The Wolf Den #795 - Friend.tech: Revolutionizing Social Media or a Flash in the Pan?
I vote the latter...
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In This Issue:
Friend.tech: Revolutionizing Social Media or a Flash in the Pan?
Can We Get An Inverse Bart On Bitcoin?
Markets Are Schizophrenic
Did Friend.tech Experience A Leak?
Binance Faces More Trouble In Europe
Circle And Coinbase Up Their Game
Bitcoin Sudden Crush: When Is The Time To Buy The Dip? | Macro Monday
Friend.tech: Revolutionizing Social Media or a Flash in the Pan?
In an effort to do due diligence for Twitter Spaces yesterday, I begrudgingly signed up for Friend.tech, the new darling of Crypto Twitter. I had no idea what I was in for.
But what exactly is this new platform, and why is it making waves across the tech industry?
Friend.tech, attributed to the development of prominent applications like TweetDAO and Stealcam, is a decentralized social media platform catering to crypto enthusiasts. At the heart of this innovation lies the use of "shares" as digital assets. Those digital assets are tokens of crypto Twitter Influencers and a smattering of “stars” from other industries. These shares symbolize ownership, mirroring the stock market’s principle of owning stakes in companies.
As of yesterday, they have renamed shares to keys, likely in an attempt to avoid the ire of regulators. Good luck with that. I doubt Gary cares about semantics.
Although bearing a slight resemblance to existing platforms like WeChat or Telegram (not really, because the UX is clunky and embarrassing), Friend.tech's distinctiveness lies in the tokenization of personalities and the access gained to that person by purchasing a token.
Users pay a base price to earn a share in a person, allowing participation. If users decide to leave the group, they can liquidate their shares. This model has led to swift adoption, with 126,000 transactions and a trading volume exceeding 4,400 ETH since its launch (as of yesterday, I am sure it is more now).
Above is a great guide to the platform and how it works, if you are interested.
Friend.tech surpassed Uniswap and Bitcoin in fees generated. The platform generated $1.42 million in protocol fees in just 24 hours and stands as a top 3 protocol by fees generated. The total value of Friend.tech's shares is around $8 million.
However, not all has been smooth sailing. A leak of over 100,000 wallet addresses and Twitter usernames has raised questions about its ability to protect user data amid privacy concerns. There are also rumors that by joining, you give Friend.tech theoretical permission to post to your Twitter account.
Not great.
The excitement surrounding Friend.tech has led to a division among industry pundits.
The Optimistic View:
Praised for bringing thousands of people on-chain and inspiring non-crypto figures.
Notable investments, including seed investment from renowned venture firm, Paradigm.
Considered by some as a breakthrough in crypto.
The Pessimistic Forecast:
Critics argue that the rapid increase in share prices may lead to unsustainable growth.
Comparisons to past failed platforms like BitClout lead some to predict an imminent collapse.
Concerns over pricing and market making have been flagged.
Probably a series of unregistered securities.
Maybe an outright scam.
After onboarding to the platform, here is my honest appraisal and a quick review of my experience.
First, the process is complicated. You have to add the app to your iPhone through shady means, as something like this would never pass the muster of the app store. Next you need to create a metamask wallet, fund it with ETH, then bridge that ETH to base chain. Then you have to send from your base wallet to FT. There is no way anyone who is not deeply crypto-native will do this.
Mainstream adoption? Not happening.
Once you get there, you connect your Twitter account, mint your first share of yourself and then it is off to the races… for the bots.
The second an influencer launches an account, the bots go to work pumping price and then dumping at the top for free profit. It is complete garbage. And that garbage is profitable for the influencer and the platform.
There are no real terms and conditions, and there is nowhere to find more information. There is no privacy policy.
I had no idea that the second I “joined” the platform my “keys” would be for sale and that bots would be pumping the price.
I immediately had messages from buyers asking what I intended to do to increase the value. Nothing, obviously, but we can get to the reason for that in a bit.
This is what I tweeted after about 20 minutes on the platform…
The UX/UI is a challenge, very difficult to communicate with everyone reaching out, but I am trying my best. This is not how I intended to spend my time, but I'm on there now and feel responsible. Seems there are a few quick models that people are using to drive traffic or at least some interesting ideas.
