As the crypto world revels in a week painted green, Friend.tech is stumbling and appears to be losing its vitality and appeal. The SocialFi platform, which once held a prestigious place in the digital space, is now grappling with the harsh reality of significant financial exodus.
On October 23, Friend.tech witnessed a staggering $5.81 million depart from its platform, marking the most substantial daily withdrawal since the app’s inception.
Data from DeFiLlama paints a stark picture, highlighting the magnitude of the outflow. But the financial hemorrhage didn’t stop there; on October 25, the platform endured another substantial hit, with an additional $3.21 million making a beeline for the exit.
Understanding the Magnitude of the Exodus
A deep dive into the situation reveals that the turmoil was further fueled by the departure of ‘Vombatus,’ a prolific creator and the platform’s most prized user.
Vombatus made a bold move, liquidating 176 of their own keys, amounting to an approximate value of $1.5 million. This transaction sent shockwaves through the platform, plummeting the price of Vombatus’ key from an impressive 8.3 ETH to a mere 1.671 ETH.
Following the sale, Vombatus left a cryptic message, potentially highlighting a period of inactivity on Friend.tech, “At least I got people to talk and use FT for the first time in a few weeks today.”
In a twist of events, Vombatus has since migrated and established a new profile on New Bitcoin City, a spinoff from Friend.tech, with transactions conducted in bitcoin (BTC).
Interestingly, New Bitcoin City is extending its hands, offering enticing boosted airdrops to those migrating from Friend.tech.
This strategy seems to be paying off as the platform has successfully attracted over $3 million in net inflows in just a fortnight, according to data from DeFiLlama.
The Ripple Effects on SocialFi Apps
As the crypto assets continue their upward trajectory, SocialFi apps are experiencing mixed fortunes. Friend.tech, alongside Stars Arena and Friend3, is trending in a downward spiral.
On the other end of the spectrum, New Bitcoin City and Post.Tech are on an upward trajectory, experiencing growth. Despite the challenges, Friend.tech’s Total Value Locked (TVL) hovers just below the $40 million mark as of Wednesday.
Even in these trying times, the platform still commands an impressive 86.8% of the dollar volume amongst leading SocialFi projects.
This is a noteworthy feat, especially considering that Stars Arena, an Avalanche-based platform, recently fell victim to an exploit, as reported on a Dune Analytics dashboard.
The departure of Vombatus from Friend.tech is not just a financial loss but a significant blow to the platform’s reputation and standing in the SocialFi space.
The substantial outflows signal a lack of confidence and raise questions about the platform’s sustainability and appeal to its user base.
While Friend.tech grapples with these challenges, its competitors are seizing the opportunity, innovating, and attracting disenchanted users.
The situation underscores the volatile and competitive nature of the SocialFi space, reminding us that in the digital age, user loyalty is fleeting, and platforms must continuously innovate and provide value to retain their user base and remain relevant.