Understanding the Core Logic of the Social Project Friend.tech

Introduction

Friend.tech operates as a social protocol, distinguished by impressive metrics such as protocol revenue and user growth. Several prominent Twitter influencers have joined the protocol, and its underlying game-theoretical logic has garnered attention.

To access Friend.tech, users must open the friend.tech webpage through a browser and download it onto their mobile devices. Through a strong integration with Twitter, users can purchase shares (Keys) of any Twitter user on Friend.tech using Ethereum on the Base chain. This ownership grants users the right to engage in direct conversations with the purchased Twitter accounts, and they can profit by trading these shares. The pricing of Keys follows an exponential transformation, with the specific formula being: Price = S^2/16000 * 1 ETH.

After utilizing friend.tech, it becomes apparent that the current protocol offers limited functionality within the realm of social interaction. Users assume two distinct roles throughout the process:

• Purchasing Keys of Other KOLs: Users have the ability to acquire Keys of other Key Opinion Leaders (KOLs). This ownership grants them the opportunity to engage in conversations with these KOLs.

• Being Purchased by Others: On the flip side, users can have their own Keys purchased by others. This not only generates revenue for the user whose Keys are bought, but also grants the purchaser the chance to engage in conversations with them.

Data Performance

Since its launch on August 10th, the protocol has garnered a noteworthy accomplishment: the total count of unique addresses has surpassed 90,000.



The most captivating aspect lies in the protocol's ability to attract substantial funding. In less than two weeks, the protocol's revenue has reached 1,824 ETH, equivalent to approximately 3 million USD.



Rules of Friend.tech

The overwhelming success of Friend.tech can be attributed to several factors. At its core, Friend.tech operates on the principle of fan economy. Unlike traditional fan economies, it establishes a robust connection between “fan attributes” and “economic attributes,” thereby creating a realm of imagination for both “fans” and “speculators.”

As previously mentioned, while Friend.tech's social functionalities are currently limited, it has gained prominence due to its ingenious economic structure. To gain a more comprehensive understanding of the project, it's crucial to delve deeper into its economic framework.

Economic Structure

Upon entering the protocol, users have the option to use ETH to purchase shares (Keys) of any user registered within the protocol. These acquired shares can also be sold later. The pricing formula for Keys is as follows: Price = S^2/16000 * 1 ETH (where S is an integer greater than 0). It's worth noting that purchasing shares earlier in the process results in lower costs.



During the process of buying and selling, there is a 10% transaction fee. This fee is collected based on the selling price, and it is split as follows: 5% goes to the protocol as revenue, and the remaining 5% goes to the Key Opinion Leader (KOL) as income.

In this economic framework, the earnings of both the protocol and KOLs increase as the turnover rate rises. Buyers' profits are derived from having more newcomers purchase shares later on.

Understanding the Logic Behind Rules

Friend.tech's popularity can be attributed to its simplicity in both social attributes and economic structure. However, the key to its widespread interest revolves around two focal points: 1) Humans are driven by self-interest, and 2) Network effects and scarcity marketing.

Before delving into these two points, it's essential to understand four key pieces of information:

• Friend.tech's seed round involves participation from Paradigm, and Paradigm engineer @_anishagnihotri has created an analytical tool called FriendMEX for analyzing Friend.tech.

• Over the course of the next 6 months, Friend.tech plans to distribute a total of 100 million points during its testing phase, with distributions occurring every Friday.

• Numerous well-known Key Opinion Leaders (KOLs) have joined Friend.tech, and there is a continuous influx of prominent KOLs joining the platform.

• Registration requires an invitation code, and each registered user is given three invitation codes.

These pieces of information provide context for the subsequent exploration of the two aforementioned points.

Human Propensity for Self-Interest

For Key Opinion Leaders (KOLs), the economic structure's buy-and-sell transaction fee of 10% holds significant strategic value. Within this fee, 5% is allocated to the platform while the remaining 5% goes to the KOL. These individuals hold substantial influence on platforms like Twitter and can leverage their presence to attract more users to Friend.tech. The high revenue-sharing ratio effectively aligns the interests of both the platform and KOLs.

Because earnings are generated through transaction fees, KOLs stand to gain higher profits and experience quicker results compared to conventional platforms. For them, the opportunity cost is low, and the cost of remaining inactive is minimal. As a result, joining the platform is a highly favorable proposition.

Friend.tech's user interface features a “Top Users” section that showcases prominent users. Those ranked lower are not displayed. Users can also search for specific KOLs by name. For KOLs, being an early adopter of the platform increases their exposure as the platform's interface and functionalities provide greater visibility and opportunities.



Furthermore, if a KOL engages in unethical behavior, they can manipulate the system by purchasing their own Keys, raising the price using their influence, and then selling them for profit.

For users purchasing Keys, the pricing curve's dynamics play a crucial role. Early Key purchases result in lower costs and lower opportunity costs. Friend.tech's point mechanism also provides users with the anticipation of airdrops.

When examining a blockchain project, regular investors need to consider various factors like the macro environment, the project's field, and technical comparisons. Assuming an investor aims to profit from Friend.tech, they only need to focus on KOL engagement, identify recently joined KOLs with substantial follower counts, and buy Keys when prices are low. This approach features low opportunity costs and a high risk-reward ratio.

Another key point worth mentioning is that while Friend.tech currently offers limited social functionalities, it holds the potential to enable upward social mobility for users.

Network Effects and Scarcity Marketing

Friend.tech is tightly integrated with Twitter, leveraging its economic model to establish strong bonds between KOLs and the platform itself, thereby generating network effects. Alongside the creation of these network effects, the platform adopts an open registration system, providing each registered user with only three invitation codes.

Simultaneously generating network effects and controlling the rate of user entry has its advantages:

• Slowing Down the Economic Cycle: By controlling the rate at which users enter the ecosystem, the entire economic process can be managed and paced more effectively.

• Allowing Time for Feature Development: The platform gains additional time to develop new social functionalities and enhance the user experience.

• Amplifying Exposure through Influential KOLs: As well-known KOLs join, Friend.tech can garner sustained exposure on existing Web2 information platforms.

This approach combines the strategic benefits of controlled growth with the potential for robust network effects, all while positioning the platform for further expansion and development.