Introducing SocialFi: A new concept that combines decentralized social interactions with income generation. Friend.tech, Stars Arena, and Post.tech are leading protocols in this space. Friend.tech allows users to acquire and trade "keys" for access to exclusive chatrooms, benefiting both creators and users. Stars Arena connects to X accounts and allows users to buy/sell "tickets" and tip creators. Post.tech copies X's interface and offers rewards for active users. Recent data shows the growing popularity of these protocols, but security concerns remain. Users should conduct their own research before investing.

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<div><div><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F708de377-be39-4fa4-8d99-d5172b9d90cd_1616x1048.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/vycgtmd8zw3a.png'/></picture></div></a></figure></div><h1><strong>SocialFi Introduction</strong></h1><p>SocialFi protocols are where users indulge in decentralized social interactions, addressing their social requirements and income generation simultaneously.</p><p>Counter to the recent upsurge in hype, the concept of SocialFinance (SocialFi) is not new at all. In fact, you might have encountered these platforms while participating in airdrop farming and retroactive hunting, possibly without realizing that they belong to the SocialFi category, namely:</p><ul><li><p>Galxe ($GAL)</p></li><li><p>Lens Protocol</p></li><li><p>Mask Network ($MASK)</p></li><li><p>Hooked Protocol ($HOOK)</p></li><li><p>CyberConnect ($CYBER)</p></li></ul><p>This development has undoubtedly stirred up some curiosity regarding our latest rising stars. In light of the numerous protocols already in existence, one may wonder how Friend.tech and its counterparts like Friendzy on Solana, Friend3 on opBNB, Post.tech on Arbitrum, and the current frontrunner Stars Arena on Avalanche have managed to garner such attention in the crypto community lately.</p><h1>Why Friend.tech (and alike)?</h1><p><em><a href="https://www.friend.tech/" rel="nofollow ugc noopener" target="_blank">Friend.tech</a><span> is a decentralized social app built on Base, a layer-2 blockchain from Coinbase. Friend.tech platform enables users to acquire and trade unique "keys," which grant them special privileges to participate in chatrooms moderated by the key's X (formerly Twitter) creator.</span></em></p><p><em>Creators receive royalties when their keys are traded, and traders can potentially profit by trading or investing in these keys.</em></p><p>The usual one-way content consumption where users are fed with (seemingly) free content, and creators gain followers, reap interactions to generate revenue elsewhere, either from platforms ads or affiliate sponsors, does not necessarily strengthen the connection between creators and users. Sometimes, creators are forced to monetize their content through irrelevant ads, securing their income stream but adding virtually no value to their users.</p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb9d741ba-dc42-4800-8e3f-b8a409051341_296x296.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/qbk9tmd8zwoh.png'/></picture></div></a><figcaption><em><strong>Figure 1.</strong><span> Friend.tech logo (Source: Friend.tech)</span></em></figcaption></figure></div><p><span>Friend.tech seems to offer an ideal solution to this problem. As an advancement beyond the traditional 'subscription' paradigm, </span><em><strong>Friend.tech's revenue structure benefits creators on the business front by unifying the definitions of 'content consumers' and 'sponsors' into one</strong></em><span>. It simultaneously enhances the consumer experience as well. Why not when:</span></p><ul><li><p>Users are willing to pay to nominate creators and content they are in favor of.</p></li><li><p>Users will have private access to the like-minded community and exclusive knowledge with ‘backstage’ 1:1 interaction.</p></li><li><p>Users can make profits re-selling the ‘keys’ they hold.</p></li><li><p>The referral scale of this kind is only for ‘the richer’ as the keys’ value only goes up as long as there are users demanding for the content you’re producing. This means that creators have basically nothing to lose, but to focus on delivering their best to the quality-conscious consumers.