The risks and rewards of farming Friend.tech points

Two months ago, we did a deep dive into Friend.tech which is arguably the most successful socialfi project recently. Friend.tech is a decentralized social media platform that wants to redefine how we engage with content, interact with influencers, and evaluate the value of insights. 

Since we did the deep dive, Friend.tech has managed to attract crypto enthusiasts seeking engagement with Crypto Twitter figures. Beyond a mere social platform, friend.tech is a paradigm shift, a high-signal information aggregator fueled by the discerning judgments of its participants.

But more recently, crypto enthusiasts have been pouring capital into it to “farm” future airdropped tokens. The “farm” future airdrop tokens culture in the crypto space is a practice that has become more prevalent with the success of recent airdrops like Optimism, Arbitrum e.t.c where users deposit their assets into a project to build on-chain activity that might earn them rewards in the form of airdropped tokens. 

There are several reasons why farm future airdrop tokens have become so popular. First, it is a relatively easy way to earn rewards. Second, it is a way to invest in new projects early. When a new project launches, they will often airdrop tokens to their early supporters. By farming future airdrop tokens, users can gain exposure to new projects early and potentially earn significant profits if the project succeeds.

But what lies beneath the surface of this trend for Friend.tech, and is it as lucrative as it seems? 

Let’s find out.

Friend.tech is currently generating impressive daily fees.

If we extrapolate the annual revenue and multiply the daily fees by 365 days, assuming that the platform maintains a similar revenue rate throughout the year, we get annualized fees ranging from $300 million to $365 million. This annualized figure provides a clearer picture of the platform’s potential yearly earnings. 

Assuming a 10x-15x valuation based on fees, the platform could be valued between $3 billion to $4 billion. 

Furthermore, if Friend.tech distributes 10% of its total token supply through airdrops, users could collectively receive between $300 million to $400 million in token rewards. With 100 million points to be distributed over 25 weeks, each point could be worth approximately $3 to $4.

Since Friend.tech operates in points, successful airdrop farming strategies must optimize for accumulating points. Currently, the top point holders are:

According to Friend.tech analysts, a significant portion of points comes from portfolio value (83%), as well as the number of holders and holdings. Also, self-buyers are being penalized.

To maximize portfolio value, acquiring assets that appreciate is essential. So, as a user, you have to aim to maximize returns on your deployed capital by making strategic key purchases. To do that, four scenarios are to be examined:

• A single buyer for all keys (ideal)
• Community-driven portfolio value growth (3,3)
• Late entry
• No capital involvement

In the first scenario, there is only one buyer for all available keys. This leads to a situation where the portfolio value consistently increases because the sole buyer keeps purchasing all the keys. This approach not only eliminates selling pressure but also benefits from the multiplier effect of owning the same key.

The second scenario involves a community-driven effort where users trust each other not to sell their keys before others do. It has the potential to provide the best return on capital deployed, but it comes with uncertainty, as there is no guarantee that others won’t sell first. This scenario prioritizes achieving a higher return on investment rather than optimizing portfolio value.

In the third scenario, we have the buy high, sell the higher narrative. Here, you’ll have to enter the game late, purchasing keys at potentially inflated prices. The downside is that others may decide to sell their keys to these latecomers, possibly resulting in losses.

The last scenario is to rest. Just sit on your hands. No involvement = No losses.

Calculating the return on farming Friend.tech points involves a formula that considers factors like the number of keys, key-value, points per ETH in portfolio value, USD per point, and the number of remaining weeks. 

Imagine you’re holding 75 unique keys on the friend.tech platform, each with a price of 2E.

• Number of keys = 75, each unique
• Value of keys = 2E hypothetically
• Points per ETH in a portfolio value range from 30 to 150; conservatively, let’s consider 40 points.
• USD per point varies between 2 to 5, with an average of 3.5.

17 weeks are remaining in this experiment; we’re currently in week 9.

With this setup, you can calculate the expected returns:

You would receive 75 * 2 * 40 * 3.5 * 17 = $342,720 by the end of the 25th week. However, please note that this calculation assumes no penalties for self-purchasing or repeatedly buying specific keys, factors that may affect the actual outcome.

In this new scenario, you’re holding a different number of keys with varying values, but the concept of optimizing your returns based on key purchases and their potential value appreciation remains the same.

Risks of Farming Friend.tech Points:

• Calculating the initial investment required can be tricky due to the platform’s buying and selling mechanics, which include a 10% tax on transactions.

• The pointing system and expected returns are not entirely transparent, making it challenging to predict outcomes accurately.

• Bots and other random buying and selling activities can hinder efforts to minimize upfront costs and reduce returns.

• Depending on various factors, including portfolio value and the ability to recoup upfront costs, the return profile can vary, making it less predictable.

Closing

Farming Friend.tech points present both opportunity and risk, as almost everything in crypto does. 

Ultimately, the decision of whether or not to invest in friend.tech airdrop farming is up to you. Just make sure you have enough data, models, and a thorough understanding of the platform’s dynamics if you want to capitalize on this trend. The project has recently been involved in several initatives to make the platform better. It reported to have upgraded the platform to make data load up 10x faster and has also removed 600,000 accounts it identified to be bots from the feed’s vote distribution.