1. Buy back and burn This seems somewhat shitty, but not intentionally. It will inflate the price and price people out. Shouldn't you want your price to remain really low so that more people can have access to you? This is a tough aspect.
2. Giveaways This seems interesting. just give away the money you make on some regularly scheduled program. Maybe $100 a day or something. At least people can get back some value. The issue is, this is not sustainable.
3. Alpha This is tough with the existing chat, because it is clunky and you miss messages. You also can't post charts and images.
4. AMA? This could be interesting but again the UX is clunky so you will miss most questions.
If we are being honest, this is a platform tailor-made for quick profit for influencers, and there is no real way for them to return that value. The UX is too shitty. People are there simply to make money, pumping and dumping shares of other people. The platform also plays to the ego of the influencers, compelling them to fight for a spot on the leaderboard. Sad, really.
As Daan mentioned in his thread tagged above, there are a few ways that people make money.
“Besides price moving up and down there's some fees involved in buying and selling shares.
5% of the share price goes to the Friend Tech treasury.
5% of the share price goes to the person that you're buying or selling the share from.”
This is the big catch. Every time someone buys or sells your share, you make money. A lot of it. I “made” about 4 ETH in a matter of hours, which I will leave on the platform and figure out what to do with at a later date. And this was without promotion and with me actually speaking very critically of the platform on spaces (which dumped my price). Screenshots of people actively pumping their “shares” have been of 20+ ETH in a matter of hours.
So influencers make money pumping, dumping, pumping again. That is not the intention of most, but it’s just how the fee structure and incentives work. Every purchase or sale is money in their pocket.
Further, this is likely a major issue with regulation - there is an expectation of profit when influencers use tools to pump price. This is the very definition of an unregistered security in that regard… a marketer or promoter giving an expectation of profit on an asset that has not been registered with the SEC.
Blockworks summarized this well in this article.
There are a lot of issues here. Clearly.
Friend.tech's innovative approach to decentralized social engagement has garnered considerable attention and investments. The blend of social benefits with potential financial gains has made it an intriguing proposition for many.
However, the concerns raised about its sustainability, coupled with privacy issues and the propensity for bad actors to take advantage of their “community” paint a less rosy picture. Critics warn that the platform's hype may not last, while supporters hail it as the next big thing in crypto.
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 am wrong.
Can We Get An Inverse Bart On Bitcoin?
We all know what the Bart pattern is by now, right? If not, then here is an illustration.
This is one of my favorite things in markets. Price rises, consolidates sideways looking bullish, then drops right back to where it started. This pattern is a function of whales manipulating price action. Short squeeze up, then long squeeze down.
At the moment, Bitcoin has an ideal setup for an Inverse Bart. Just flip him upside down and eat his shorts, man.
The idea for the drop we just saw is that one major player bought tons of Bitcoin over the past few months while also accumulating a short position with leverage. At the ideal moment, when volatility was historically low with almost no volume, they sold their huge spot position at once on the market, causing a liquidation cascade on leverage exchanges. They made money buying on the way up and selling spot, but even more on their leveraged short that was triggered by the sale. Risky, because if there’s a huge buyer in the market this will not work. Timing has to be precise.
They were successful this time, which is evidenced by the fact that price dropped in a single 5-minute candle.
So why would we Bart back up? Because they likely were also the buyer at the bottom, holding support around $25,000.
This is just a fun prediction, I have no idea what will happen. But now shorts are paying longs on exchanges, meaning the market is ripe for a short squeeze back up.
That’s how we get Bart.
Still waiting for bullish divergence. I believe we will get one more push down for a lower low on price, making an inevitable higher low on RSI. Then up for Bart.
Just a guess! Right now the market is weak, so the betting man would probably put their money on more downside.
