Morning Minute | Has The Friend Tech Bubble Burst?

TylerD's Market Summary

Friend Tech has soared in popularity, with 100k users and over 1.7M transactions in 10 days. But does it have legs, or is the app already in down-only mode?

🤝 Friend Tech Makes Millions for Itself and Friends

If you have been around NFT or Crypto Twitter over the past week, you've seen Friend Tech on the timeline.

It's been the major story and incredibly polarizing, with fans and haters chucking takes at one other relentlessly for days.

Now after what may have been a blow-off top weekend for the new app, the question on people's minds - has the Friend Tech bubble burst?

What is Friend Tech?

For quick background, Friend Tech is dubbed "the marketplace for Friends" and is an app that sits on the L2 Base.

Friends are the products on this app, able to be bought and sold like NFTs, with "key"* holders able to access private chats led by the friend.

Want to speculate on or talk to Cobie? Buy one of his keys and get into his chat room. Or simply hold a key passively looking for an exit at a higher price (not guaranteed).

*Note the team just changed the word "share" to "key" yesterday, perhaps in an attempt to make the whole process less "unregistered security"-like.

To get started, users need to sign up with Twitter (and a phone number), bridge a little bit of ETH to a custodial wallet on Base, buy a share of yourself and then launch.

People are priced on a quadratic bonding curve, meaning they start low but go high pretty fast.

The first few buys are at or below the 0.001 ETH level, but once a friend gets 30-40 holders their price shoots up closer to 0.1 ETH, At 50-60 holders the price is in the 0.4-0.5 ETH range, and it quickly goes higher.

Each buy and sell has a 10% tax, with 5% going to the person and 5% to Friend Tech.

Market Impact & Metrics

One of the main reasons Friend Tech has generated so much hype is due to the huge numbers involved just 10 days post-launch.

A few key metrics and stats:

• 1.7M transactions completed
• $3.14M in fees generated
• $62.8M in protocol inflow
• $34.9M in buys vs $27.9M in sales (makes some say there's like a $7M marketcap)
• 92,700 unique buyers

Those are some eye-popping stats - but wait, there's more.

Because of the 5% tax that goes to the creators (the friends), popular individuals are making bank.

Here's the top list from yesterday, with Cobie leading with 80 ETH in fees, Hsaka next at 56 ETH and Racer (founder) with 55 ETH. That's some real money.

For reference, a small account like me has generated about 0.25 ETH in fees after being on the app for about a week.

Recent News - Paradigm and Mainstream Adoption

As mentioned above, this past weekend saw activity soar and may have been a blow off top.

Why did it happen?

Two major pieces of news came out on Friday and Sunday.

On Friday, the Friend Tech team posted an image alluding that Paradigm invested in their seed round and the first round of airdrop points came out.

For many this inspired more confidence that the app was "legit," had real backing and was less likely to rug.

Then on Sunday after trading volume had picked up, major names from outside crypto started joining.

We saw names like Faze Banks joining and starting onboarding major people, NBA player Grayson Allen, players from Tech like Nikita, Only Fans creators and more. This was on top of basically every major crypto and NFT personality capitulating and joining.

Has the Bubble Burst?

Volume has quieted down since Sunday, with most Friends falling in value.

Many are wondering if the bubble has already burst and if we're in for down only on our friends.

There are reasons to be bullish and bearish.

Bull Case

• The app is 11 days old, has generated millions of dollars and captured ~100k users
• Many are building infrastructure around and on top of the app, including sniping bots, indexes, desktop apps, trading activity trackers, data analytics and more
• Creators making tens of thousands of dollars will tell their friends
• People are generally having fun on the app even with its limitations
• The app (when working) is very easy to use on mobile and solves many issues of the native crypto/web3 trading experience with its custodial wallet
• An airdrop and $FRIEND token could well soar past the $100M marketcap level as Social Fi becomes a new meta

Plenty of reasons to be bullish and there are likely several more. There are also reasons for concern and hesitancy.

