The Wolf Den #1045 - The Friends We Made Along The Way
The End of Friend.tech
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In This Issue:
The Friends We Made Along The Way
Bitcoin Thoughts And Analysis
Legacy Markets
Japan’s Largest Electric Company Is Mining Bitcoin
Bitcoin ETFs Still Have Haters
Michael Saylor Made A Huge Prediction
Bitcoin Could Soar To $90K If Trump Wins, But Harris Might Crash It To $30K | Macro Monday
The Friends We Made Along The Way
Some cool things happened yesterday.
I’m jumping ahead a bit, but Eric Balchunas tweeted the above in response to a thread by Jim Bianco criticizing Bitcoin ETFs. This sparked a discussion between Andrew Parish and me, leading to a video we filmed exclusively for Wolf Pack members, where we dive deeper into the topic. I’ve covered the Bianco Research report below, but if you want to watch the video Andrew and I made, it’s available to Wolf Pack members HERE.
Now for the newsletter.
On August 10, 2023, Friend.tech launched on the Base network, almost immediately being hailed as the next evolution of social media—a platform where you could invest in influential individuals, and creators could monetize their digital presence.
It was everything the crypto world had dreamed of and more. How could it possibly fail?
I distinctly remember the frenzied launch—everyone scrambling for invite codes like their lives depended on it. I was among them, fumbling for access while gearing up for a Twitter Spaces where I was supposed to talk about the platform for hours.
To this day, I have no idea how that Twitter Space went or if we even made it through without crashing. But today, I want to dive into the rise and eventual crash of Friend.tech. If you’ve been following the news, you know where this is headed. I suspect there are some valuable lessons in this saga—or at the very least, a wild story to tell.
First, let’s quickly recap what Friend.tech was all about.
Friend.tech, developed by the creators of applications like TweetDAO and Stealcam, was a decentralized social media platform aimed at crypto enthusiasts. At its core was the concept of ‘shares’—digital assets representing tokens of crypto Twitter influencers and a few “stars” from other industries. These shares were a form of ownership, mirroring the way people hold stakes in companies on the stock market.
The platform was lauded as a key driver of Web3 adoption, a gateway for newcomers into the crypto world. It combined elements from Web2 platforms like Telegram and WeChat, but with a twist: it allowed users to tokenize personalities, granting access to influencers and creators through the purchase of tokens. It seemed like a win-win situation for creators looking to monetize their fan bases. What could go wrong?
Within eleven days of launch, over 100,000 users had flooded the platform, generating more than $1 million in fees by August 21.
But not everything went smoothly. Around this time, Friend.tech faced scrutiny, prompting the rebranding of ‘shares’ to ‘keys’—a move likely aimed at avoiding legal trouble. I doubt the team would’ve ditched the ‘shares’ branding if they could have avoided it.
Here are a couple of quotes I found from an old article:
“The original name was good but our legal team has advised us that maybe it’s not a good idea to use words associated with financial markets.”
“Anyone who decided ‘shares’ was a placeholder name either didn’t get legal advice or blatantly ignored legal advice.”
Here’s an excerpt from my newsletter covering Friend.tech’s meteoric rise shortly after launch:
“Friend.tech surpassed Uniswap and Bitcoin in fees generated. The platform generated $1.42 million in protocol fees in just 24 hours and is now a top 3 protocol by fees generated. The total value of Friend.tech's shares is around $8 million.
However, it hasn’t been all smooth sailing. A leak of over 100,000 wallet addresses and Twitter usernames has raised concerns about the platform's ability to protect user data. Additionally, rumors are swirling that by joining, you might be granting Friend.tech permission to post on your Twitter account.”
As expected, the platform quickly attracted critics. Watching influencers obsess over the price of their ‘shares’ became quite the spectacle.
Here’s a dichotomy I highlighted back when it all began…
It was much easier to write a pessimistic forecast for Friend.tech simply because the cracks in the system were visible from day one.
Everything about Friend.tech was complicated. First, you had to add the app to your iPhone through questionable methods, as it would never pass the scrutiny of the App Store. Next, you needed to create a MetaMask wallet, fund it with ETH, bridge that ETH to the Base chain, and then transfer it from your Base wallet to Friend.tech. Let’s be honest—there’s no way anyone who isn’t deeply crypto-native would even attempt this.
