Entrepreneurial Thinking Based on Friend.Tech Seeing the Emergence of Web3 Fan Economy Breaking through Traditional Boundaries
Friend.Tech's Entrepreneurial Thinking Sees Web3 Fan Economy Breaking Traditional Boundaries
Recently, more than half of the content on Twitter is about Friend.Tech. After trying it out, I found that it has many good concepts, which can provide some inspiration for future social entrepreneurship and incubation:
What are the highlights of Friend.Tech;
What are the problems with Friend.Tech;
What are the better entrepreneurial directions based on Friend.Tech;
What are the highlights of Friend.Tech?
Firstly, Friend.Tech is a track in the social industry that is very suitable for the encrypted market: fan economy. Although its slogan is “Your network is your net worth,” it seems to be targeting ordinary users. However, both its business model and promotion methods are based on the fan economy. Therefore, I would prefer to say that it is a fan economy platform.
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Why is the fan economy very suitable for the encrypted market?
Social networking has always been a direction that many people have high expectations for, but so far, the projects with the most users are infrastructure projects, such as social graphs and wallets. Why is it so difficult for application projects? It’s because the moat of Web2 applications is already too high, and users have no motivation to migrate, and VCs are uncertain and unwilling to invest.
The essence of the encrypted market is finance. The past applications that have emerged, such as DeFi and GameFi, follow the same principle. However, they are too financial and difficult to sustain because the users they attract are not the real target users but speculators who want to make money.
Therefore, it is crucial to make your users willing to pay for your product.
But most social scenarios have nothing to do with money, and users will not spend money for ordinary daily chats. The big social scenes that users are willing to pay for are dating and fan economy. Of course, dating inevitably involves some unhealthy information, so compared to that, the fan economy is very suitable. Users have a real willingness to pay, and phenomena such as traditional live-streaming rewards and celebrities creating their own brands have shown that fans are willing to pay directly to celebrities.
Secondly, the fan economy comes with traffic. What is most important for Web3 entrepreneurship? Naturally, it is traffic. In just 13 days since its launch (until August 23rd), the total trading volume of Friend.Tech has reached nearly 40,000 ETH, the number of user addresses is close to 100,000, the protocol inflow has exceeded 66 million, and the transaction fees (protocol revenue) amount to 3.34 million. Apart from the initial growth in data after its launch, the data skyrocketed from the announcement of LianGuairadigm’s investment on August 19th. Why? Because LianGuairadigm is now the market’s compass for traffic. Friend.Tech’s target users are many KOLs, and KOLs have traffic. The market path of their product is in line with this, so doing KOL promotions can be said to be twice the result with half the effort.
Friend.Tech has an eye-catching business model
So, will any project succeed in the fan economy? Obviously not. On the one hand, Friend.Tech has the support of Coinbase, making it a key application to attract traffic on the base. On the other hand, the business model it introduces is also a concept that is easy to attract attention. In the past, what we have seen more often is to encourage users to use the application and reward them with tokens. Both KOLs and ordinary users benefit from the growth of platform tokens. However, this requires strong control over the tokens, as a decline in token value in the later stage can cause significant damage to the product.
Friend.Tech does not issue its own tokens, but allows users to directly purchase shares from others using ETH. Once they own shares, users can chat, join KOL groups, and the transaction fees for KOL shares will go directly into their wallets. This provides a direct reward for KOLs, making it very attractive to them.
For users who buy KOL shares early on, they can sell them at a higher price later and earn profits. Friend.Tech uses a bonding curve to ensure that prices rise with transactions, incentivizing early purchases by users. Especially when new KOLs register on the platform, many users will buy their shares due to expectations of their traffic.
Of course, platform users are not just in it for the money. Holding shares not only has the expectation of selling, but also allows users to have conversations with KOLs. This is where fans are truly willing to pay, giving value support to the application.
This logic is somewhat similar to previous NFTs, where creators can earn royalties and many users buy NFTs not just to sell, but more importantly, to enter that circle.
Other advantages of Friend.Tech
In addition, Friend.Tech has some clever features, such as directly linking Twitter accounts, which allows for easy redirection of Twitter traffic. It also helps users discover early investment opportunities, further driving user growth.
