The Defiant's Ultimate Friendtech Guide

yyctrader

Sun, Oct 8, 2023, 11:17 PM 9 min read

Disclaimer: This is neither a recommendation nor an endorsement to buy or trade any token(s). yyctrader has been using friend.tech since August and holds many of the keys mentioned.

friend.tech is a social trading app that has drawn in users from all corners of crypto, from DeFi and coin traders to NFT collectors, builders and thought leaders. In the two months since it launched, the platform has amassed a total value locked (TVL) of nearly $50M and crossed 100,000 users in its first two weeks.

What Is friend.tech?

friend.tech is a web3 social media application that facilitates interactions between creators and their audience through the selling and buying of "keys" linked to Twitter accounts, which give access to private chatrooms. It runs on Base, the Layer 2 network from Coinbase that launched this summer.

Nearly $400M worth of keys have been traded as of Oct. 5, netting the platform a cool $19.5M in fees, as it collects 5% of every trade. In terms of weekly revenue, it’s currently ahead of all major DeFi protocols except Lido.

SocialFi isn’t a new concept – we’ve already seen BitClout, Lens, Farcaster etc.

So why are degens betting serious money on these keys? As with most hyped narratives in crypto, there’s naturally a token involved.

The Airdrop

friend.tech is backed by Paradigm, a well-regarded VC firm that was an early investor in Uniswap, Fireblocks and Chainalysis, among other major crypto projects. It also backed Blur, the now-leading NFT marketplace by volume, which drew users away from OpenSea by offering activity-based airdrops of BLUR tokens.

On Aug. 14, friend.tech announced that 100M ‘points’ would be distributed weekly to users of the platform over six months.

Despite a lack of tokenomics information or even official confirmation of a token from the team, that hasn’t stopped yield farmers from speculating on the future value of these points. Estimates range from $0.50 to as high as $5, with future tokens reportedly being sold over the counter (OTC) already.

A recent analysis from hopydoc of the Spartan Group projects $3+ per point if the platform continues to generate fees at current levels.

Currently, farmers are earning 50 points per ETH on average, but that's subject to drop as TVL rises.

Earning a triple-digit yield on ETH sounds great, right? Not so fast.

This isn’t your typical yield farm where you park your assets and claim rewards occasionally.

In this tutorial, I’ll share some tips to get the most out of your friend.tech experience while avoiding potentially costly mistakes.

Before we get started, here are some risks you should be aware of:

friend.tech is an experimental project still in beta.
The platform generates a wallet for you, and while the private keys are secured by Privy, it’s no substitute for self-custody, ideally with a hardware wallet.
Use a Google or Apple email account to sign up, as users who signed up with their phone numbers are at risk of SIM swap attacks.

Onboarding

Setting up a friend.tech account is quite straightforward. Simply head over to friend.tech on your computer or mobile device and sign up by connecting your Twitter and email accounts.

As the app is still in closed beta, you’ll need an invite code. You can find some single-use codes at the end of this tutorial or on Twitter. Please reach out in Discord if you’re unable to find one.

You’ll need to fund your newly created wallet with ETH on Base to get started, and there are various deposit options:

Deposit ETH on Ethereum mainnet
Use a bridge like Synapse to send ETH to Base
Transfer from Coinbase
Credit card purchase

Once your account is funded, you will be prompted to buy your own key for free + gas. Once this is done, your account will be active and your key will become tradeable.

If you run into any issues, please consult this setup guide by 0xBreadguy.

At this stage, I recommend that you export your friendtech wallet to a regular browser wallet like Metamask or Rabby, so you can retain access even if the platform goes down.

If you are a prominent personality, don’t be surprised to see a rush of buyers, as these are bots and traders on the hunt for new accounts that they can flip for a profit.

Pricing and Fees

Keys are priced along a bonding curve and a 10% fee is levied on all trades, half of which goes to the creator and the other half to the platform.

Be aware that fees add up quickly and it’s most profitable to enter early, as one would expect.

The above graphic illustrates the mechanics well. A spreadsheet version of the bonding curve model can also be found here.

Points System

Points are released every Friday around 8 p.m. ET.

While the exact formula remains unknown and changes from week to week, analysts like xponentcrisis have been crunching the data to give the community a better idea.

The two biggest drivers of points so far have been portfolio value and the number of keyholders an account has.