I knew immediately that mainstream adoption, under this setup, wasn’t going to happen.
After navigating the convoluted process, you were required to connect your Twitter account, mint your first share of yourself, and then the madness began... for the bots.
As soon as an influencer launched their account, bots swooped in, pumping the price and dumping at the top for easy profit. The whole system was a mess, and yet, it was profitable—for both influencers and the platform.
What I didn’t realize was that the second I ‘joined’ the platform, my ‘keys’ would automatically be up for sale, with bots inflating the price.
Almost immediately, I started receiving messages from buyers asking what I planned to do to increase the value of my keys. My response? Nothing, obviously. But I’ll explain why in a moment.
Here’s what I tweeted after spending about 20 minutes on the platform…
I won’t bore you with the rest of the tweet, but you can tell I was frustrated.
My takeaway was simple: this platform was tailor-made for influencers to make a quick profit, with no realistic way for them to deliver any real value in return. The user experience was terrible. People were there solely to make money, pumping and dumping shares of others. On top of that, the platform fed into the influencers’ egos, pushing them to fight for a spot on the leaderboard. It was sad, really.
Honestly, I’m a bit surprised the SEC didn’t go after Friend.tech, though it seems the platform managed to collapse on its own. Perhaps the SEC just needed more time—after all, it took them ages to go after OpenSea.
Which brings us to the news today, here’s some article headlines I found: “Friend.tech creators walk off with $44m as project shuts down” and “Crypto platform Friend.tech sees token dive 26% following admin transfer.”
Not good.
Here’s the original newsbreak from Friend.tech.
What this means is that Friend.tech's developers executed a function to transfer control of the platform’s smart contracts to Ethereum’s null address, effectively locking the system and preventing any further changes. While the team announced that no fees are currently being directed to their multisig wallet, they conveniently left out the fact that the project’s creators are walking away with a hefty $44 million.
Since its launch just over a year ago, Friend.tech has generated nearly $90 million in fees, with half of that going to the development team. Unfortunately for investors, the FRIEND token has nosedived by 98% since its debut in May and recently dropped another 20% following this news. When a platform declares that no new features are coming and no fees are being collected, it’s essentially signaling that there’s no incentive or intention to continue development. Long story short—Friend.tech signed its own death warrant.
And frankly, I saw it coming. This is how I ended my newsletter on Friend.tech last year:
“As with many novel technologies, only time will tell if Friend.tech will revolutionize the social media landscape or become another example of a promising idea that flamed out too quickly. For now, the tech world watches with bated breath, anticipating Friend.tech's next move.
I am not optimistic. It feels like yet another noncompliant platform that will fizzle out after the value is extracted by a fortunate few.
I hope I’m wrong.”
The goal here isn’t to boast about predictive prowess, but to emphasize that success in this space rarely stems from overnight frenzies. In fact, it’s often the opposite. What truly works tends to emerge from a slow, steady process rather than quick excitement. Apps like Uniswap and OpenSea, while essential, have been relatively uneventful. PolyMarket has seen bursts of excitement, but also long periods of dullness. The initial hype around ETFs has fizzled out, there’s been little recent buzz around tokenization or RWAs, and Base—the network behind Friend.tech—seems stagnant for now.
The key difference is that all these platforms kept moving forward. New iterations continue to roll out, fresh markets keep opening, inflows are trickling in, and tokenization is slowly expanding. Despite the drop-off in initial excitement, these projects have stayed relevant by continuing to build and evolve, even during the quieter periods.
Web3—or any crypto product, for that matter—won’t find a solid niche if financial incentives are its only driving force. There needs to be genuine interest, real substance. Friend.tech never quite achieved that. My biggest hope in sharing this story is to keep these lessons top of mind when the next ‘hot app’ emerges. There will be plenty more as the next bull run returns. And when similar pitfalls appear, albeit in slightly different forms, we can avoid repeating the same mistakes.
Be critical of everything that exists and everything that comes into existence. If we’re uncertain about an app’s potential, chances are the mainstream won’t pay much attention either. To capture more than just a niche audience, we need rock-solid, beautifully designed products. Some are getting close, but there’s still much progress to be made.
