Friend.Tech’s token falls 98% following airdrop fiasco

Users condemned the friend.tech airdrop request process as the token fell from its opening price of $10 after a sharp rise to $167.

SocialFi project friend.tech launched its native token FRIEND via an airdrop to users on May 3, along with version 2 of its protocol previously announced last month. Launched last year on Base, Coinbase’s Ethereum (ETH) L2 network, the platform offers an invitation-based community through “keys,” a special type of ERC-20 social tokens.

Shortly after FRIEND was launched, DEX Screener data showed a 98% drop in token price and little liquidity. Token liquidity essentially enables trading by allowing investors to buy or sell assets on the market. Small liquidity caps can cause large price fluctuations as larger orders have a greater impact.

A Messari analyst registered ofriend.tech’s team initially added a level of liquidity disproportionate to the amounts collected from fees.

“Free money bro, why is CT upset?”

Wasn’t it? Users paid $60 million in fees, of which $30 million(!!!) was covered by Friendtech.

So users collectively paid $30 million in farming costs for a token with a liquidity pool of only $3 million in ETH liquidity… pic.twitter.com/aCrpmVUaNQ

— Average Joe’s Crypto (@AvgJoesCrypto) May 3, 2024

Users also pointed out that the request portal was cumbersome, causing successful claimants to sell large amounts of tokens and causing prices to drop, while others were unable to collect the airdrop.

As I keep refreshing the page trying to claim, I see that the value of my airdrop increased from 7 figs to 5 figs in 2 hours….still can’t claim.

Meanwhile, I have to watch this guy withdraw money while my wallet is not loaded.

Adding insult to injury 💀💀💀

— Luke Martin (@VentureCoinist) May 3, 2024

FRIEND fell from $10 to less than $2, but liquidity increased. At the time of writing, crypto.news recorded over $8.3 million in liquidity, while FRIEND’s 14.5 million supply held a market cap of $67 million. The token also had over 20,000 holders and that number is growing.

FRIEND token data after airdrop | Source: DEX Eliminator

While liquidity increased and the number of holders increased, sellers still outnumbered buyers by over 2,000. Coinbase Director Conor Grogan stated that the friend.tech token launch provides a case study in airdrop culture and how market participants react after the distribution.

“The FriendTech airdrop is interesting because we’re getting on-chain proof of everyone’s trading acumen in an identity-based way, as good a natural experiment as you’ll ever get.”

Conor Grogan, Director of Coinbase