U.S. enforces. The tokenized nature of Friend.tech introduces complexities related to securities regulations. While the platform recently changed the name of its core asset from “Shares” to “Keys” to potentially avoid scrutiny from the SEC, it’s essential to ensure that the platform’s token offerings comply with relevant securities laws.

• Compliance Challenges: The tokenized nature of Friend.tech introduces complexities related to securities regulations, data privacy, and intellectual property rights. Like any other social media platform, Friend.tech collects personal data from users, and ensuring data privacy is crucial. The platform must securely store user information using encryption technology and avoid sharing or selling data without consent. Friend.tech also needs to manage intellectual property rights effectively. This includes protecting its own innovations and respecting the IP rights of others. Ensuring proper licensing and avoiding infringement are critical aspects of compliance.

Ethical Considerations

Ethical considerations of tokenizing social interactions include several concerns. Firstly, turning social connections into tradable assets risks dehumanizing relationships, reducing them to financial transactions and undermining genuine human connections. Secondly, this trading model can create exclusivity and inequality, where only those who can afford high-priced shares can interact with certain individuals, leading to an unequal social environment. Additionally, tokenized influence, as seen with Friend.tech, raises ethical questions about balancing power dynamics and ensuring fair token distribution. To address these issues, the platform should develop clear ethical guidelines, ensure transparency in share valuation and personal data usage, and implement decentralized governance models that involve users in policy-making to maintain ethical standards.

Conclusion

Friend.tech has emerged as a unique platform at the intersection of social media and blockchain technology, offering an innovative model where social interactions are tokenized and monetized. Friend.tech has redefined online engagement and content creation by leveraging the Base blockchain and a robust tokenomics framework involving KEY, FRIEND, and POINT tokens.

The platform's ability to balance scalability, security, and regulatory compliance will be crucial for its sustained growth. The v2 launch and the upcoming introduction of new features like meme clubs, Keydrops, and pinned rooms indicate Friend.tech's commitment to enhancing user experience and economic sustainability.

As Friend.tech continues to evolve, its innovative approach may set a new standard for SocialFi platforms, emphasizing user ownership, community engagement, and the seamless integration of social and financial interactions. For those interested in the future of decentralized social media, Friend.tech represents a significant development worth watching.