As for tonight's presidential debate, do you think crypto will come up? I’m leaning towards no, but the implications of the outcome will be significant for the markets. And before we know it, September will be halfway over.
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Bitcoin Thoughts And Analysis
Not much has changed here for Bitcoin, even though we did get a decent move up yesterday back into the range.
What “may” be important is that Bitcoin has potentially put in it’s first higher low since the all time high. As you can see, we have had bearish market structure - a series of lower highs and lower lows. This higher low would be conrirmed by a break above $65,000 - the last lower high.
Legacy Markets
US stock futures dipped ahead of a pivotal week, with key US inflation data due on Wednesday, followed by interest rate decisions in the US and Europe. S&P 500 futures fell after Monday’s rebound, while Treasury yields continued to rise, reflecting investor caution. The Federal Reserve's stance, recession concerns, and a cooling labor market are contributing to uncertainty.
The European Central Bank (ECB) is expected to cut rates again this week to address economic weakness, with Morgan Stanley forecasting a sharp drop in the euro, possibly reaching parity with the dollar by year-end. Hedge funds are also preparing for market volatility ahead of the US elections in November by shifting to safer assets like US and Japanese government bonds.
Key events this week:
Germany CPI, Tuesday
US presidential debate between Donald Trump and Kamala Harris, Tuesday
US CPI, Wednesday
Japan PPI, Thursday
ECB rate decision, Thursday
US initial jobless claims, PPI, Thursday
Eurozone industrial production, Friday
Japan industrial production, Friday
U. Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 5:41 a.m. New York time
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 was little changed
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1041
The British pound rose 0.2% to $1.3097
The Japanese yen was little changed at 143.26 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $57,138.17
Ether rose 0.4% to $2,350.68
Bonds
The yield on 10-year Treasuries advanced one basis point to 3.71%
Germany’s 10-year yield was little changed at 2.18%
Britain’s 10-year yield was little changed at 3.86%
Commodities
West Texas Intermediate crude fell 1.2% to $67.87 a barrel
Spot gold fell 0.1% to $2,503.38 an ounce
Japan’s Largest Electric Company Is Mining Bitcoin
A subsidiary of the Tokyo Electric Power Company (Tepco), Agile Energy X, is exploring Bitcoin mining using wasted renewable energy. By harnessing surplus solar energy, the company aims to reduce energy waste caused by Japan's ‘output control’ practices, which limit renewable energy production to balance supply and demand. So far, Agile Energy X has set up mining rigs near solar farms in Gunma and Tochigi prefectures to begin the operation. The firm estimates that using just 10% of Japan’s wasted renewable energy for Bitcoin mining could generate approximately $2.5 billion annually, potentially incentivizing the adoption of more green energy.
Bitcoin ETFs Still Have Haters
Well respected Macro investment researcher Jim Bianco caught a lot of flak from crypto Twitter following the posts and claims I am about to share. I want to preface this section with the following set of facts: most analysts were predicting Bitcoin ETFs would do 5 to 10 billion in inflows in the first year. In a couple of days, it will be 9 months since the Bitcoin ETF launched, and we already crossed the $50 billion mark as of late August.
As I read this post, I can't help but feel that Jim has some kind of vendetta against Bitcoin—maybe because the price is down, or he just doesn’t like it. Sure, he correctly points out the price drop, but why does that matter? The ETF is brand new—was it supposed to only go up? He also claims the buyers are “small ‘tourist’ retail” due to the average trade size being low. But that doesn’t mean hedge funds aren’t holding significant positions, which we know is true from 10-K filings.
I might do a longer post on this in a future post, but for now, just know it’s a load of crap. Haters are going to hate, no matter what. Let’s see what Jim has to say when Bitcoin is trading at $100,000.
Michael Saylor Makes A Huge Prediction
I was featured in this article, so of course I had to share it here! Here’s the contents of the article:
Shout out to CryptosRus on Twitter and YouTube for the article. As I mentioned at the end of that article and interview, I’d be more than happy with $100,000 for now. $1 million is coming, but it’ll take some time—baby steps.
Bitcoin Could Soar To $90K If Trump Wins, But Harris Might Crash It To $30K | Macro Monday
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