Friend.tech’s Smart Contract Abandonment Sends FRIEND Token Into Freefall

A drastic decision to relinquish control of smart contracts has triggered a sharp decline in the platform’s token value and investor confidence.

Friend.tech, a once-promising decentralized social media platform, has taken a surprising and controversial step by transferring control of its smart contracts to Ethereum’s null address. The move, announced on September 8, 2024, has led to immediate and dramatic consequences for the platform, including a steep drop in the value of its native FRIEND token and a significant decrease in total value locked (TVL).

According to Friend.tech, the decision to transfer the control of its smart contracts to the null address—a known destination for irretrievable transactions—was made to "prevent any changes to their fees or functionality in the future." This essentially locks the platform’s contracts, ensuring that no alterations can be made moving forward. However, the consequences of this action have been swift and severe.

Within just 24 hours of the announcement, the FRIEND token’s value plummeted by over 30%, sinking to an all-time low of $0.059. This is a dramatic fall from its earlier peak, when the token had a market capitalization of $233.6 million shortly after its launch. As of the latest data, the market cap has shrunk to a mere $5.6 million, reflecting a sharp decline in investor confidence.

The total value locked (TVL) on Friend.tech has also taken a significant hit. Once boasting a peak of $52 million in early October 2023, the platform now holds under $3.5 million in locked assets. This massive drop signals that users are withdrawing their assets, potentially fearing the platform’s ability to recover or innovate without control over its smart contracts.

Further adding to the platform's troubles, Friend.tech's daily earnings from fees have been underwhelming, consistently falling below $1,000 since late July. This indicates that the platform’s ability to generate revenue has dwindled, as user activity and trading volumes have dropped significantly in recent months.

The decision to transfer control of smart contracts comes at a curious time for Friend.tech, which had only three months ago announced its intention to build a dedicated blockchain called “Friendchain.” The removal of that announcement post, coupled with this latest development, has only fueled confusion and uncertainty among the platform's community and investors.

Friend.tech’s core premise involves allowing creators to monetize their content through tokenized shares or “keys,” a model that saw early success after its launch. Built on Coinbase’s layer-2 solution Base, the platform had attracted over 100,000 users and generated more than $2 billion in fees. However, the sudden turn in governance decisions raises concerns about Friend.tech’s long-term viability.

Although the platform has reassured users that the transfer does not affect its separate web client, and that no fees from either the smart contracts or the web client go to the development team's multisig wallet, the long-term impact of relinquishing smart contract control is uncertain. The inability to update the platform’s features or fix bugs could severely limit its ability to compete in the dynamic and fast-paced world of decentralized finance (DeFi) and social media platforms.

photo source / Blockonome