Decentralized Social Media
Breaking down the continued success of Friend.tech...
In today’s edition of The Ground Floor we are breaking down Friend.tech and why the platform continues to increase in popularity…
Is Decentralized Social Media Back?
Decentralization and social media
In theory, they should complement each other for a variety of reasons, however, in practice they have worked as well together as oil and water ~ they don’t mix.
This was best illustrated by the rise and fall of Bitclout, however, just because something failed to work in the past doesn’t mean it can’t work in the future.
What Went Wrong?
Bitclout (now DeSo) was born during a period whereby crypto continued to appreciate in value, and the market at large was convinced that crypto was the singular solution to many prominent problems.
One such problem that was prevalent during this period was online censorship.
In response to this, many creators were very open to the idea of decentralized social media whereby creators would retain control of their ability to reach their followers, as opposed to relying on remaining in good standing with large social media platforms who could restrict their reach for any number of reasons.
These conditions paved the way for Bitclout to gain significant traction in a very short period of time as the product was positioned as a decentralized, censorship resistant Twitter whereby users could bet on the success of creators.
As an individual who was very active on Bitclout throughout this period, it was crystal clear Bitclout faced many scaling problems, and without the right solutions ~ Bitclout quickly degraded into people creating content simply to promote their coins which unsurprisingly didn’t make for very interesting content.
The value of the Bitclout protocol
What’s Going Right?
Friend Tech is less than 33 days old.
Throughout its short history, the platform has been subject to much criticism by people who are opposed to the financialization of people whereby a number next to their name is thought to be indicative of their value.
While Bitclout seemingly embraced this narrative, Friend.tech has taken a different approach ~ focusing on the financialization of gated group chats.
Yes, these platforms share many similarities such as their macro goal of creating a decentralized social media platform, however, the focus on gated group chats as opposed to a singular timeline significantly sets these platforms apart.
The Bull Case For Friend.tech?
1) Speculation: First and foremost, Friend.tech is enabling a new form of speculation whereby people are provided the opportunity to bet on the popularity of gated group chats on the platform.
If you think someone is capable of creating interesting conversations within their gated group chat that other people would like access to, you can purchase their “keys” that provide access to these gated group chats.
While on paper this might not sound like the most compelling use case, in reality, people have been purchasing NFTs for years now as a means to access exclusive online communities ~ friend.tech is simply a more direct model.
2) Creators are making money: NFTs have enabled digital artists to make money in ways that were previously out of reach.
That’s an average of $151,000+ each day.
It’s unclear how sustainable these payouts will prove in the long run, however, in the short run, it’s crystal clear these payouts will continue to attract new creators to the platform who would like a piece of this pie.
In the past 2 days, @friendtech trades have paid creators $500,000, more than 3x as much as the entire ETH NFT ecosystem has paid creators.
— NFTstats.eth (@punk9059)
Sep 11, 2023
3) The upcoming airdrop: In addition to the opportunity for speculators to purchase creators keys with the intent to buy them low and sell them high, the people actively participating on the platform are also accruing points.
It’s unclear what value these points will provide participants, however, the consensus is that these points will provide the people holding them a share of the Friend.tech airdrop when they would conceivably release their native token.
This is a tried and tested playbook with people having made massive sums from accumulating points via their participation on Blur when the platform was being built, and the lure of such an airdrop is more than sufficient for many participants to use the platform in anticipation of such an airdrop.
At the time of writing, Friend.tech has more than 140,000 people using the platform with more than $20 million in value locked in the platform (value of the ETH deposited) with friend tech making $500,000+ in daily revenue this week.
As the allure of an airdrop continues to gain attention within the Web3 world, it’s my perspective that this platform will continue to gain popularity in the weeks, and perhaps months to come for the reasons mentioned above.
Does this mean Friend.tech is the future of decentralized social media?
Absolutely not, as such financial incentives to use a platform can significantly distort the data on the number of people using the platform for reasons related to the value they gain from using its features vs the possibility of making money.
As is the case with every product in the Web3 world, the real litmus test is the extent to which users are interested in using a product once the platform has concluded the financial incentives to use the product.
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This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity