Between Hype & Reality: Analyzing New-Age Social Media Platforms in Crypto

The social media landscape is rapidly evolving, with Elon Musk reshaping Twitter to X and Web3 exploring innovations through platforms like Solcial, Lens Protocol, and Deso, each built on unique blockchains. Today, we are witnessing the resurgence of SocialFi with emerging web3 apps like FriendTech which is on a massive hype now and is developed on leading L2 Ethereum chains, enjoying immense popularity.

Friend.tech is currently buzzing in the crypto community, attracting attention not only from crypto enthusiasts but also from those who are new to this domain. The platform has managed to generate substantial fees from the first week, half of which have been allocated to the creators active on it.

Operating on the newly-established Base Network—a focal point for many—Friend.tech has garnered endorsements from various influencers and the Base Network itself. The expectations of an Airdrop (and the backing of Paradigm) has been the primary interest for many, with people exploring the platform in the hope of earning substantial rewards subsequently. These are the main reason why people pay more attention to these new platforms than to already existing full-fledge web3 social platforms like Solcial, DeSo, and others that also have user tokens economy, but also allow people to share any type of content and in a censorship resistant manner.

Sounds pretty cool. So, where does the issue lie?

Thus far, friend.tech seems to have fallen prey to the speculative frenzy that frequently follows new crypto projects, resembling more of a meme coin phenomenon rather than a flourishing social media platform. Even venture capitalists are pondering whether, in today’s market, every innovation necessitates a degree of speculation to attain success.
As many crypto influencers and enthusiasts say that FT functions like a Ponzi scheme, masquerading as a "social experiment" and exploiting the imprudent actions of influencers.

Let's delve into various factors. To illustrate, I'll draw comparisons between FT and Solcial.io, another web3 social platform founded on a user-token economy. While Solcial.io predated FT, I've been with it since its inception. Even with its impressive UI and myriad features, it hasn't garnered the same buzz as FT. Launching during the FTX crash, especially with FTX among its investors, might not have been the best timing. Regardless, it remains operational, continues to innovate, and I remain optimistic about its future growth and longevity.

Team

The creators of the project are known for initiating various financial experiments, only to desert them unexpectedly and without warning.
FriendTech is the brainchild of 0xRacerAlt, who is also responsible for TweetDAO and Stealcam. Both are perceived as forerunners to FriendTech, presenting themselves as social experiments. Also, 0xRacerAlt and Shrimppepe were associated with a failed NFT project — Kosetto:

https://twitter.com/iLiquidatebots/status/1693573727492214797
These projects have three common features:

• All identity as a "social experiment".
• All exhibit a pyramid-like economic structure.
• All were active for a brief period before their abrupt discontinuation.

Creators

Most creators aim to generate fees and foster a community, two objectives that are not mutually exclusive and can sometimes counteract each other, varying with the type of creator involved. Those such as writers, product developers, and artists derive more value from establishing long-term communities. Conversely, creators like those on OnlyFans, who benefit from shorter transaction cycles, may prioritize fee generation.

It’s crucial to note that creators on FT accrue fees solely through the trading of their keys. Without trading volume, a creator gains nothing, and the only advantage of having their key held is the sustenance of a higher price floor, which can increase the fee when traded. This model incentivizes creators to increase both the number of holders and the overall trading activity.

The critical takeaway is that post-purchase of a creator’s key, there is a diminished incentive for the creator to retain them since there is no ongoing payment or subscription flowing from buyer to creator. While creators desire more buyers to elevate the key’s price, they would generally prefer a lower, frequently traded price over a high, stagnant one. Trades equate to fees, holding doesn’t. This is the main reason why we see so many OnlyFans users on FT.

This financial structure of friend.tech lacks the capability to provide emotional and financial support. The sustained success of subscription-based platforms like Patreon stems from their ability to fund continuous content creation through ongoing memberships, rather than access to previous works. Platforms like Solcial from the previous generation of web3 have adopted this model, but the crypto community seems inclined toward immediate gains over cultivating long-term opportunities.

