Did friend.tech's decline disprove SocialFi? No, the real hope for SocialFi lies here
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Did friend.tech's decline disprove SocialFi? No, the real hope for SocialFi lies here
We should be wary of applications that overly rely on "DeFi."
Navigating Web3 tides with focused insightsBy: TechFlow Asher Zhang
Recently, the decision by friend.tech to relinquish control of its smart contracts sparked intense debate in the market. The team clarified that this was not a rug pull—so is there still hope for friend.tech? Does its decline invalidate SocialFi as a concept? Why was friend.tech’s downfall inevitable? And where does real promise for SocialFi lie?
friend.tech Is Effectively Bankrupt; SocialFi Must Prioritize the "Social"
On September 8, the friend.tech team announced they had set both the Admin and ownership parameters to 0x000…000. Following the news, the protocol's token FRIEND dropped over 20% in price. According to CoinMarketCap data, FRIEND once traded near $3 in May but has since plunged by more than 97%.
Why did the market react so strongly? This move indicates that developers have permanently surrendered control over the smart contract, meaning no future upgrades or improvements are possible—fueling speculation about an exit scam. However, the team later clarified: “We have no plans to shut down or discontinue the friend.tech application. The prior action was taken solely to ensure that no changes can ever be made to the smart contracts deployed on Base—including any modifications that could introduce new fees. These actions do not affect the current functionality of the friend.tech app in any way. Everything users know and use remains unchanged.”
Despite the team's reassurances that “everything remains the same,” the data tells a different story: friend.tech is effectively unsustainable. Data from The Block shows that since the end of May, daily active users (DAUs) have remained below 100. On August 7, DAUs plummeted to just five—three unique buyers and two unique sellers—the lowest level on record. From a business perspective, such operational metrics are nonviable. Without ongoing development or updates, revival is nearly impossible. Therefore, I argue that friend.tech has effectively undergone bankruptcy liquidation. Additionally, the team has continuously transferred ETH to Coinbase addresses, totaling 19,477 ETH.
At its peak, friend.tech focused heavily on the “Fi” aspect of SocialFi, using financial incentives to drive rapid user migration. But much of its apparent success stemmed from mercenary actors—“yield farmers”—who flooded the platform with spam to farm tokens, undermining genuine user experience. Once these actors cashed out, the ecosystem collapsed.
In contrast, Farcaster, a decentralized social networking protocol and competitor to friend.tech, places greater emphasis on the “Social” component of SocialFi. For instance, amid the recent surge in Meme coins, Farcaster’s plugin system enables timely delivery of such information directly to users. As a result, more and more Meme projects are choosing Farcaster as their communication channel, attracting users seeking real-time updates. At its peak in July, Farcaster surpassed 100,000 daily active users and still maintains around 70,000 today.
Farcaster’s Success Story: A Beacon of Hope for SocialFi
While friend.tech’s failure has disappointed many and cast doubt on SocialFi as a whole, it’s premature to abandon the sector. In reality, friend.tech’s collapse is typical within crypto—it relied too heavily on incentive-driven economics. Once short-term profit seekers left, the artificial growth vanished. This pattern isn’t unique to SocialFi; previous trends like GameFi followed similar trajectories. Investors should remain cautious about applications overly dependent on DeFi-style tokenomics. Long-term success will belong to projects offering real utility. In this regard, Farcaster stands poised to lead the next wave of SocialFi.
As shown above, Farcaster emphasizes authentic social interaction and adapts quickly to market dynamics by developing targeted plugins that serve actual user needs—a strategy proving highly effective. In fact, Farcaster has always taken a pragmatic approach from day one.
The two co-founders of Farcaster, Dan and Varun, previously held key roles at Coinbase and possess deep connections across the crypto industry. During early testing, Dan leveraged his personal network to invite prominent OGs including Vitalik Buterin to join. Early access was granted selectively via Twitter DMs, ensuring high-quality initial users. In October last year, Farcaster opened public registration but maintained a $5 entry fee, which effectively deterred bot accounts and preserved a healthy community environment—setting it apart from Nostr, which declined due to rampant bot activity.
Dan also developed Warpcast, an application built on the Farcaster protocol, which now captures 90% of the protocol’s traffic. Warpcast mirrors traditional Web2 platforms like Twitter, allowing users to post “casts,” comment, repost, and follow others. Beyond standard features, it introduces channels and actions that enable richer interactions. For example, DEGEN distributes tokens based on user engagement within Farcaster’s ecosystem—users earn airdrops by following specific channels and interacting, and can then tip others with those tokens.
Moreover, Farcaster’s explosive growth this year is closely tied to Frames, introduced in February. Frames are mini-applications embedded directly within Warpcast, enabling diverse on-chain activities without leaving the app—such as minting NFTs, subscribing to content, playing games, or claiming tokens. For instance, far.cards, built on mint.club, is a collectible card game exclusive to Farcaster users. Each user’s card attributes are determined by their on-chain activity—follower count, likes received, replies, etc. Card prices follow a bonding curve model, and cards can be collected or traded.
Overall, the Farcaster team exemplifies builders who genuinely focus on user-centric social experiences and tailor their product to the nuances of the crypto space. This is precisely why they’re well-positioned for long-term success. In May, Merkle Manufactory—the developer behind Farcaster—announced a new funding round led by Paradigm, raising $150 million and achieving a $1 billion valuation. This reflects strong institutional confidence in Farcaster’s potential.
What Are the Real Bottlenecks Facing SocialFi? An Overlooked Value of Farcaster
In truth, the core challenge facing SocialFi remains low crypto adoption. Most crypto users still operate primarily within centralized exchanges, while usage of decentralized tools and apps remains limited. One major reason is the prevalence of fraud. Although many projects start with good intentions, too many eventually exit-scam, resulting in only a handful surviving long-term. This reinforces the perception that crypto is full of scams, requiring time and effort to rebuild trust. Traditional industries rely on regulation, but decentralization lowers the cost of malicious behavior, making average users hesitant or fearful to participate. Additionally, the technical barrier to entry for most crypto applications remains high, especially for newcomers—a problem Ethereum aims to address in upcoming upgrades. Furthermore, I believe blockchain itself currently generates relatively little intrinsic value, making speculation (e.g., farming rewards) the dominant use case, rather than widespread practical demand.
Nonetheless, I maintain that blockchain is still in its early stages and that Web3 adoption will eventually come—users will arrive in time. Under this assumption, Farcaster holds an underappreciated strategic advantage. Its founders’ background at Coinbase, combined with tight integration into the Base ecosystem, positions it uniquely. Jesse, the core lead of Base chain, is highly active on Farcaster. Among the top 500 users on Farcaster, over 70% of their on-chain activity occurs on Base. With Coinbase backing Base and bridging into traditional finance, Farcaster enjoys strong tailwinds for future growth.
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