Furthermore, the application is actually a web version, but it generates an app on the desktop, avoiding the issues of app stores while still providing an app-like experience.
Moreover, the application integrates a cross-chain bridge, which allows for direct cross-chain functionality within the application to deposit ETH from the mainnet into the base, eliminating the need to separately transfer on a cross-chain bridge.
What issues does Friend.Tech have?
In my personal opinion, Friend.Tech mainly has the following three issues:
Poor user experience
Many users have complained that Friend.Tech is difficult to use, such as pages taking several seconds to refresh, frequent bugs, and the inability to log in using a computer, only a mobile phone.
In addition, each new user registering on the platform will automatically generate a new wallet address. At first, I thought this was to make it easier for people who don’t use crypto to get started, but later I found out that they still need their own ETH mainnet address and have to cross-chain to the base. The steps are quite cumbersome and not user-friendly for traditional users. For crypto users, they cannot bind an existing address and have to manage a new address, which is more troublesome. So personally, I find it difficult to understand the reason for setting up this function and speculate that it may be related to the configuration of share transactions.
Currently, besides buying and selling shares, the only function of Friend.Tech is chatting. If users don’t buy shares from others, then this application is just an empty shell and can’t do anything. This is a hindrance for users who want to try it out. If there could be some free content for users to browse, their activity and engagement would greatly increase.
The excessive financialization is the biggest problem I see with Friend.Tech. On one hand, it is reflected in the dominance of its financial functions, which means the product functions are too single. Although it targets the fan economy, which is a track where users are willing to pay, fans also need to be cultivated, but the product currently lacks this channel. Moreover, a high proportion of financialization will attract more speculative users than real users.
Secondly, the bonding curve set by Friend.Tech for share trading is too steep. With more than 100 share holders, the price of shares reaches 1-2 ETH, which is a hindrance for users to purchase in the later stage. This limits individual KOLs from attracting a large number of fans on the platform. Combined with the lack of content channels to cultivate fans, the product becomes more like a new venue where mature KOLs charge for private domain traffic.
This is also why many people are not optimistic about Friend.Tech and criticize it as another new speculative bubble that will burst soon. However, I don’t think there will be a bubble burst, after all, it hasn’t issued any tokens. At most, it will gradually lose its voice. As a dapp that serves as a base for attracting traffic, it has already achieved tremendous success. If the subsequent data is not ideal, it is more likely due to the aforementioned problems.
What are the better entrepreneurial ideas based on Friend.Tech?
The emergence of Friend.Tech may lead to a renewed attention to the social track, so many entrepreneurs and investors will start paying attention to this direction.
I always believe that the fan economy is the most potential application for Web3 social networks to break through. Both its built-in traffic and the payment ability of target users make it easier for user growth and platform development. The challenge lies in how to accumulate the first batch of KOLs. Friend.Tech happens to bring a good business model that can start the growth flywheel, but it also needs a suitable scenario to rely on.
Group chat is a good scenario, and there are many fan economy models that have been proven in traditional economies, such as live streaming, short videos, long or short text sharing, and group chat, etc.
However, the text platform for fan economy already has Twitter, which has increased incentives for creators since it was taken over by Elon Musk. Moreover, everyone has expectations for token issuance on Twitter, making it very close to Web3. Therefore, I think it is difficult for this field to emerge under the dominance of Twitter.
Therefore, another option to consider is video scenarios such as live streaming. At the same time, the content on these traditional platforms is very strictly regulated, while Web3 products can be relatively more free.
Secondly, in terms of product design, user payment should be set with thresholds, and there should be some free content to attract and cultivate users. For advanced content, try purchasing content similar to Friend.Tech, gradually increasing user stickiness, and also incentivizing ordinary users to gradually build their own influence and benefit from it. In addition, considering the expansion of user base, KOLs should be allowed to decide the form of the bonding curve to match different content quality and target users.
Finally, the social platform of Web3 should target a broader user base rather than just Web3 users. This requires a low enough entry barrier for users, with a focus on wallet, payment, and other functionalities. When it becomes possible to achieve convenient product user experience and sufficient incentives for KOLs, it is very likely to attract a large number of traditional KOLs into the application, potentially forming a new paradigm of fan economy and creating truly groundbreaking applications.