Friend.Tech to Stay on Base L2 After Plans to Leave
Following an early June pledge to depart from the Base blockchain and establish its own network, the decentralised social media platform Friend.Tech has retracted its plan.
The platform's supply and liquidity will remain on Base, and the migration to Friendchain has been postponed indefinitely.
A pseudonymous user on Friend.Tech, known as The Giver, expressed on X that it was premature for the platform to attempt migrating its project and user base to a new network.
However, the news of this reversal has had an even more detrimental effect on the FRIEND token's price than the initial migration announcement.
According to data from CoinGecko, FRIEND plummeted to an all-time low of $0.2973 on Thursday morning.
At the time of writing, the token is trading at $0.2732, setting another all-time low record.
This price is less than half of what it was on the day Friend.Tech announced its intention to migrate off the Base L2, a decision that was met with widespread criticism from its community.
The decision to switch networks has been contentious, with some arguing that it was too hasty, while others viewed it as a logical step forward.
Friend.Tech co-founder Racer had previously offered a $200,000 reward to any developer who could facilitate a smooth migration from Base without significant disruptions, indicating a desire for a technical solution to the migration challenge.
Racer also mentioned that the relationship between the Friend.Tech team and Base had become strained.
They referred to backlash from Farcaster investors during the platform's launch, which contributed to a feeling of alienation from the Base community.
In response, Jesse Pollak, the head of Base for Coinbase, made a conciliatory statement.
He acknowledged that the Friend.Tech team had felt "isolated and disconnected" from certain parts of the Base and Ethereum ecosystems.
Pollak added that while he would be disappointed if Friend.Tech chose to leave, he would still respect and support their decision.
Over $1.1M TVL Loss & FRIEND Token Hitting New All-Time Low
Following the controversial decision to rescind its migration plans, Friend.Tech has experienced a significant decline in its Total Value Locked (TVL), with a reduction of $3.3 million and a precipitous fall of over $1.1 million within the last 24 hours.
This downturn has been unfolding for nearly a month, as the decentralised social media platform's attempts to reassure users have proven ineffective.
TVL is a critical metric that quantifies the aggregate value of assets secured within a specific protocol or platform, reflecting the volume of cryptocurrency held in smart contracts across a DeFi ecosystem.
A decrease in TVL typically indicates the withdrawal of assets from the DeFi platform, which may be indicative of waning user confidence or a shift towards more promising investment opportunities.
In tandem with the TVL drop, Friend.Tech's native token, FRIEND, has seen a 30% decrease in value over the past 24 hours, further underscoring the impact of the platform's decision on its financial standing and user sentiment.
Less than a month ago, it hit an all-time low at $0.7711.
As mentioned earlier, at the time of writing, the token is trading at $0.2732, which is another all-time low record.
FRIEND Token Tanks After Launch
In the hours following the activation of the Friend.Tech airdrop on 3 May, the platform's largest whale, identified as "Murphys1d," liquidated over 55,000 of the freshly minted Friend tokens, as per blockchain records.
This sell-off was not the only issue; some users, including crypto investor Luke Martin, encountered difficulties in claiming their airdrop tokens.
Martin also pointed out that the whale's wallet appears to be associated with a dormant fake X account, which allowed it to accumulate over 500,000 Friend.Tech points without risk.
The price of FRIEND suffered a decline after the whale's complete disposal of tokens immediately post-launch, leading to an initial 50% drop followed by further depreciation.
Multiple users reported an API failure that hindered their ability to claim tokens as the price fell.
Prior to its launch, the crypto community anticipated that Friend.Tech's version 2 would introduce innovative features to the ecosystem.
However, the Web3 social platform faced significant backlash shortly before its debut when a leaked smart contract suggested the airdropped tokens would be non-transferable.
Upon its market entry, the FRIEND token was priced at $169, attracting 18,000 holders with a circulating supply of 14 million tokens.
As pointed out, the trading price has plummeted to around $0.2732.
Participants in the airdrop have voiced serious concerns about the development, citing problems with token claiming and app functionality.
The airdrop process, intended to distribute tokens to the community, has encountered numerous challenges.
Social media users on X have expressed dismay over the diminishing value of their airdropped tokens.
Some claimants struggled to claim their tokens, while others watched helplessly as the value of their holdings plummeted.
DeFi researcher DeFi Ignas expressed disappointment with Friend.Tech's V2 launch, labelling it a "massive flop" and criticising the app's usability issues.
Ignas questioned whether the development team's focus was misaligned.
Speculation has emerged suggesting that the team may have deliberately engineered a price decline to trigger a subsequent rise.
Analysts have attributed the dramatic drop to potential liquidity issues, reminiscent of the recent Renzo token incident, indicating a lack of adequate buy and sell orders to sustain a stable price.
The sudden drop has left investors and users sceptical about the token's stability and future prospects.
Friend.Tech Losing its Allure…Fast
Crypto Quant analyst Bradley Park iterated that the top spot on Base was Friend.Tech's to lose:
"FT was originally one of the leading contributors to the Base boom. However, overshadowed by growth of Farcaster, FT announced that it would move to another chain. They were the original Dapp of Base, but they suddenly left their position."
Park noted that the community sentiment is that the project has lost its appeal, further exacerbated by significant exits from whale wallets.
According to data from 21Shares, a provider of crypto investment products, Friend.Tech has not seen user deposits exceeding $50,000 in a single day since 16 April. https://dune.com/21co/friendtech-analysis
Is Farcaster Causing Friend.Tech's User Exodus?
The decline in Friend.Tech's TVL can be attributed to several factors.
Firstly, the broader market downturn, with Bitcoin's price dropping to around $54,000 at the time of writing, has had a ripple effect on altcoins.
As these assets follow Bitcoin's lead, the global market capitalisation has fallen by over 5%.
This overall decrease in market value can result in a reduction in TVL, as the value of locked assets also diminishes.
Moreover, the drop in Friend.Tech's TVL suggests a shift in investor sentiment, indicating that some investors are exploring alternatives to one of the leading SocialFi dApps on the Base network.
Ethereum co-founder Vitalik Buterin foresaw this in February, critiquing Friend.Tech for its reliance on financial speculation rather than intrinsic enjoyment.
If users are indeed seeking alternatives, Farcaster may be their destination of choice.
As a peer and competitor in the decentralised social media space, Farcaster has garnered attention.
Buterin has shown optimism for Farcaster, highlighting its decentralised structure and the freedom it offers developers, in contrast to his criticism of Friend.Tech.
Friend.Tech's co-founder, Racer, has also publicly addressed Farcaster, accusing them of misrepresenting Friend.Tech's project at its launch and contributing to the strain between Friend.Tech and the Base community.
Can Friend.Tech Recover or Is it on the Path of No Return?
To rebound from this setback, Friend.Tech must devise strategies to enhance liquidity and stabilise the FRIEND token's price.
Potential measures include boosting the volume of buy and sell orders, augmenting the platform's features to draw in new users, and offering improved support for those who encountered issues with the airdrop.
The steep decline in the FRIEND token's value has sparked concerns about the platform's stability and long-term viability.
The rollout of new features in version 2 and efforts to bolster liquidity may not suffice to win back the trust of users and investors.
However, with a strategic and well-executed approach, Friend.Tech could surmount these challenges and resume its growth trajectory.
Yet, given the platform's recent track record and FRIEND token hitting multiple new all-time lows, it may be time to contemplate its potential demise, as even its renowned witty comebacks may not be enough to prevent it from foundering.
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