The rise and fall of Friend.tech
Friend.tech, the BitClout lookalike that was once the most popular application on Coinbase’s layer 2 of Ethereum, has removed the ability to change the smart contract code. Administrators transferred permission to edit its smart contract to Ethereum’s ‘burner’ null address this week. Critics quickly declared its network ‘effectively dead.’
To date, the market capitalization of its token has declined 96% from $235 million to less than $10 million. Its protocol’s total value locked has declined a similar 93%.
After processing tens of thousands of daily transactions during its launch in August and September 2023, use of Friend.tech on Coinbase’s Base dwindled to nearly zero by November. Ever since, users have continued to neglect the network, with August 2024 transactions totaling barely a few hundred per day.
In 2023, Ethereum layer 2s like Arbitrum and Optimism were one of the hottest new things in crypto. That year, Arbitrum was airdropping its highly-anticipated ARB token, and Optimism was launching its OP Mainnet. Google queries for Arbitrum hit an all-time high in 2023 with over five times more queries than Google has received for that word at any other time.
Friend.tech: The flagship app on Base
In the midst of this frenzy, Coinbase launched its own Ethereum layer 2, Base. Differentiated by its lack of a proprietary token, Coinbase advertised Base as a way to save time and fees for a cornucopia of use cases.
In reality, a single application quickly gained traction and dwarfed all other activity on Base: Friend.tech, a copycat of BitClout.
Just like BitClout, Friend.tech allowed users to buy tokens associated with Twitter influencers in order to speculate on their popularity.
The DOJ and SEC eventually filed criminal and civil charges, respectively, against the founder of BitClout. Before law enforcement even published those charges, the market capitalization of BitClout had declined over 90%. It halved again after the charges – and has never recovered.
So far, no charges are filed against the founders of Friend.tech.
Read more: Are Friend.tech keys securities?
The protocol has generated approximately $40 million in fees since inception. There is no full accounting from Friend.tech nor its founder Racer regarding those funds.
For its part, Friend.tech denies claims that it is discontinuing its service or web application. It is simply guaranteeing that no one may change its smart contract on Base.
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