</p></li></ul><p>It's time to examine any unique characteristics that each protocol might bring to light (if they exist):</p><h3><strong><span>1. </span><a href="https://post.tech/" rel="nofollow ugc noopener" target="_blank">Post.tech</a><span> (on Arbitrum)</span></strong></h3><ul><li><p>Builds an exact replica interface of X.</p></li><li><p><span>Rewards active users with an airdrop scheme associated with point accumulation. The first reward pool goes </span><a href="https://dappradar.com/blog/the-rise-of-socialfi-with-friendtech-33-and-crypto-tokens" rel="nofollow ugc noopener" target="_blank">up to $100,000</a><span>.</span></p></li><li><p><span>Whose team will “</span><a href="https://nftnow.com/news/post-tech-friendzy-and-more-friend-tech-derivatives/" rel="nofollow ugc noopener" target="_blank">reinvest 30% of protocol fees from Sept 9 to Nov 20 to enhance liquidity</a><span>.”</span></p></li><li><p>Allows users to tokenize their profiles and posts for trading.</p></li><li><p>Has an anonymous founder Racer.</p></li></ul><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F86a7c247-5298-407e-80d2-554c2cf56211_1145x611.webp" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/3hactmd8zwmp.png'/></picture></div></a><figcaption><em><strong>Figure 2.</strong><span> Post.tech’s intentional X-copycat interface (Source: </span><a href="https://www.datawallet.com/crypto/post-tech-explained" rel="nofollow ugc noopener" target="_blank">Datawallet</a><span>)</span></em></figcaption></figure></div><h3><strong><span>2. </span><a href="https://www.starsarena.com/" rel="nofollow ugc noopener" target="_blank">Stars Arena</a><span> (on Avalanche)</span></strong></h3><ul><li><p>Directly connects to your ‘X’ account.</p></li><li><p>Connects your Avalanche C-chain wallet to use $AVAX to buy/sell ‘tickets’ (tickets in Stars Arena are similar to keys in Friend.tech) or drop tips for your favorite creators. You don’t need to deposit $AVAX to start posting and interacting on the platform. $AVAX is only needed when you initiate ticket transactions.</p></li><li><p>Has a public list of creators that you can follow without having to pay for the tickets; No referral codes needed.</p></li><li><p>Allows creators to set duration for subscription and the associated price; they can also decide the revenue-sharing percentage for ticket holders.</p></li><li><p>Rewards active users with an airdrop scheme associated with point accumulation. Airdrop rewards are distributed weekly, and the program started on September 26, 2023, with no set end date.</p></li><li><p>Has anonymous founders called ‘theBuilder’.</p></li><li><p><span>New user shares on Stars Arena start at </span><a href="https://www.coingecko.com/learn/stars-arena-avalanche-socialfi-crypto" rel="nofollow ugc noopener" target="_blank">0.0066 AVAX</a><span>, while on friend.tech, the initial price of new user shares is based on the user's Twitter data.</span></p></li></ul><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fed8f6b57-133b-4f44-b3f3-6c5bd1957842_1202x886.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/jf8ptmd8zwrs.png'/></picture></div></a><figcaption><em><strong>Figure 3.</strong><span> theBuilder’s X Profile Page (Source: </span><a href="https://twitter.com/hannesxda" rel="nofollow ugc noopener" target="_blank">X</a><span>)</span></em></figcaption></figure></div><h1><strong>Analysis</strong></h1><blockquote><p><em><strong><a href="https://m3talab.io/reports/this-week-in-number" rel="nofollow ugc noopener" target="_blank">Post.tech and Stars Arena</a></strong><span>: Data as of Oct 5, 2023</span></em></p><p><em><strong><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">Friend.tech</a></strong><span>: Data as of Oct 7, 2023</span></em></p><p><em>Our primary focus is on 3 noteworthy SocialFi protocols for a direct comparison, and we highly recommend refraining from drawing broad conclusions about the entire SocialFi sector based solely on this evaluation.</em></p></blockquote><p>Stars Arena, which has been on the market for more than two weeks, has seemingly outperformed Post.tech in four out of five weekly metrics: revenue, trading volume, transaction count, and active subjects. Active traders, however, are gradually catching up.</p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7d7d354f-097e-4bba-9623-6d2997b6ffeb_2582x816.