Subscriptions encourage sustained community investment by creators; single transactions do not. Transaction fees promote turnover, not permanence. Does this imply a brief lifecycle for FT? Will see, but current indicators suggest a lack of emphasis on nurturing communities and creators, focusing instead on stimulating key purchases by users.

Bonding curves and user tokens economy

Friend.tech effectively employs "bonding curve," - allowing a smart contract to create a synthetic market where tokens are traded against a (dampened) quadratic curve, facilitating the buying and selling of "keys" or shares of a personality on platform X. These keys grant access to a private chat room on X, enabling private messaging and group broadcast announcements.
This is how the tokens ¨keys¨ price performed:

The buying price of ETH = n ^ 2 /16000 (where n is the total outstanding supply, and 16000 is the scaling factor or constant selected by Friend.tech’s economic model.

The selling price follows a slightly different relationship:

Selling price of ETH = (n-1) ^ 2 /16000

Here is a detailed thread that clearly shows the mathematics behind Friend.tech’s tokenomics model and what you should be aware of:

https://twitter.com/0xCygaar/status/1693030028123005305
The concept of tokenizing online personalities with social tokens isn’t novel. Solcial utilizes a similar mechanism where users buy tokens to invest in creators or access private content, differing in its operation more like an open market similar to AMM, requiring liquidity provision for token trade.

So, why is Friend.tech garnering immense hype compared to Solcial, a functional platform with a variety of features? The prospect of possible airdrops and a plethora of transactions offer appealing avenues for users to earn with minimal effort, creating a frenzy in the crypto community.

However, Friend.tech essentially remains a speculative game, where users, unmindful of the keys they purchase, are primarily driven by price and potential growth. It makes it more like Dogecoin than a vibrant social-media platform.

Its longevity relies on the influx of new users purchasing keys, some priced over 1ETH, raising questions about its value and sustainability, especially considering the high access costs to private chats with little perceived benefit.

And remember one fact - exponential bonding curves can be as drastically descending as they are ascending, and Friend.tech's endurance will be truly tested post-hype.

Conversely, Solcial, with its diverse use cases for social tokens, holds genuine promise to revolutionize the creator economy, requiring time and understanding from various users to realize the continuous profits and community-building opportunities it offers.

Speculation generating active usage of trading bots

The speculation with ¨keys¨ on FT has paved the way for bot usage by users speculating on token prices, thereby escalating transaction numbers and earning the platform commissions. This raises the question of whether the team itself owns a majority of these bots—a query that remains unanswered.

The real issue is the ease with which such bots can be set up and operated. Accounts are opened merely by linking to Twitter, and it’s likely that bots are configured to immediately purchase shares of new accounts with significant followers at the lowest price. When friends and followers are invited to buy shares, they become exit liquidity for these bots. If this occurs on thousands of profiles daily, only the bots and the platform profit, while users gain minimal utility—direct chats, often at a steep price. This structure counters the interests of users and creators seeking long-term earnings.

Privacy policy and personal data security

The primary concern regarding privacy arises from the mandatory linking to Twitter (X). Given that X accounts are potentially susceptible to hackers, it's prudent to disconnect “X” from the connected app module via settings for enhanced security. Many users have also advocated for such disconnection for increased privacy. Additionally, any compromise or permanent ban on your X account would result in losing access to both your FT account and funds.

The legitimacy of the co-founder’s credentials is also dubious, with Shrimppepe, a name associated with the project, purportedly involved in security fraud.

Cygaar, a software engineer with substantial Twitter (X) following, conducted back-engineering of the backend to spotlight several genuine concerns:

• The API setup, reading prod-api.kosettoo.com, appears to be a revamped version from an older project, corroborating our previous concerns.
• There's a conspicuous absence of “bot” protection on the backend, leading to potential inflated share prices and future rug pulls due to bot front-running purchases.
• Wallet keys, being partially custodial, are stored on Friend.tech’s server, rendering them vulnerable to breaches.

https://twitter.com/0xCygaar/status/1693705049359385060
The platform has recently updated its Privacy Policy, which, upon inspection, raises questions regarding its authenticity and the team's concern for user data integrity, as it seems to amalgamate content from various resources. This ambiguity raises doubts about data usage and the platform’s longevity.

