A month ago, a “three-no” product project without any announcement, explanation, or product introduction, became popular all over the Internet. On the day it went online, it created nearly 580,000 transactions on the Base chain and reached a record-high daily active user count of 136,000 people. Within just 20 days of its launch, it obtained 2,500 ETH at zero cost, equivalent to approximately 4.2 million USD. Now, the number of users, known as “friend.tech,” has officially surpassed 100,000+.
This project is none other than friend.tech. Although there is a lack of official announcements, as early as August 11th, well-known individuals such as ZhuSu and crypto KOL Adam Cochran have already joined and started share trading on friend.tech. Among them, Adam Cochran’s Share transaction amount reached 30 ETH.
However, friend.tech took a step that ignited the enthusiasm of the crypto community when LianGuairadigm publicly admitted its participation in seed round investment in friend.tech on August 19th. In the following days, several well-known KOLs, including Garry Tan, President of Y Combinator, Frank DeGods, founder of the DeGods NFT project, trader Gainzy222, and NBA player Grayson Allen, announced their entry.
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As of September 5th, according to the latest data from Dune, the daily number of completed transactions has decreased from the peak of 520,000 to only 25,000 on September 4th, a decrease of approximately 95%. The daily revenue has dropped from a minimum of 1.7 million USD to 170,000 USD.
The popularity of friend.tech seems to bring a ray of hope to the SocialFi track, but looking at the development history of SocialFi, it seems that it can only be described as “a flash in the pan.” From the early Steemit to friend.tech today, among so many SocialFi projects, friend.tech has not completely escaped the same fate despite its many accolades.
Perhaps it is inevitable that the enthusiasm of the community for new projects follows a pyramid-shaped trend. However, from the data provided by friend.tech, we can see that there are still about 20,000 users logging in to friend.tech every day to view and read information, and the average active user spends more than 30 minutes using friend.tech each day.
Meanwhile, although friend.tech does not provide significant updates and iterations like Uniswap, it has been continuously launching new features. This includes the ability to view the timestamp of the last message to make more informed purchasing decisions, the use of reply function to add context to sent messages, and viewing the list of new posts to know who is speaking. On September 4th, the official release of credit card login function lowered the entry barrier, allowing users who are not familiar with cryptocurrencies to register more easily.
Currently, the development of the SocialFi track is destined to be full of ups and downs. After friend.tech overcomes its peak period, it may enter a new stage of development. In this context, the friend.tech simulated trading platform has also gained a lot of attention. Not long ago, the decentralized social project Xshares received investment from Negentropy Capital and BitValue Capital.
Attracting the attention of the community, BlockBeats will introduce the mechanism and gameplay of Xshares in this article.
A simulated XFi project by friend.tech
Xshares is a decentralized trading platform based on the Twitter social ecosystem, incentivizing creators using Web3 and NFT technology. Its core goal is to represent the value of each user and adjust these values through a unique algorithm.
According to the whitepaper of Xshares, its uniqueness lies in its pioneering and clever algorithm, which can coordinate the valuation of user value. This valuation can seamlessly fluctuate with the evolving market trends, and the essence of each user’s contribution will be tangibly expressed through the concept of shares.
In the Xshares ecosystem, the process of buying shares is manifested as the dynamic fusion of roles, where users simultaneously transform into loyal fans and strategic investors. These shares have an inherent connection with the image of KOLs and go beyond static appreciation. They can be actively traded on the secondary market of Xshares, and the value concepts they contain are dynamically present, with potential appreciation or depreciation depending on the current market forces.
Imitation and Innovation of Xshares
Interestingly, Xshares seems to intentionally imitate friend.tech. On the one hand, its launch time coincides with friend.tech’s experience of a round of demystification. On the other hand, the gameplay of Xshares is similar to friend.tech. Both activate accounts through an invitation code mechanism and both bind Twitter accounts to purchase and sell “shares” of any user with Ethereum. Essentially, they are both projects that tokenize KOLs.
In addition, in terms of share generation and pricing, Xshares is the same as friend.tech, with exponential growth as more and more people buy shares. For shareholders, they are not only owners but also enjoy exclusive early access, direct communication with KOLs, voting rights, and the right to receive dividends.
The only difference is in the invitation mechanism. Each user of friend.tech has three invitation codes, while Xshares users have five invitation codes.
Compared to friend.tech, Xshares emphasizes its targeting of X platform creators more. The official platform introduction directly states, “Xshares is the first XFi project, aiming to build its unique X creator economy.”
It is worth mentioning that the only account followed by the official Xshares account is friend.tech, and in the whitepaper of Xshares, it specifically points out the shortcomings of the friend.tech project in terms of functional innovation, and proposes its own improvement plan.