Bear Case / FUD

• The app crashes / doesn't work a lot and the chat function is very limited
• The team has a spotty history with failed projects in their past
• Some issues with the code base and lack of privacy policy
• Trading friends based on "social capital" can be seen as dystopian and wrong
• The 20% fees (10% on buys and 10% on sells) make it very hard to beat the rake trading-wise, and the prevalence of bots has made buying early (and cheap) nearly impossible
• The bonding curve effectively caps how large the groups can be sub-200 based on how quickly price jumps up

So there are some real reasons to be bearish as well.

Has the bubble burst? 

Personally I think it has more legs and another run.

Only a handful of major names outside crypto have joined so far and they've all made serious money. They have incentives to stick around (at least for a bit) and tell their friends.

The team is now flush with cash and incentivized to keep building and fixing issues (app durability, anti-bot measures, etc.).

So I'm long the FT Index. As for individual prices, those could very well fall unless we see a serious influx of capital.

Overall it's been a fun experiment to watch and take part in. Even if Friend Tech is not the final boss of Social Fi, it has taken this meta to the next level.

And hey, maybe we can make some new friends along the way.

🚚 What else is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

• Trading volume came in around 6,700 ETH on Monday; the NFT board saw some welcome green in a small relief rally after weekend bleeding: BAYC +3% to 24 ETH, MAYC +2% to 4.64
• Sam Spratt's The Monument Game went live Monday evening, with the 209 "Player" editions selling out in 2 minutes at 3.33 ETH (695 ETH or $1.15M raise) and 237 unique players in the game
• Sam's 1/1 "IX. The Monument Game" has been bid up to 95 ETH as more and more players explore the intricate and expansive piece
• Jack Butcher's Opepen Set 12 "Kairos" revealed and opened at a 1.05 ETH floor
• Zynga's new web3 game Sugartown teased new details around its upcoming mint for the Oras, indicating it's likely a 9,999 NFT set
• Azuki is partnering with NFL star Patrick Mahomes for 1/1 Azuki-style Mahomes card to be raffled off to holders
• Recur announced last Friday that its shutting down its platform citing "unforeseen business challenges" effective Nov 16, 2023; users are encouraged to withdraw their NFTs and any crypto from the site by that date

🌎 Around Crypto and Web3

A few other Crypto and Web3 headlines that caught my eye:

• The crypto market mostly chopped on Monday; BTC even at $26,040; ETH even at $1,660
• Coinbase has taken an equity stake in Circle and USDC, with USDC set to launch on 6 blockchains for native support
• Snoop Dogg and Skechers collaborated on a pair of sneakers featuring Snoop's Bored Ape, Dr. Bombay, priced at $100 each

🚀 NFT Total Volume

• BAYC (3,755 ETH, 24 ETH Floor)
• MAYC (790 ETH, 4.52 ETH)
• DeGods (47 8 ETH, 3.7 ETH)
• Azuki (302 ETH, 3.44 ETH)
• Pudgy Penguins (227 ETH, 3.65 ETH)

📈 NFT Floor Price Increase

• Cult (129%, 0.41 ETH Floor)
• Sproto Pepes (68%, 0.06 ETH)
• CyberKongz Genkai (20%, 0.12 ETH)
• Azra Games (20%, 0.29 ETH)
• DigiDaigaku (14%, 2.06 ETH)

🗓 Upcoming NFT Mints and Reveals

Today has drops spanning brands, PFPs and art.

adidas is dropping their collab with BAPE called The Forum this morning and Kaiju Kings are back with Kaiju Origins.

Then artist Harvey Rayner (behind "Fontana" in Art Blocks Curated) is doing his Quasi Dragons drop on Verse. It is a generative mint with a twist, where collectors purchase tiles to create composite pieces, with potential to unlock Black and White Dragons.

If you want more, see the full list of today's drops from Swizzy's daily mint monitor. 

• adidas z BAPE - The Forum (10:00 a.m. ET)
• Kaiju Origins (1:00 p.m. ET)
• Harvey Rayner x Verse "Quasi Dragon" (1:00 p.m. ET)

Enjoy this write-up and/or want to sponsor the Morning Minute? Follow along with me on Twitter @tyler_did_it or reach out via email tyler.warner@luckytrader.com.

For all volume and floor price data, see Lucky Trader's Project Rankings page.

For all upcoming mints, see Lucky Trader's NFT Calendar page.