In contrast, Solcial demands no external services for account creation, requiring only a crypto wallet, which can be created directly on Solcial, granting users a personal and private seed phrase. Users retain complete control over their funds, stored directly in their wallets, and not on potentially vulnerable platform servers or nodes. Solcial also offers a connection via Ledger, a secure method to store funds, and ensures user control over data, preventing access by external services like Google, X, Telegram, etc., safeguarding against unauthorized data usage.

Thus, while Friend.tech poses multiple concerns, platforms like Solcial appear to offer more secure and user-centric alternatives.

Base Privacy Policy

Recently, a user shared information extracted from the Base blockchain privacy policy in his tweet. While it may not seem critical at first glance, it is prudent to delve deeper.

https://twitter.com/OttoRothmund/status/1704364358334067171

The Privacy Policy of Base blockchain demonstrates several potential areas of concern for users who are keen on maintaining their privacy. Here's a breakdown of the possible problematic areas:

1. Extent of Information Collection: The platform collects a broad range of information, including public wallet addresses, IP addresses, and device information. This extensive collection could be concerning if users are not comfortable sharing this much information.

2. Sharing of Information: The policy states that user information is shared with several third parties, including service providers, affiliates, and other partners. The sharing of information with multiple entities increases the risk of data being mishandled or misused.

3. Linking with Third-party Services: When users link to third-party services or websites, those entities may receive information about the user. These third-party services operate under their own privacy policies and terms, and there is no guarantee that they will handle user information with the same level of care and security as Base blockchain.

4. Information from Affiliates: The company obtains user information from affiliates, and this collection is often beyond the control of the user, leading to potential privacy concerns.

5. Legal and Regulatory Disclosure: The policy explicitly states that information can be shared with authorities, regulators, and law enforcement. While this is typically standard in most policies, it does open up avenues for government scrutiny and potential invasions of user privacy.

6. Analytical Information Collection: The collection of analytical information can lead to the creation of user-profiles and can potentially be used for targeting and behavioral analysis, which could infringe on user privacy.

7. Implication of Marketing Communications: The collection of basic user information for marketing purposes may expose users to unsolicited communications and advertisements, raising concerns for those who prefer not to receive such communications.

8. Ambiguity in Third-party Service Providers Clause: Although there is a mention of requiring third-party service providers to use information in accordance with instructions and terms, there is no explicit guarantee or detail on the mechanisms in place to ensure the security and privacy of users information.

Conclusion

While my critique may seem harsh, it might be attributed to the infancy of the platforms, and there is a likelihood of substantial updates in the future. However, this is merely speculative. Given the circulating news of the leakage of details of over 100,000 accounts, including Twitter and ETH addresses, the level of preparedness and the robustness of the app's security measures are understandably questionable. It's perplexing to observe such a high-caliber dApp, promoted by prominent voices in the crypto community, falling short on security preparedness. While one could argue that the data—comprising names, Twitter handles, and ETH addresses—is essentially public, the leakage from the database still raises serious concerns regarding the app’s security protocols. It poses pertinent questions about whether Friends.Tech is poised for longevity and if it can meet the expectations of new users, particularly those in the nascent stages of building their influence.

Time will tell what transpires once the initial hype subsides. Several exemplary social networks already exist, offering value to users at all levels, enabling them to share content freely and earn profits through user tokens serving as their identity. Solcial stands out as a potential leader among fully realized Web3 decentralized social networks, poised to bring together individuals from diverse sectors. Contrasted with the emerging social networks, Solcial appears well-prepared for the long haul, guaranteeing user privacy, data protection, and a stable and realistic user token economy. It’s not just about a transient presence; it’s about building a sustainable and secure ecosystem where every user feels valued and protected. Solcial’s readiness to offer such a comprehensive platform makes it a frontrunner in the evolution of decentralized social networks, holding the promise of a unified, secure, and value-driven social media landscape.