With SocialFi Track Poised, Who Has the Edge Among Friend.tech, Farcaster, and Phaver?
v1 defect analysis
v2 Mechanism Analysis
What’s SocialFi’s dilemma?
Innovative attempts by other SocialFi projects
Write at the end
Last year, in the SocialFi arena, Friend.tech was once leading the pack but later faced a downturn due to uncertainties surrounding token listings and the unsustainable nature of its “Fi” attributes. However, recently, with its innovative V2 version, it has once again led the market frenzy. Can Friend.tech avoid the pitfalls of SocialFi this time?
v1 defect analysis
The main function of Friend.tech is to access exclusive content or interact through keys, whose prices are designed using a “bonding curve” mechanism, meaning they increase exponentially with the purchase quantity. The specific calculation formula is a quadratic equation: the price of the next key = (current number of keys)^2 / 16000 x 1 ETH.
The purpose of this model is to create a speculative environment, allowing early buyers to enter at lower prices and gradually increase prices with the increase in the number of market participants, thus encouraging more early investment and active markets. However, both buying and selling require a 10% tax, making it difficult for new buyers to participate due to the high prices, especially when the market is nearing saturation. The cost for new entrants is extremely high, requiring more than a 20% increase in key prices for profit. This poses a challenge to the platform’s long-term sustainable development. Additionally, the steepness of the bonding curve for FT also brings significant risks, especially when user engagement decreases, as it can lead to a rapid decline in key value and trigger a market collapse.
Source: Mirror (Based Toschi）
Although the bonding curve model can encourage early market participation, it does not inherently promote long-term stability or sustained user engagement. Initially, community members support each other, forming a (3,3) spiral upwards. However, once market turbulence occurs or someone engages in “dumping”, the expected spiral quickly reverses, leading to reduced community activity and damaging the overall platform’s attractiveness and vitality. This is also why the FT community later tended to be quieter.
v2 Mechanism Analysis
Friend.tech v2 introduces several innovative features and an enhanced token model, aiming to improve user engagement and platform utility. One notable feature is the “Money Club”, similar to a paid community space where each new member joining the group needs to pay an increasing price. This design not only increases the platform’s monetization capability but also promotes active interaction within the community and enhances the value of content creators. The chairman of each club is elected by key holders, responsible for managing the club and appointing moderators, enhancing community autonomy and participation.
To overcome the challenges encountered in the v1 version, the v2 version introduces a new scoring system and custom curve functionality, allowing users to create personalized mechanisms based on their level of participation. This flexible design helps meet the needs of different user groups, enhancing overall user satisfaction and activity.
Additionally, transactions within the club only support the FRIEND token, and each transaction incurs a 1.5% fee. This fee mechanism creates additional revenue streams for the platform while also potentially helping to regulate trading activities and curb potential speculation.
Source: Dune (msilb7 & whale_hunter）
As of the drafting on May 13th, according to Dune Analytics dashboard data, there have been 202,000 Clubs created within Friend.tech, with 160,000 participants in Club transactions, totaling 23.55 million FRIEND tokens (equivalent to a market value of $51.1 million USD). However, it’s worth noting that for the claim of $FRIEND airdrop, initially users could only claim 10% of their share, with the remaining 90% requiring participation in at least one Club to claim. Therefore, the surge in Club transaction activity is also attributed to this claim rule.
Overall, the launch of v2 has brought considerable incremental value to FT. However, observing the daily trading volume, Club transactions are gradually decreasing.
What’s SocialFi’s dilemma?
From the data of Friend.tech and market response, it’s not difficult to see that the early market’s expectations for its token airdrop brought substantial Total Value Locked (TVL) and interaction activity. However, as tokens are launched and users claim the airdrop, the trading volume decreases over time, leading to user attrition, which has become the biggest pain point for SocialFi.
Breaking down the dilemma of SocialFi into two points:
1）User retention issue: For SocialFi projects, attracting and retaining users is a major challenge. These platforms often require users to understand and accept complex concepts such as blockchain technology and tokenomics, which can be a barrier to entry for users unfamiliar with cryptocurrency. However, if only insiders are attracted, balancing the “Fi” attributes and social gameplay becomes even more challenging. Furthermore, transitioning from traditional social media platforms with a large user base and mature network effects to new decentralized platforms may progress slowly and be fraught with challenges.