Markets Are Schizophrenic
Nasdaq futures are indicating further gains in US tech shares following Monday's rally, with optimism about the tech sector spreading across Europe and Asia as well. The Nasdaq 100 Index is up 0.4%, and Nvidia Corp. gained 1.4% in premarket trading. Treasuries have steadied after reaching 16-year high yields, and a surge in Chinese shares has lifted sentiment in Asia. Europe's Stoxx 600 Index has seen gains led by tech, while the UK's FTSE 100 Index has broken its longest losing streak since July 2019. Investors are now closely watching for Federal Reserve Chair Jerome Powell's speech on Friday at the Jackson Hole Economic Policy Symposium, seeking clues about the future direction of US monetary policy. Over 80% of those polled in a Bloomberg survey expect Powell's speech to reinforce a message of hawkish hold on policy. Meanwhile, SoftBank Group Corp.’s semiconductor unit Arm has filed for what could be this year's largest US IPO.
Key events this week:
US existing home sales, Tuesday
Chicago Fed’s Austan Goolsbee speaks, Tuesday
Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
US new home sales, S&P Global Manufacturing PMI, Wednesday
US initial jobless claims, durable goods, Thursday
Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
Japan Tokyo CPI, Friday
US University of Michigan consumer sentiment, Friday
Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 9:37 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.4%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index rose 1%
The MSCI Emerging Markets Index rose 0.7%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.2% to $1.0917
The Japanese yen rose 0.4% to 145.66 per dollar
The offshore yuan fell 0.2% to 7.3013 per dollar
The British pound rose 0.3% to $1.2789
Cryptocurrencies
Bitcoin fell 0.1% to $26,075.6
Ether fell 0.4% to $1,664.93
Bonds
The yield on 10-year Treasuries declined two basis points to 4.31%
Germany’s 10-year yield declined three basis points to 2.68%
Britain’s 10-year yield declined three basis points to 4.70%
Commodities
Brent crude fell 0.3% to $84.18 a barrel
Spot gold rose 0.2% to $1,899.19 an ounce
Did Friend.tech Experience A Leak?
A pseudonymous Twitter user has shared data of Friend.tech users, sparking debate within the community about what constitutes a leak. The “leak,” as some are referring to it, consists of a massive repository of over 100,000 Twitter accounts that correspond to certain wallet addresses used in the signup process. Considering how public blockchains currently are, it doesn’t take much effort to discover someone's address or activity. This is why critics argue that the data was not truly a “leak.” The situation raises questions that you may wish to explore further, especially concerning the permissions on the platforms that all users likely agreed to without a complete understanding. The article linked above asserts that “friend.tech’s permissions claim that these users had granted friend.tech the ability to post on their behalf.” The unfolding drama will surely pique interest as the community watches to see where the hype leads next.
Binance Faces More Trouble In Europe
Binance customers in Europe are currently facing challenges in processing EUR deposits and withdrawals via SEPA, the Single Euro Payments Area, a standard for European cross-border payments. Binance has publicly announced that they are working to restore these transactions. However, confusion arose from a now-deleted Binance message that circulated, stating that the payment provider “can no longer support these transactions.” Although the message was later clarified as having been “sent in error,” and that SEPA will continue until September 25th as originally communicated, the situation remains unclear. Binance finds itself continually navigating small and medium challenges on all fronts. The resilience shown during this period could prove pivotal for the exchange, but caution is still advised: I still wouldn't recommend leaving your funds on the platform or any exchange at all.
Circle And Coinbase Up Their Game
Crypto exchange Coinbase is boosting its support for stablecoins by investing in Circle, although the exact terms of the investment remain undisclosed. As part of the agreement, Circle will assume full control over USDC's issuance and governance, and USDC will be launched on six new blockchains between September and October. The companies are also disbanding Centre Consortium, the organization initially founded to manage the stablecoin. Both Coinbase and Circle expressed a shared commitment to the stablecoin ecosystem and will continue to generate revenue from USDC reserves interest income. This move comes at a time when other companies like PayPal are also showing interest in stablecoin development, signaling a growing trend within the industry.
Bitcoin Sudden Crush: When Is The Time To Buy The Dip? | Macro Monday
Join James Lavish, Dave Weisberger, and Mike McGlone for a deep dive into the latest macroeconomic trends. We unpacked the factors behind Bitcoin's recent downturn and explored strategies for determining the optimal time to invest in it.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.