friend.tech Imitation XFi project, can Xshares delay the lifecycle of SocialFi and break the curse of 100,000 in the encrypted product?
Author: Luccy
Editor: Jaleel
A month ago, a “three-nothing product” project without any announcement, explanation, or product introduction became popular on the Internet. On the first day of its launch, it created nearly 580,000 transactions on the Base Chain, and the number of daily active users reached a historical high of 136,000. It cost zero to obtain 2,500 ETH, equivalent to 4.2 million US dollars in just 20 days after its launch. Now, the number of users of this project has officially exceeded 100,000+.
This project is friend.tech. Although there is no official announcement, as early as August 11th, well-known figures such as ZhuSu and crypto KOL Adam Cochran have already joined and started trading shares in friend.tech. Among them, Adam Cochran’s Share transaction amount in friend.tech reached 30ETH.
However, the step that friend.tech successfully ignited the enthusiasm of the crypto community was when LianGuairadigm publicly admitted on August 19th that it participated in the seed round investment of friend.tech. In the following days, many well-known KOLs such as Garry Tan, the president of Y Combinator, Frank DeGods, the founder of DeGods NFT project, trader Gainzy222, and NBA player Grayson Allen announced their entry.
As of September 5th, according to the latest data from Dune, the number of daily completed transactions has dropped from the peak of 520,000 to only 25,000 on September 4th, a decrease of about 95%. The daily revenue has dropped from a minimum of 1.7 million US dollars to 170,000 US dollars.
The popularity of friend.tech seems to bring a glimmer of hope to the SocialFi track. However, looking at the development history of SociaFi, 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 having many highlights.
Perhaps it is inevitable that the enthusiasm of the community for new projects shows a pyramid trend. However, from the data provided by friend.tech, we can see that there are still about 20,000 users logging into friend.tech every day to view and read information, and the average active user spends more than 30 minutes on friend.tech every day.
At the same time, although friend.tech does not provide major updates and iterations like Uniswap, it has been continuously launching new features, including the ability to view the last message timestamp to make wiser purchasing decisions, use the reply function to add context to sent messages, view the list of new posts to know who is speaking, etc. On September 4th, the official launched the credit card login function, reducing the threshold for use and making it easier for users unfamiliar with cryptocurrency to register an account.
Currently, the development of the SocialFi track is destined to be full of ups and downs. After friend.tech overcame its peak period and completed its rebranding, it may enter a new stage of development. In this context, friend.tech’s XFi simulation trading platform has also received a lot of attention. Recently, the decentralized social project Xshares, which was jointly invested by Negentropy Capital and BitValue Capital, attracted the attention of the community. BlockBeats will introduce the mechanism and gameplay of Xshares in this article.
An XFi project on friend.tech’s simulation trading platform
Xshares is a decentralized trading platform based on the Twitter social ecosystem that incentivizes 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 groundbreaking algorithm that 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 purchasing shares involves the dynamic fusion of roles, where users simultaneously transform into loyal fans and strategic investors. These shares are inherently linked to the image of KOLs. They go beyond static appreciation and can be actively traded in the secondary market of Xshares. The value concept they contain presents a dynamic existence, and potential appreciation or depreciation depends on the current market forces.
Imitation and Innovation of Xshares
Interestingly, Xshares seems to intentionally imitate friend.tech. On the one hand, it was launched just after friend.tech went through a rebranding phase. On the other hand, the gameplay of Xshares is also similar to friend.tech. Both platforms activate accounts through invitation codes and bind Twitter accounts to purchase and sell “shares” of any user using Ethereum. Essentially, they are projects that tokenize KOLs.
In addition, in terms of share generation and pricing, Xshares is the same as friend.tech, both experiencing exponential growth as 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, where friend.tech users have three invitation codes while Xshares users have five.
Compared to friend.tech, Xshares emphasizes its targeting of X-platform creators. The official platform introduction directly states that “Xshares is the first XFi project, aiming to build its unique X creator economy.”
It is worth mentioning that the only account followed by Xshares’ official account is friend.tech’s official account. In the Xshares whitepaper, it specifically points out the shortcomings of the friend.tech project in terms of functional innovation and proposes its own improvement plan.