2）Economic and tokenization model issues: SocialFi needs a sustainable economic model to develop. Traditional social media platforms heavily rely on advertising revenue, but SocialFi aims to directly redistribute value to users and creators through social tokens and NFT mechanisms. Developing and maintaining a balanced tokenomics that provides real value without causing inflation or being exploited is crucial. The FT model indicates that while the steep bonding curve brings some benefits, high-value keys are almost impossible to realize economic returns. This is because as user and protocol data grow, speculative purchases reliant on high-priced keys will no longer be viable if growth stagnates or declines.
To ensure long-term success, SocialFi projects must innovate to address these issues, providing a more user-friendly experience while building an economic model that can sustainably attract and incentivize user participation. Over time, only those platforms that can effectively integrate social functionality with financial incentives may stand out in the fiercely competitive market, achieving real growth and user loyalty.
Innovative attempts by other SocialFi projects
Farcaster: Focusing more on Social Attributes
Farcaster has not issued platform tokens; instead, memecoins abound in its ecosystem. The mechanism design of Farcaster reflects its advantages, especially in establishing decentralized social networks. Firstly, Farcaster allows users to maintain the coherence of their social graphs across different applications, even across different social apps, ensuring identity and network connections. This significantly reduces the influence of centralized entities and ensures user control over data. Additionally, Farcaster’s open-source and permissionless design encourages developers to innovate and integrate new features, providing greater flexibility and user-driven experiences for social media applications. Users and developers can freely build and expand social networks, making Farcaster a highly modular and composable platform. In comparison, Friendtech’s economic model shows some design flaws, such as a lack of value return for holders and over-reliance on advertising revenue, which may limit its long-term development. Farcaster’s design allows it to adapt more effectively to user needs and market changes, providing a fairer and more sustainable social networking environment.
Phaver: Emphasizing User Contribution and Participation Incentives
Phaver’s mechanism allows users to share and integrate responses across protocols (such as Lens Protocol and Farcaster), providing users with broader interaction and stronger social network influence. Additionally, Phaver’s application is characterized by being non-custodial and permissionless, allowing users greater control over their social graphs and data, rather than being limited by centralized platforms.
Phaver also introduces the $SOCIAL token to enhance the interactivity and reward mechanisms of its ecosystem. Users can earn points by actively contributing to the platform and exchange these points for $SOCIAL tokens in specific activities. Moreover, holding $SOCIAL tokens can increase users’ credit rating and monthly withdrawal limits, thereby providing more platform benefits and early access to new features.
Compared to Friend.tech’s economic model, Phaver’s design emphasizes incentives for user contribution and participation, strengthening community activity and user stickiness through tokenization. These designs give Phaver a competitive advantage in the SocialFi market, particularly in building decentralized and user-driven social networks.
Write at the end
While discussing the challenges of economic model sustainability and user retention faced by Friend.tech and the entire SocialFi sector, we have also observed innovative attempts by other platforms such as Farcaster and Phaver. These platforms, through their unique mechanism designs, attempt to address issues of user engagement and imbalanced economic models.
Although these designs are theoretically attractive, whether they are truly superior to Friend.tech, or if their designs can provide a more balanced combination of “Fi” and social attributes in the long term, remains uncertain. Ultimately, which model can better balance the characteristics of finance and social interaction, meeting users’ needs, remains an unanswered question.
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ref：
https://www.ccn.com/news/friendtech-v2-reinvigorate-socialfi-platform/
https://decrypt.co/229273/friend-tech-community-in-uproar-amid-token-and-v2-launch
https://www.coinlive.com/news/gmx-v2-and-competitors-the-new-wave-of-disruption-in
https://decrypt.co/228473/friend-tech-v2-goes-live-as-hype-builds-for-100-airdrop-of-friend-token
https://blocknews.com/everything-you-need-to-know-about-friendtechs-upcoming-friend-token/
https://hkaift.com/tokenomic-model-of-friend-tech-social-platform-a-data-driven-analysis/
https://foresightnews.pro/article/detail/59623
https://dune.com/msilb7/friendtech-on-base-activity
https://dune.com/whale_hunter/friend-tech-ultimate-analytics
https://decrypt.co/215856/what-is-farcaster-ethereum-crypto-twitter-alternative
https://phaver.gitbook.io/whitepaper-phaver/whitepaper-phaver/overview
Statement:
This article originally titled “SocialFi 赛道暗流涌动，Friend.tech、Farcaster 及 Phaver 谁略胜一筹？” is reproduced from [ChainFeeds Research]. All copyrights belong to the original author [HAMSTER]. If you have any objection to the reprint, please contact the Gate Learn team, the team will handle it as soon as possible.
Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.
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