As a seasoned analyst with extensive experience in the cryptocurrency market, I find the friend.tech token launch and the subsequent price crash to be an intriguing case study. Based on my analysis of the situation, I believe that the clunky claim portal and the significant disparity between the fees paid by users and the token’s liquidity were the primary factors contributing to the sharp decline in FRIEND’s price.
As a crypto investor, I found the airdrop distribution process at friend.tech disappointing, leading to my frustration as the token’s value plummeted from its peak of $167 down to its starting price of $10.
The friend.tech SocialFi project introduced its native token, FRIEND, during its debut on May 3, which also included an airdrop to users. Simultaneously, they released version 2 of their protocol that was previously announced last month. This platform, which launched on Coinbase’s Ethereum (ETH) L2 network last year, provides access through an invite-based community using unique “keys.” These keys represent a custom ERC-20 social token type.
After the introduction of FRIEND, data from DEX Screener indicated a dramatic 98% drop in the token’s value and limited ability for traders to buy or sell it. The availability of token liquidity is crucial as it facilitates trading by allowing individuals to exchange assets on the market. Insufficient liquidity can lead to significant price fluctuations due to the greater impact of larger orders.
A Messari analyst pointed out that the initial liquidity provision by friend.tech’s team was significantly larger than the fees they had accumulated.
“Why is CT annoyed when it’s essentially free money for us?” That statement isn’t accurate, though. In reality, users paid $60 million in fees, and Friendtech took out an astonishing $30 million of that amount. So, collectively, users paid $30 million for farming costs for a token, while its Ethereum liquidity pool only amounts to $3 million.
— Average Joe’s Crypto (@AvgJoesCrypto) May 3, 2024
As an analyst, I’ve noticed some feedback from users regarding the claim portal experience. They mentioned that the process was cumbersome, leading some claimants to sell significant amounts of the token in frustration as they successfully claimed their airdrops. On the other hand, others encountered difficulties in collecting their airdrop tokens, further exacerbating price fluctuations.
As I observe the value of my airdrop plummeting from seven figures to five figures within just two hours, I find myself compulsively refreshing the page, desperate to claim it. Alas, the claim process remains elusive to me.
Meanwhile, I can’t help but witness another person successfully cashing out while my wallet stubbornly refuses to load. The irony of the situation leaves a bitter taste in my mouth. 😠😠😠
— Luke Martin (@VentureCoinist) May 3, 2024
Friend’s value dropped from $10 to less than $2, yet its liquidity showed signs of enhancement. According to crypto.news at the current moment, there were more than $8.3 million in available funds for trading Friend tokens. With a total supply of 14.5 million tokens, the market capitalization stood at approximately $67 million. Additionally, over 20,000 investors had already acquired Friend tokens and the number kept growing.
As a researcher studying the cryptocurrency market, I’ve noticed an uptick in liquidity and an expansion of token holders. However, sellers have remained more active than buyers, with over 2,000 more transactions taking place on the sell side. The recent friend.tech token launch serves as a valuable case study, shedding light on how market participants react following an airdrop distribution event. According to Coinbase Director Conor Grogan’s perspective.
“The FriendTech airdrop is intriguing due to the opportunity it provides for obtaining on-chain evidence of each participant’s trading skills, linked to their identities, in a nearly ideal experimental setup.”
Conor Grogan, Coinbase Director
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2024-05-03 20:08