Can custom price curves extend the lifecycle?
In addition to imitation, the unique innovation of Xshares is the introduction of a tipping mechanism. Due to issues with the equity pricing algorithm on the friend.tech platform, creators lack customization options to shape the price curve, resulting in a steep price curve that may cause many potential buyers to abandon their purchase intentions due to high prices, leading to a loss of true user participation.
To address this, the Xshares team has introduced a new feature on its platform, which is the ability for KOLs to customize price curves, better meeting market demand and user psychology. The core of this feature is the use of a parameter called the “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 more gentle. 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, namely steep slope level; slightly steep level; gradually flattening level; moderately flat level; gentle level; slightly gentle level; gradually softening level; fairly gentle level; very gentle level; extremely gentle level.
Levels and Price Slope Chart
The tipping mechanism transforms the Xshares platform into a more flexible and user-friendly trading place, going beyond the limitations of traditional social interactions, allowing users to express gratitude in a more meaningful way. When the insights of KOLs have a profound impact, users can now go beyond the scope of simply “liking” or “sharing” and give back. By giving tips or even acquiring shares from KOLs’ profiles, users can consolidate their appreciation and support.
Such a mechanism can help high-quality content convert into corresponding income, making Xshares a potential avenue for users to earn substantial income, further incentivizing user participation and the creation of high-quality content. The Xshares team believes that by allowing creators to participate in pricing decisions and empowering them with the ability to customize price curves, market prices and user demands can be better balanced, attracting more people to participate and improving the overall user experience.
Development Roadmap
In July of this year, Xshares formed a team and established a community. Following that in August, the focus was on product development, user experience design, and the design of the token economic model.
Currently, Xshares has officially announced the release of the mobile application Xshares DApp beta version and has invited friend.tech users to participate in its internal testing on social media platforms.
According to the official website of Xshares, the development roadmap for Xshares is as follows: In October, the official version 1.0 of Xshares will be launched and the platform’s functions will be updated. In November, the product functionality will be strengthened, and dedicated versions for iOS and Android users will be launched. In December, at the end of the year, the platform’s functions 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. In February, the latest version 2.0 is planned to be released, and in March, based on market feedback and demand, continuous improvement and enhancement of product functionality will be made.
Can Xshares Break Through the Web3 Social Challenge?
SocialFi provides a Web3 method for creating, managing, and owning social media platforms and the content generated by participants. It helps content creators, influencers, and participants to better control their own data, freedom of speech, and the ability to profit from social media attention and engagement. In the evolving landscape of blockchain, SocialFi, this emerging track, has also been highly regarded.
However, this trajectory also exposes significant flaws. The execution of SocialFi’s design principles still faces significant resistance and must overcome the challenges of scalability and sustainability. Whether it is GameFi or SocialFi, some platforms promise very high incentives for their participants. However, so far, these incentive measures have proven to be short-term growth hacking methods. All patterns discussed in the SocialFi incentive must undergo pressure testing from multiple market cycles and black swan events to become mainstream.
Specifically, in the field of SocialFi, there is a conflict between user investment value and KOL income, which has not been resolved, resulting in dissatisfaction with returns 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 lead to the devaluation of social tokens and cause a series of losses to system participants.
Despite the resistance from infrastructure and economic models, SocialFi platforms still show prospects. The world is rapidly moving towards a creator economy model, and this is a big step in that direction. The future use of DeFi principles in social networks can only claim robustness after experiencing several downturns and persisting through them, and this definitely applies to SocialFi as well.
On August 31, Xshares officially announced that more than 2,000 hodler addresses have been established on the platform within one week of its launch.
As Jason Choi, the founder of BlockCrunch, said: “No matter what the killer application of cryptocurrency social is, I firmly believe that a successful social application should bring cryptocurrency to users, rather than bring users into cryptocurrency.”
How can Xshares achieve true XFi, prolong the lifecycle of SocialFi, and even break the curse of ten thousand in encrypted products? The answer to this question can only be given by time and market considerations. Of course, as users themselves, they should also protect their own liquidity in a bear market environment and not be deceived by false narratives.
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