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/kk98tmd8zw9z.png'/></picture></div></a><figcaption><em><strong>Figure 4.</strong><span> Comparison of 3 SocialFi Protocols Across Different Monthly and Weekly Metrics (Source: </span><a href="https://m3talab.io/reports/this-week-in-number" rel="nofollow ugc noopener" target="_blank">M3TA's This Week in Number</a><span>)</span></em></figcaption></figure></div><p>Monthly numbers are still reigned by Friend.tech although the protocol has had its transaction share cut down by more than half since the hype for Stars Arena started on Oct 3.</p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F24d79691-0a80-4536-b82c-9e6a65d2afdb_2600x862.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/ttq9tmd8zw4w.png'/></picture></div></a><figcaption><em><strong>Figure 5.</strong><span> Daily Transaction Share and Count of. 3 SocialFi Protocols (Source: </span><a href="https://m3talab.io/reports/this-week-in-number" rel="nofollow ugc noopener" target="_blank">M3TA's This Week in Number</a><span>)</span></em></figcaption></figure></div><p>But when we consider the cash flow perspective, Friend.tech still retains the largest active user base, enabling it to command over 80% of the trading volume and achieving a 95% revenue ratio.</p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe10b7abb-fe30-4744-930d-abf81aaabc40_2624x1280.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/swoxtmd8zwzc.png'/></picture></div></a><figcaption><em><strong>Figure 6.</strong><span> Share of Active Subjects, Active Traders, Protocol Fee and Trading Volume Among 3 SocialFi Protocols (Source: </span><a href="https://m3talab.io/reports/this-week-in-number" rel="nofollow ugc noopener" target="_blank">M3TA's This Week in Number</a><span>)</span></em></figcaption></figure></div><p>More on Friend.tech:</p><ol><li><p>Despite a highly competitive market, Friend.tech consistently maintains over 10,000 active traders daily, with 50-75% of them usually being newcomers. This rate of growth in new traders is particularly striking when contrasted with other protocols.</p></li></ol><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F5e66f985-cb5f-4c90-894c-78ae47476923_1874x828.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/a6hhtmd8zw1b.png'/></picture></div></a><figcaption><em><strong>Figure 7.</strong><span> Daily Active Traders on Friend.tech (Source: </span><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">M3TA’s Friend.tech</a><span>)</span></em></figcaption></figure></div><ol start="2"><li><p><span>The cumulative transaction count on Friend.tech has now surpassed 10 million, and its total value locked (TVL) stands at nearly $45.9 million as of the current time. It's worth noting that its TVL briefly exceeded $50 million on two particular days: October 01 and October 02, immediately before the high-profile </span><a href="https://twitter.com/darengb/status/1709021872178729409" rel="nofollow ugc noopener" target="_blank">rug / SIM swap incidents</a><span> on Friend.tech.</span></p></li></ol><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fe57c8e00-4e9c-4485-bddc-b4e0a786973e_2800x780.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/gl3ctmd8zwig.png'/></picture></div></a><figcaption><em><strong>Figure 8.</strong><span> Daily Transaction Count and Total Value Locked on Friend.tech (Source: </span><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">M3TA’s Friend.tech</a><span>)</span></em></figcaption></figure></div><ol start="3"><li><p><span>Just like other metrics, trading volume has also taken a toll since </span><a href="https://twitter.com/brypto_/status/1708055944360255600" rel="nofollow ugc noopener" target="_blank">several users</a><span> continued coming forward about how their account and their key holders got exploited through something as basic, and quite alarmingly common, as SIM swap.</span></p></li></ol><p><em>SIM swap takes place when the attacker tries to deceive your mobile carrier that he/she is the owner of the number so as to gain control of all known accounts that are registered with that phone number.</em></p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb5107f5d-c93b-48b0-87ca-d690586d6acf_704x804.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/2lnwtmd8zwuz.png'/></picture></div></a><figcaption><em><strong>Figure 9.