A new web3 social media app that allows users to “buy and sell shares of their friends” has been deployed on the Coinbase-incubated (COIN) Base blockchain.
On this week’s episode of Yahoo Finance UK’s The Crypto Mile, Coinbase vice president of international policy Tom Duff Gordon described this new decentralised application, called FriendTech, and how it is driving trade on Coinbase’s new layer 2 blockchain.
“One of the decentralised apps on top of the Base blockchain that has really caught on is this social media application, called FriendTech. This allows users to buy shares in their friends, and then to trade them.” Gordon said.
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FriendTech as a new way of engaging with a social network, he said. “There are now hundreds of thousands of active users on FriendTech right now, and this has been very exciting.”
The FriendTech web3 social media network
Shares in “friends” are bought and sold on the platform using ether (ETH-USD), the native cryptocurrency of the Ethereum network.
Everyone on FriendTech has their own channel, and to access content on another person’s channel, users must buy a share, or key, of that channel. When a key is bought or sold, a 5% fee goes to the app, and a 5% fee goes to the channel’s owner. Prices of these shares rise and fall in response to the person’s popularity.
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The new app, hailed as “a marketplace for you friends”, surpassed over $35m (£28.7m) in purchased shares just over a week after it launched in August. Within a month of launch, the social media app had over 110,000 new unique addresses.
FriendTech activity declining
However, trading tokenised representations of people and monetising popularity is not without it’s critics.
Web3 influencer Beanie has been critical of FriendTech in numerous posts on X.com. “Every couple years in crypto somebody reintroduces an elaborate ponzi with a bonding curve,” he said. “And there’s always some group of influencers that rave about it being ‘the new paradigm.’”
In the past months footfall on the web3 platform has fallen. Activity on the app had declined by 95% from a peak of almost 39,000 daily transactions on 21 August according to Dune Analytics data. On-chain data indicates that activity on the app across multiple metrics peaked in mid-September and subsequently declined sharply.
Finance apps on Base
Gordon also spoke about other applications that are being deployed on Coinbase’s new Base blockchain, including a tokenised US bond exchange-traded fund (ETF).
“This tokenised US bond ETF is now hosted on Base, so users can get exposure to US bonds through a BlackRock ETF (BLK), but through a tokenised format. With rates where they are now, this is an attractive product,” he said.
Gordon added that the tokenisation of financial products on a blockchain will lower the barrier of entry for investors who want to participate in markets.
“Funds right now that are quite difficult to access, often they have a minimum amount of money that you have to invest to gain access. And, getting out of those funds can be quite complicated involving paying intermediaries to facilitate this access,” he added.
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He explained that fractionalising tokenised financial products, breaking them down into smaller units, would enable individuals with less money to gain exposure to them. “This is democratising these funds, and may over time improve liquidity and improve pricing,” he said
What is Coinbase’s Base blockchain?
Coinbase launched its Base layer 2 blockchain in August.
It is called a layer 2 blockchain, because it sits on top of the Ethereum network, which is a layer 1 network. The Ethereum network acts as a highly secure foundational layer for all exchanges on Base. Layer 2 transactions are faster and cheaper because they are executed on a separate, side network, and then batched together to be transferred back on to the underlying Ethereum chain at a later date.
The Base blockchain says it aims to improve the ability to run decentralised applications on Ethereum more efficiently.
Coinbase derives revenue from transaction fees charged to users exchanging cryptocurrencies on its trading platform. Additionally, it generates subscription and services revenue from, custodial fees, and blockchain rewards. The addition of the Base blockchain could also allow Coinbase to acquire a new revenue stream from applications built on top of it.
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