Friend.tech Revokes Plan to Exit Base L2 Network After Community Backlash

Friend.tech has seen over $1 million in total dollar value held in its smart contracts flow out in less than 24 hours.

Friend.tech, a decentralized social media platform, has seen over $1 million in total dollar value held in its smart contracts flow out in less than 24 hours. This follows a month-long effort by the platform to alleviate users after announcing its intention to exit the Base blockchain.

Friend.tech runs on Base, Coinbase’s Layer-2 network, and is second only to Arbitrum (ARB) among Ethereum-based L2s in terms of value locked.

After committing on June 8 to leave the Base blockchain and move to its own network, Friend.tech has now reversed the plan. Its supply and liquidity will remain on Base, and plans to migrate to Friendchain have been shelved.

“We’ve heard your feedback: you don’t want FRIEND moving to another chain. We agree. FRIEND was always meant to be a 100% community-controlled token powering the Clubs contract. Migrating the supply and liquidity would not align with that spirit. You’ll still be able to create clubs, chat, buy keys, and use FRIEND on Base in the friend.tech app,” the Friend.tech team wrote.

The move to change networks has been a contentious topic, with some arguing that it was too early in the project. Others saw it as a natural progression after Friend.tech co-founder Racer put out a call and offered a $200,000 reward for any developer who could smoothly migrate the platform from Base without major disruptions.

Since then, Friend.tech Total Value Locked (TVL) has decreased by $3.3 million and dropped by over $1.1 million in the last 24 hours after announcing that it will no longer be moving.

Read More: What is Friend.tech? A Deep Dive Into The Web3 Social Media App

TVL measures the total value of assets that are locked in a particular protocol or platform. It represents the amount of cryptocurrency locked in smart contracts within a DeFi ecosystem.

A drop in this metric suggests the withdrawal of assets from the DeFi platform. It may indicate a loss of confidence in the platform or users seeking better opportunities elsewhere. Along with the drop in TVL, Friend.tech’s native token FRIEND has dipped by 30% in the past 24 hours.

Is Farcaster Siphoning from Friend.tech?

There are a few potential reasons for the drop in Friend.tech TVL. First, the market has crashed today, with the price of Bitcoin (BTC) dropping to the $57,000 range. As altcoins tend to follow BTC, the global market cap has decreased by over 5%. A drop in overall market value can lead to a decrease in TVL as the value of the locked assets also declines.

Otherwise, the drop in Friend.tech TVL may suggest a change in sentiment, indicating that investors are seeking alternatives to one of the leading SocialFI dApps on the Base network. This change may be driven by a shift in interest or a preference for other decentralized social media platforms.

Earlier this year, Ethereum co-founder Vitalik Buterin criticized the project for relying on financial speculation instead of genuine enjoyment.

“Bad GameFi is using financial speculation as a substitute for fun. Blockchain games need to be fun as games — approx quote I’ve said many times I believe a similar thing for crypto social,” he wrote.

If users are indeed looking elsewhere, chances are that Farcaster is the destination. It is Friend.tech’s industry peer and market rival in the decentralized social media landscape. While Buterin threw shade at the former, he expressed optimism for Farcaster, citing its decentralized architecture and developer freedom.

“Registering a prediction: Farcaster and lens will NOT be deserted in four months or 1 year,” Buterin wrote.

Friend.tech co-founder Racer also called out Farcaster for misconstruing their project at launch, blaming the latter for straining the relationship between Friend.tech and the Base community.

Read More: A Beginner’s Guide to Layer-2 Scaling Solutions

Meanwhile, with Base still playing host to Friend.tech, the L2 solution continues to gain popularity, especially as the hub for SocialFi apps. Its allure sprouts from using optimistic rollups to expedite transactions and reduce costs. Base batches transactions off the main Ethereum blockchain, consolidate them, and finalize on the Ethereum mainnet.

According to L2Beat’s scaling tracker, Base is one of the largest L2 on TVL metrics, only second to Arbitrum. Notwithstanding, it is impossible to ignore the recent challenges on the Base network, including security concerns about its meme coin projects.

BeInCrypto recently reported that 91% of meme coin projects on the Base platform are susceptible to security breaches. Therefore, progressive improvements are critical for user protection and building trust in Base’s ecosystem.