KEY POINTS
- The team recently made a move to render the SocialFi platform immutable
- Users believe it was just a 'soft rug', especially after Lookonchain confirmed the team had been selling ETH
- When a project pops out, it's important to look at whether the team is 'aiming for lasting impact, or just quick gains': Soulbound's Casey Grooms
Social finance (SocialFi) platform friend.tech has been plagued with shutdown rumors in recent weeks after the team behind the project announced it was transferring the protocol code's admin and ownership rights to a null address.
The move will prevent any future changes or fee collection by the original creators, rendering friend.tech immutable. Following the announcement, the protocol's native cryptocurrency, FRIEND, started a downward spiral. The token has shed 94.70% since its launch in May, as per data from CoinMarketCap.
Team Has Been Dumping $ETH
Last week, blockchain analytics firm Lookonchain revealed that the team behind friend.tech has been selling some $52.4 million worth of Ether (ETH) from December through June, seemingly confirming speculations that the developers carried out a "soft rug," a more subtle way of scamming investors instead of a full-blown rug pull – a type of exit scam wherein a crypto project's team suddenly vanishes after taking investors' money.
The https://t.co/7UU3SB86ts team sold 19,477 $ETH($52.4M) from December 2, 2023, to June 11, 2024!
— Lookonchain (@lookonchain) September 11, 2024
The price of $FRIEND has dropped 95% since its launch. pic.twitter.com/2c7LcCtK3Q
Crypto Community Demands Answers
Cryptocurrency users on X are demanding answers from the friend.tech team, with one user asking why a "community takeover" wasn't considered at this point to allow for the FRIEND token's revitalization.
One user called the team "cowards," saying they should instead "do something with the project," while another said friend.tech "was the most toxic scam crypto had since FTX."
This was the most toxic scam crypto had since FTX. Influencers are already extremely toxic for the space. The fact people were actually paying them directly through this scam was a complete disgrace and one of the biggest low points crypto had seen in years. it marked low last yr
— trollmaster200k (@trollmaster200k) September 9, 2024
Friend.tech Downturn Underscores Importance of Sustainable Projects: Expert
The predicament that friend.tech users are in amid speculations about the project's demise only highlights the challenges faced by decentralized social platforms, Casey Grooms, the co-founder of Web3 livestreaming platform Soulbound, told International Business Times.
"These platforms promise freedom from censorship, but they also need to ensure they're sustainable and safe for users," he said.
He further noted that decentralized SocialFi platforms should offer crypto users and enthusiasts more than a blockchain version of existing social media platforms. They should provide "unique features that only blockchain enables, without making things too complex for users."
He also noted the importance of digging deep into the teams working behind a crypto or blockchain project. "Are they aiming for lasting impact, or just quick gains?" he pointed out.
Several crypto users have pointed out that prominent trader and digital assets influencer Ansem promoted the friend.tech project. Ansem has repeatedly been accused of shilling – promoting a digital asset (even through misleading means) with the goal of driving the price up.
Promoted by @blknoiz06 🤦♀️
— Memo (@MeMoJi_C) September 11, 2024
Thanks @blknoiz06
— Fring (@Gustavvvvvoo) September 11, 2024
Grooms said that for SocialFi platforms to thrive, "they should aim to appeal beyond the crypto crowd, making their benefits clear to everyone, with blockchain working quietly in the background."
Friend.tech has clarified that it is not shutting down or discontinuing the app. However, questions linger, and many users have said they "abandoned" the platform.
For Grooms, it is crucial for developers to come up with solutions wherein all stakeholders benefit from it, one where creators, users, and advertisers alike experience a system that can sustain itself.
"Ultimately, friend.tech's collapse is a learning opportunity. It highlights the need for strong leadership, a clear long-term path, and a focus on real user value over short-term hype," he said.