</strong><span> Daily Trading Volume and Keys Volume in USD on Friend.tech (Source: </span><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">M3TA’s Friend.tech</a><span>)</span></em></figcaption></figure></div><ol start="4"><li><p>Friend.tech transactions entail dual 5% fees (10% in total). One portion is directed to the protocol's treasury, and the remaining 5% is granted to the creator whose keys are being traded.</p></li></ol><p><span>This has been </span><a href="https://twitter.com/PostTechSoFi/status/1697289156505055278" rel="nofollow ugc noopener" target="_blank">pointed out by Post.tech</a><span> to be a tiny bit less advantaged for key holders (users who have bought their favorite creators’ keys). And so they add 5% revenue share for the key holders in each transaction to gain an edge.</span></p><p><span>Stars Arena seems to take a different approach when the platform intentionally </span><a href="https://twitter.com/starsarenacom/status/1704888145458708583" rel="nofollow ugc noopener" target="_blank">allocates more fee share for creators</a><span> at 7%, 1% for referrals and just 2% for the protocol’s treasury. This might also skew the speed of protocol fee accumulation on Stars Arena compared to Friend.tech. Just in case you see any chart depicting the number for this protocol, take this into consideration.</span></p><div><figure><a href="https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8a5197c2-1125-40d3-8f6b-72cb8f387303_1392x744.png" target="_blank"><div><picture><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosponge/web3image/23/11/11/vfwktmd8zwbl.png'/></picture></div></a><figcaption><em><strong>Figure 10.</strong><span> Daily Protocol Fee (5% of Each Transaction) in USD on Friend.tech (</span><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">Source: M3TA’s Friend.tech</a><span>)</span></em></figcaption></figure></div><p><span>Track more detailed insights such as </span><em><strong>Top Traders by Earnings, Top "Subjects" by all-time Royalties Earnings (ETH) and Top "Subjects" ranked by "Key" Supply Change vs 7d ago (in %)</strong></em><span> in </span><a href="https://m3talab.io/reports/friendtech" rel="nofollow ugc noopener" target="_blank">our Friend.tech dashboard</a><span>.</span></p><h1>Conclusion</h1><p>Recent SocialFi protocols no doubt gain an upper hand with its no-brainer on-ramp registration process, allowing users to sign up with just an email, X account, or phone number. However, as with any trend in the past, it will eventually face its own challenges.</p><p><span>To sustain its enduring popularity, it's critical to revisit how users can experience more lasting benefits, beginning with prioritizing security. Presently, it appears that neither Friend.tech nor Stars Arena has successfully achieved this goal, especially considering </span><a href="https://twitter.com/starsarenacom/status/1709934535570608172" rel="nofollow ugc noopener" target="_blank">the latter's recent experience of two separate attacks over the weekend</a><span>.</span></p><p><em><strong>Disclaimer</strong></em></p><p><em>The views expressed herein are for informational purposes only and should not be considered as investment advice. They may not necessarily represent the opinions of M3TA. As every investment and trading opportunity carries risk, you should conduct your own research before making any decisions. M3TA assumes no responsibility for our users' investment activities or their profits or losses. The articles, data, and content provided by M3TA should not be relied upon for any investment-related decisions. We do not advise investing funds you cannot afford to lose.</em></p><p><em>This article, encompassing text, data, content, images, videos, audio, and graphics, is presented for informational purposes only and is not intended for trading purposes. M3TA cannot guarantee the accuracy, comprehensiveness, or timeliness of the content, documents, data, materials, or website pages accessible through any service, and neither M3TA nor any of its affiliates, agents, or partners shall be liable to you or anyone else for any loss or injury caused in whole. The content available through this website is the property of M3TA and is safeguarded by copyright and other intellectual property laws. Failing to provide proper citation may result in being accused of plagiarism.</em></p></div></div>

On-chain Analysis: Friend.tech, Post.tech & Stars Arena