Despite Friend.tech’s recent success and virality across Twitter, I have been underwhelmed and skeptical of its long-term success. Friend.tech is cool, and the team has done a great job creating incentives to onboard people. But the bonding curve seems easily gameable by bots, and Friend.tech creates a lot risk for creators around off-boarding and regulations. Readers may not remember, but early in the rise of influencers, the FTC took many of them to court for undisclosed advertising and breaking other broadcasting rules. Additionally, as other analysts mentioned, once creators join Friend.tech, they are stuck. Any attempt to leave will burn anyone who has bought their shares.

We learned when we wrote our report on DeSocial protocols that bootstrapping a DeSocial network when competitors like X and Facebook exist is hugely challenging. Social networks rely on network effects, and the incumbent’s lead is in an entirely different realm and hard – if not impossible – to overcome.

Unfortunately, to lock their creators onto the platform, they are punishing creators with demonetization if they use a fork – tweeting that those who use forks of Friend.tech will not receive airdrop points. Monetization is the lifeblood of a creator-based DeSocial platform. If creators cannot earn a steady income on your platform, they move on. And without creators creating content to bring in users, your platform dies. Removing the ability of your earliest adopters to earn points for the simple act of using a fork of your protocol is a really good way to alienate the creator community. Granted, creators can still earn fees from share trading, but this move still does remove some earnings from creators. This move is so wrong-headed that they will probably retract and create a system to reward platform loyalty rather than punish a lack of it. I expect Friend.tech to fizzle out if they maintain this policy.

Unfortunately, we already see the excitement around Friend.tech beginning to fizzle out. Daily transactions have gone from a high of 38.9k with thousands of buyers and sellers to 2k with less than 300 users buying and selling shares. Finally, inflows have fallen off a cliff since the initial excitement, from $750k to $269k as of today. These trends are worrying, but Friend.tech is still new, and, naturally, the excitement around the protocol will cool after the initial launch. And this is why punishing people for using a fork is so dangerous for Friend.tech. Excitement is already waning. Punishing people will drive them away rather than lock them in. This move, meant to secure the future for Friend.tech, will likely hasten its downfall unless they change course.