Decentralized social media platform Friend.tech has announced it will be teaming up with Conduit to develop its own blockchain, Friendchain.

Friend.tech to Develop Own Blockchain, Sparking User Questions and Price Volatility

Friend.tech, a decentralized social media platform on Coinbase's layer-2 network Base, announced plans to create its own blockchain, Friendchain. This move has raised questions among users about the necessity and value proposition of a social-focused blockchain, while also causing significant price fluctuations in its native token, FRIEND.

Key Details:

1. Announcement and User Reaction:
- Friend.tech announced on June 8 that it will develop Friendchain with the help of crypto infrastructure startup Conduit.
- The new blockchain will utilize the native FRIEND token as a "fully transferable gas token."
- The announcement was met with skepticism and confusion from users questioning the need for a dedicated social-focused blockchain.

2. Concerns Raised:
- Users expressed doubts about the value proposition of Friendchain.
- Concerns were voiced about potentially higher gas fees compared to Base, a low-cost Ethereum layer-2 solution.

3. Market Response:
- Following the announcement, the price of FRIEND spiked by 64% within 20 minutes, reaching $1.31 before dropping back to $0.89 within the hour.
- The spike in FRIEND’s price indicated increased trader interest despite skepticism.

4. Historical Context:
- Friend.tech launched the FRIEND token and conducted a major airdrop a month prior to the announcement.
- The largest whale, "Murphys1d," sold over 55,000 FRIEND tokens shortly after the airdrop, contributing to significant transaction activity.

5. Transaction Activity:
- Friend.tech saw a surge in transaction activity after the airdrop, surpassing $1 million in fees in 24 hours on August 19, 2023.
- Despite initial strong performance, transaction activity had stagnated until the recent announcement.

6. Future Plans:
- Friend.tech has not provided a detailed explanation for the decision to create Friendchain.
- The platform aims to leverage Friendchain for enhanced social media functionalities and potentially other decentralized applications.

Implications:

1. Strategic Shift:
- The development of Friendchain suggests a strategic shift towards greater control and customization of the platform’s underlying technology.
- This could allow Friend.tech to better tailor its blockchain to the specific needs of social media applications.

2. Market Volatility:
- The significant price fluctuations of the FRIEND token highlight the speculative nature of the crypto market.
- Traders' rapid response to announcements underscores the importance of clear communication and strategic clarity from blockchain projects.

3. User Concerns:
- Addressing user concerns about the necessity and benefits of Friendchain will be crucial for maintaining trust and engagement.
- Transparency regarding the technical and economic advantages of the new blockchain will help mitigate skepticism.

4. Competitive Landscape:
- Friend.tech’s move to create a dedicated blockchain could set a precedent for other decentralized platforms considering similar strategies.
- The success of Friendchain will likely influence future developments in the decentralized social media space.

Conclusion:
Friend.tech’s decision to develop Friendchain has generated mixed reactions, with users questioning the need for a specialized blockchain and traders driving significant price volatility. The platform's future success will depend on effectively addressing user concerns and demonstrating the tangible benefits of its new blockchain initiative.