It’s likely that portfolio value will continue to be prioritized as the team looks to boost TVL.

Now that we’ve covered setting up an account and how the points work, let’s move on to strategies to maximize your potential airdrop.

I’ve found that friend.tech users can be broadly classified into four groups:

Casual User - Curious about the app, makes a small deposit, buys a few keys and engages primarily in their own chatroom.
Content Creator / Grinder - Extremely active on the app, looking to build an audience through organic engagement in multiple chatrooms.
Flipper/Sniper - Always hunting for new accounts to buy early and flip for profit, usually uninterested in the airdrop.
Power Users/Whales - Top 1,000 users on the leaderboard that are usually both active and deploying capital.

Your optimal strategy will depend on how much time and ETH you’re willing to put in, so I’m going to share some general tips.

Farming Strategy

Regardless of the size of your portfolio, your goal should be to deploy capital while reducing your downside risk, so spend your ETH wisely on keys that are likely to stick around for the duration of the airdrop campaign.

The 10% fee on trades means that changing your mind is expensive, as buying and selling a key at the same price leaves you with a 20% loss!

Owning more than four of your own keys is not advisable from a points perspective. Early whales like Vombatus sought to game the system by buying up their own keys, which led to the team cracking down on self-buyers.

It wouldn’t be crypto without fake accounts and scammers, so always do some due diligence before buying any keys – check their Twitter profile, mutual followers, funding wallet etc.

The Return Of (3,3)

For those unfamiliar with the origin of the (3,3) meme, it emerged during the heady days of the 2021 bull market, when OlympusDAO was leading the ‘DeFi 2.0’ movement.

The idea was simple – If nobody sold, prices would continue to rise and everyone would benefit. Of course, we all know how that turned out.😬

With points for self-buys being nerfed by the friendtech team, large farmers had to find a way to reallocate capital, which they did by exchanging their keys with each other, naturally leading to the (fren,fren) or (🤝,🤝) strategy that is currently favoured by many users.

This refers to two people buying each other's keys with a loose commitment to hold for the duration of the airdrop campaign. For a more detailed explanation, check out 0xBreadguy’s guide.

Picking the right people is vital to the strategy, as we’ve already seen some strained bonds.

If you choose to participate, here are some tips:

Start by looking for keys in your price range, which offer the most equitable trade. If your key is 0.1 ETH and you buy a 1 ETH key, they are unlikely to buy 10 of yours.
Vet potential candidates using the Dune dashboards at the end of this guide.
Watch out for accounts that hold a large number of their own keys.
Look to maximize your holder count, which some speculate could be positive for points.
Have fun! Remember that this is a long campaign, so it’s a bonus to hold the keys of people you actually want to interact with.

Final Thoughts

I signed up back in August purely out of curiosity, as I’ve learned that dismissing new crypto projects without trying them out is usually detrimental to my wallet.

While I remain skeptical of the longevity of the platform beyond the airdrop, I’ve managed to make a lot of new connections in the space, ranging from traders and NFT collectors to VCs and builders, many of whom I’ve followed for a long time but never had the chance to interact with. Regardless of how the airdrop plays out, I consider that a win.

For the grinders looking to work their way up the leaderboard, 0x5f Capital is a great account to follow. Keep engaging on the app and don’t get discouraged if it takes a while for you to get noticed!

Those who have been reading DeFi Alpha for a while will know that I rarely recommend a product, but if you’re planning to take the game seriously, consider joining 0xWildWizard’s Discord.

While the price of admission is steep (currently 0.84 ETH), it’s an extremely active community of friendtech traders, grinders and whales, frequented by top accounts like dingaling, 0x5f Capital and Otto Suwen. Other members routinely feature among the most profitable traders on the platform. Full disclosure: I hold a key.

This is probably the longest tutorial I’ve written, and it’s a lot to digest. Feel free to reach out in our Discord if you have any questions and I hope you avoid some of the early mistakes I made.

Planning your exit strategy is as important as your farming plans. With the airdrop expected in February, it's likely that users will start to derisk as the launch approaches. Do not sleep on your portfolio or you are likely to get dumped on!

Finally, everything in this post is for informational purposes and is not a recommendation or endorsement of the platform. Only deposit what you’re willing to lose🫡

Enjoy!