A Wave of Social Finance ProtocolsÂ
The rising trend of social finance platforms within the crypto sphere has led to a flurry of experimentation as they seek to discover the perfect product-market fit. However, these platforms face the challenge of distancing themselves from their roots in financial speculation, which initially fueled their success.
The pioneer of this new wave of social finance platforms is FriendTech, hosted on Coinbase’s Base platform. FriendTech allows users to purchase keys granting access to influencers’ private group chats. The key prices operate on a bonding curve, meaning they become more expensive as more are purchased, and each transaction incurs a 10% fee shared between the platform’s creator and the influencer.
This fee structure prompted significant financial speculation, elevating top crypto influencers like Hsaka, Cobie, and Dingaling to the forefront, with the platform’s creator, Racer, earning $450,000 from key trading. In total, influencers have accrued $20 million in fees on the app, with Racer claiming an equivalent amount.
Remarkably, FriendTech has remained an underdeveloped application, primarily allowing users to post in group chats and trade keys. Other applications in this niche have emerged with a broader array of social and financial functions.
For example, PostTech, built on Arbitrum, offers basic posting capabilities, resembling the format of platforms like X (formerly Twitter). This feature potentially allows crypto Twitter users to migrate to social finance apps if they evolve beyond their initial novelty.
StarsArena, hosted on Avalanche, was the second-largest social finance platform before being taken down due to a costly bug. The platform is in the process of relaunching and offers a tipping function, enabling users to receive payment directly for their public messages on a Twitter-like feed.
CipherRIP, based on Arbitrum, encourages users to purchase more keys, referred to as “cores.” New users must acquire at least five cores to send a message on its public feed, a tactic designed to stimulate trading but potentially discouraging new users.
New Bitcoin City, operating on Bitcoin Layer 2 NOS, offers social functionalities that allow keyholders from other social finance platforms to use the same keys. It offers DMs between influencers and keyholders, allows influencers to play games with their keyholders, and offers “red packets,” which are essentially extra keys.
On the financial side, influencers can set fees for key purchases and sales (between 0-8%) and specify how many keys are required for group chat access. New Bitcoin City introduces a feature known as (3,3), where users buy each other’s keys to boost their value and potential earnings from fees. This function enables users to initiate a (3,3) request, locking in each other’s keys for 30 days.
Is There Any Chance For Social Finance Platforms?
Some of these platforms have ambitious goals beyond the FriendTech model. For instance, New Bitcoin City aspires to compete with major platforms like X, Meta, and TikTok. It aims to provide a user-friendly crypto app that bridges the gap between the crypto/web3 space and mainstream consumer apps.
While these FriendTech-inspired platforms have introduced new features to enhance user experience, success is not guaranteed. The social gambling aspect of FriendTech may remain a defining factor, making it challenging for competitors to displace its popularity.
Nonetheless, there is optimism that the crypto sector is ready to reach a broader audience, aiming to offer a more familiar and user-friendly experience.
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