Token-driven decentralized social network Friend.tech may have lost momentum recently, but since last week it has turned around and more than tripled its total value.
The prominent mention of the new social media network by high-profile investors from the cryptocurrency industry at this year’s Token2049 Web3 conference in Singapore may have surprised many. Several panelists put aside their skepticism and highlighted Friend.tech as an example of innovation that portends a potentially bright future for cryptocurrencies.
Paul Veradittakit, managing partner at Pantera Capital, said Friend.tech has managed to attract new users to Web3 not by stimulating their particular curiosity about digital assets, but by simply incorporating crypto into it Attractiveness of a new social media model.
“Friend.tech has done a pretty good job of getting an early adopter movement going,” he said. “The ability to obfuscate the crypto component was an easy way to do it [people] on board to be able to experience crypto without a lot of crypto being the focus.”
Alex Pack, co-founder and managing partner of Hack.VC, praised Friend.tech for bypassing the Apple Store and its policies on crypto, which he called “very onerous.”
Boost the Creator Economy
He said the platform offered new opportunities for users seeking to monetize content and compared its model favorably to those of social networks Web2, which he said had exercised excessive power over users.
“The concept of Like Crypto Social is really fascinating,” he said. “Facebook and Twitter were Trojan horses. They came in and created networks for people to talk to each other, and eventually for followers to interact with leaders and creators, and then in a sneaky way they completely mediated the way fans interact with leaders and creators, and they did everything they wanted could make it hard [them] to understand who [their] Which followers there are and how to monetize them directly.
“That was great for social media companies because then they could control the whole thing and disempower the legion of fans. The opportunity for Friend.tech and DeSo (Decentralized Social)… is this [they] could unbundle this and create a full monetization layer for the creator economy.”
Veradittakit said there is great potential for disruption on social media, but Joey Krug, partner at Founders Fund, said more work is needed.
“In terms of social networks and cryptocurrencies more broadly, what is needed is a big zero-to-one difference with the existing social media platforms for it to really take off,” he said. “I’m not sure anyone has fully understood that yet.”
Pack said more Web3 infrastructure is needed for such platforms to reach their potential.
“There is still a lot to be built, all the infrastructure, such as token-gated communities, provision of cash flows and royalties, and real economics,” he said.
DeFi development
Krug focused on decentralized finance (DeFi) as part of the ecosystem that needed an infrastructure boost to reach its full potential.
“The DeFi space broadly feels like it is in a trough of disillusionment right now,” he said. “But it is an area that is fundamentally very important to us in the long term and we will definitely invest more there too.”
Perhaps the most critical issue facing DeFi is simply the lack of tools that can be used by non-crypto natives. Even the basics of staking, lending, and yield farming need to be demystified to gain more users and traction overall.
Min Teo, managing partner at Ethereal Ventures, said DeFi developers could consider turning to TradFi for advice on improving the ecosystem.
“Right now there is a bit of an identity crisis between different products and protocols,” she said. “Look at the existing financial system – you have people developing B2B products for banks, and then asset managers who then distribute them to retailers. Everything has just collapsed into one with crypto and DeFi, so I split the two when I think about it. And as we become more mature in DeFi innovation, I think there’s a big chance we’ll start to see more of the way TradFi works.”
“There are still a lot of core elements that need to be built to make the experience faster, improve latency and just make it more consistent with what users are used to,” she said. “Otherwise, from an adoption perspective, it’s difficult to see how we bring more users on-chain.”
“There just aren’t enough people developing apps,” Krug said. “The infrastructure is at the point where … you could build something that’s truly zero-to-one and people say, ‘Wow!’ when they use your app. We wouldn’t have thought this was possible… six or seven years ago, but I think the tech stack is now at a point where it’s actually doable.”
Pack said stablecoins are critical to building the DeFi ecosystem and as a representation of real-world assets to integrating DeFi into the broader architecture of the financial system
“Stablecoins [are] the enabler behind DeFi and the most promising and exciting chart in the crypto space,” he said. Regarding the trajectory of their adoption, he said: “It’s still going up and to the right, and there will be more real assets, and that will flow into DeFi, and it’s a positive feedback loop.”
“Today you could think of DeFi as a crazy playground,” he said. “It’s just a really good jungle gym for crypto assets… but there are very few real assets. So if we could expand that and add more real assets – euros, treasury bills, stocks and things like that… then that’s probably the biggest thing as opposed to big infrastructure jumps, but if that happens I think you can do it around 10- increase up to 100-fold.”
Artificial intelligence
Pack and Krug said another boost for DeFi and for crypto in general could come from artificial intelligence, a fusion of technologies that has attracted widespread attention this year.
“There is an exciting opportunity for the use of DeFi and an open, composable and transparent financial system,” said Pack. “Today you go to ChatGPT and it’s… an AI agent – it writes your essays for you and helps you cheat on your homework, but it can’t do economic things. It can’t rebalance your portfolio, pay your bills, and run your business for you. You would have to integrate [it] with hundreds or thousands of different payment processors. Or you could get into DeFi with just one click and everything is open API.”
Krug said: “The AI agent thing… is actually an interesting area, [and] The next DeFi wave will cross heavily there. When you think about crypto, the way it works is actually a feature here, not a bug. This will be a large zero-to-one range. It’s probably a few years from now – three to five years from next year.
“And then there is a completely unexplored problem area that no companies have yet been built around,” he said. “Some of these are smaller and not zero to one, but one simple thing that I’m still shocked no one has built is a loan aggregator [in which] You deposit ETH and borrow USDC for example, and it continually refinances you to get the best interest rate. There’s nothing that does that, so there’s a lot to build in DeFi.”
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