Can a customized price curve delay the lifecycle?
In addition to imitation, Xshares’ unique innovation lies in the introduction of a tipping mechanism. Due to the pricing algorithm issue of equity on the friend.tech platform, creators lack customization options to shape the price curve, resulting in a steep price curve, which may cause many potential buyers to abandon their purchasing intentions due to high prices, resulting in a loss of true user participation.
To this end, the Xshares team has introduced a new feature on its platform, which is the ability for KOLs to customize the price curve to better meet market demand and user psychology. The core of this feature is the use of a parameter called “curve index”, which covers ten levels from 1 to 10. Each level represents a different slope of the price curve, indicating the rate of price change.
This means that KOLs now have the ability to fine-tune the price dynamics of their products based on market conditions and user feedback. If they believe that smoother price fluctuations are needed, they can choose a higher level of “curve index” to make the slope of the price curve gentler. Conversely, if the market allows, they can choose a lower level of “curve index” to facilitate faster price changes.
L1 to L10 represent different price slopes, which are steep level; slightly steep level; gradually flattening level; moderately flat level; mild level; slightly mild level; gradually gentle level; quite gentle level; very gentle level; extremely gentle level.
Level and Price Slope Chart
The tipping mechanism transforms the Xshares platform into a more flexible and user-friendly trading venue, surpassing the limitations of traditional social interaction and allowing users to express gratitude in a more meaningful way. When the insights of KOLs have a profound impact, users can now go beyond simple “likes” or “shares” to show appreciation. By rewarding and even obtaining shares in KOL’s personal profile, users can strengthen their appreciation and support.
Such a mechanism can help convert high-quality content into corresponding income, making Xshares a potential avenue for users to earn considerable income and further incentivizing user participation and the creation of quality content. The Xshares team believes that by involving creators in pricing decisions and empowering them with the ability to customize the price curve, market prices and user demands can be better balanced, attracting more people to participate and enhancing the overall user experience.
In July of this year, Xshares formed a team and established a community. In the following August, they focused on product development, user experience design, and the design of the token economic model.
Currently, Xshares officially announced the release of the mobile application Xshares DApp testing version and invited friend.tech users to participate in its internal testing on social media platforms.
According to the Xshares official website, the development roadmap for Xshares is as follows: In October, the official release of Xshares 1.0 will be launched, and the platform’s features will be updated. In November, product functionality will be strengthened, and dedicated versions for iOS and Android users will be launched. In December, the platform’s functionality will be iterated and efforts will be made to expand the product’s influence. In January 2024, Xshares will upgrade the product technology to further enhance user experience and platform efficiency, and in February, they plan to release the latest version 2.0. In March, based on market feedback and demand, they will continue to improve and enhance product functionality.
Can Xshares Break Through the Social Challenges of Web3?
SocialFi provides a Web3 method to create, manage, and own social media platforms and the content generated by its participants, helping content creators, influencers, and participants better control their own data, freedom of speech, and ability to profit from social media engagement. In the evolving landscape of blockchain, SocialFi has been receiving significant attention.
However, this trajectory has also exposed significant flaws. The execution of SocialFi’s design principles still faces major obstacles, particularly in scalability and sustainability. Whether it is GameFi or SocialFi, some platforms promise highly incentivized participation. However, so far, these incentive measures have proven to be short-term growth hacks. All models discussed in SocialFi incentives must undergo pressure testing through multiple market cycles and black swan events to become mainstream.
Specifically in the SocialFi field, there is a conflict between user investment value and KOL (Key Opinion Leader) income that remains unresolved, leading to dissatisfaction from both investors and KOLs.
In social token models like Xshares and friend.tech, users invest in KOL’s social tokens to participate in their posts, but they also face the risk of them posting harmful content. A harmful post can quickly devalue social tokens and cause a series of losses for system participants.
Despite the resistance from infrastructure and economic models, SocialFi platforms still show promise as the world rapidly accelerates towards a creator economy model, taking a big step in that direction. The future use of DeFi principles in social networks can only claim robustness after going through several downturns and enduring persistently, and this certainly applies to SocialFi as well.
Xshares officially announced on August 31st that it has established over 2,000 token holding addresses within a week of the platform’s launch.
As Jason Choi, the founder of BlockCrunch, said: “Whatever the killer application for cryptocurrency social is, I firmly believe that a successful social application should bring cryptocurrency to users, rather than bring users into cryptocurrency.”
How Xshares can truly achieve XFi, prolong the lifecycle of SocialFi, and even break the curse of ten thousand crypto products can only be determined by time and market considerations. Of course, as users themselves, they must protect their own liquidity in bear market environments and not be deceived by false narratives.