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Friend.tech Total Value Locked Plummets 19% in One Weekend As New User Count Stays Flat: On-Chain Data

Friend.tech Total Value Locked Plummets 19% in One Weekend As New User Count Stays Flat: On-Chain Data

The total value locked (TVL) on the decentralized social finance (SocialFi) application Friend.tech fell 19% in a few days as user adoption slows down. Friend.tech, which launched in August, is built on Base, an Ethereum (ETH) scaling solution supported by the Coinbase crypto exchange. The application allows users to tokenize themselves by selling shares or […]

The post Friend.tech Total Value Locked Plummets 19% in One Weekend As New User Count Stays Flat: On-Chain Data appeared first on The Daily Hodl.

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Stars Arena recovers 90% of stolen funds after offering $257K bounty

The exploiter of the Web3 social media platform agreed to keep a 10% bounty in exchange for returning the remainder of the stolen funds.

Web3 social media platform Stars Arena says it has recovered nearly all of the crypto stolen from an Oct. 7 exploit — minus a 10% bounty to the person responsible.

In an Oct. 11 X (Twitter) post, Stars Arena said around 90% of the 266,000 Avalanche (AVAX) exploited, at the time worth around $3 million, was returned after reaching an agreement to give a 27,610 AVAX bounty worth nearly $257,000 to the exploiter.

The bounty also included compensation for 1,000 AVAX worth over $9,000 seemingly lost by the exploiter in a bridge.

In a separate post, Stars Arena added it had written a new smart contract and before placing the returned funds and launching, it was finalizing an audit of the new contract.

Stars Arena first alerted its community to the exploit on Oct. 7, calling it a “major security breach” with its smart contract leading to funds being drained.

In a subsequent post, Stars Arena said it secured funding to plug the hole left by the exploit and it had contracted a development team to do a full security audit, though the team has yet to detail how the exploit took place.

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Days earlier, on Oct. 5, Stars Arena was hit by a smaller exploit, though hackers only made off with around $2,000, they claimed.

The exploit was caused by Stars Arena developers missing a vulnerable price function in the platform’s smart contract. This allowed the exploiter to sell user shares for nothing and get AXAX in return, pseudonymous X user “0xlilitch” explained in a post.

Stars Area claimed to have patched the vulnerability.

Users of Stars Arena’s main competitor, Friend.tech, have also seen targeted SIM-swap attacks with Friend.tech recently adding security features to mitigate the attempts.

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Friend.tech adds new security upgrade in wake of SIM-swap attacks

The 2FA security measure is optional for Friend.tech users seeking additional security on the platform.

The team behind the decentralized social media platform Friend.tech has added a new security feature amid attempts to stem a flood of SIM-swap attacks targeting its users.

“You can now add a 2FA password to your Friend.tech account for additional protection if your cell carrier or email service becomes compromised,” the team explained in an Oct. 9 post on X (formerly Twitter).

Friend.tech users will be prompted to add another password in when signing onto new devices.

“Neither the friendtech nor Privy teams can reset these passwords, so please use care when using this feature,” Friend.tech added.

The latest change follows several SIM-swap attacks targeting Friend.tech users since September.

On Sept. 30, froggie.eth was among the first in a string of Friend.tech users to be compromised by a SIM-swap attack, urging others to stay vigilant.

More Friend.tech users came forward with similar stories in the following days with an estimated 109 Ether (ETH), worth around $172,000, stolen from four users within a week. Another four users were targeted over a 24-hour period just days later, with another $385,000 worth of Ether stolen.

Friend.tech had already updated its security once on Oct. 4 to allow users to add or remove various login methods in an attempt to mitigate the risk of SIM-swap exploits.

Several observers criticized Friend.tech for not implementing the solution sooner.

“Finally,” one user said, while another said: “took you long enough.”

However, a prominent creator on Friend.tech, 0xCaptainLevi, was more optimistic, stressing that 2FA is a “big deal” and can help push the social media platform to unseen heights:

In an Oct. 8 X thread, Blockworks founder Jason Yanowitz revealed one of the ways the SIM-swap attacks are being orchestrated. The process involves a text message that asks the user for a number change request, where users can reply with “YES” to approve the change or “NO” to decline it.

If the user responds with “NO” — the user is then sent a real verification code from Friend.tech and is prompted to send the code to the scammer’s number.

“If we do not hear a response within 2 hours, the change will proceed as requested,” a follow-up message shows.

"In reality, if I sent the code, my account would get wiped," he said.

Related: Friend​.tech copycat Stars Arena patches exploit after some funds drained

The total value locked on Friend.tech currently sits at $43.9 million, down 15.5% from its all-time high of $52 million on Oct. 2, according to DefiLlama.

Change in total value locked on Friend.tech since Aug. 10. Source: DefiLlama.

Cointelegraph reached out to Friend.tech for comment but did not receive an immediate response.

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Friend.tech SIM-swap scourge continues as scammer nets $385K in Ether

Leaked mobile phone numbers have given scammers an easy way to drain Friend.tech user accounts.

A single scammer has reportedly managed to steal around $385,000 worth of Ether (ETH) in less than 24 hours amid a scourge of SIM-swap hacks seemingly targeting Friend.tech users.

On Oct. 5, blockchain sleuth ZachXBT reported the same scammer had pilfered 234 ETH over the past 24 hours by SIM-swapping four different Friend.tech users.

The on-chain movement of crypto assets was traced back to the same hacker who drained the accounts of the four victims.

One of the reported victims of the most recent chain of SIM-swap attacks posted to X (Twitter) following the attack:

“Got sim swapped. Apparently, dude was able to do it from an Apple store and switched it to an iPhone SE. Don’t buy my keys, that wallet is compromised.”

X user “KingMgugga” reported an attack targeting them happening in real time, posting to X that they were “getting f---ing sim swapped watching it happen” and asking for help. Meanwhile, another X user, “holycryptoroni,” confirmed they were similarly attacked, lamenting, “I got swapped sorry.”

Earlier this week, a further four Friend.tech users claimed to have their accounts drained as a result of a SIM-swap or phishing attack, totaling around 109 ETH stolen.

Friend.tech allows users to purchase “keys” of individuals, which grants access to private chat rooms with them.

The SIM-swap scam occurs when scammers gain access to the victim’s phone number and use it to acquire authentication, which enables them to access their social media and crypto accounts.

Manifold Trading, a firm building tools for the ecosystem, estimated that $20 million of Friend.tech’s $50 million of total value locked could be at risk. It called for the platform to beef up its account security measures by enabling two-factor authentication (2FA).

Related: How easy is a SIM swap attack? Here’s how to prevent one

There have also been calls for X to implement 2FA security measures to prevent mobile phone numbers from getting leaked following the high-profile hack of Vitalik Buterin’s account in September, which was also due to a SIM swap attack.

“0xfoobar,” founder and CEO of wallet security firm Delegate, advised removing phone numbers from social media accounts.

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Friend.tech users blame SIM swaps after more than 100 ETH drained in a week

In a short period of time, four friend.tech users reported their accounts were compromised and drained after hackers seized control of their mobile numbers.

Friend.tech users are warning of possible SIM-swap attacks after a recent spate of supposed hacks resulting in nearly 109 Ether (ETH) worth around $178,000 being drained from four users in under a week.

On Sept. 30, the X (formerly Twitter) user known as “froggie.eth” warned their Friend.tech account was SIM-swapped — where exploiters gain control of a user’s mobile number to intercept two-factor authentication codes, then used to access accounts — and subsequently drained of over 20 ETH.

Days later, on Oct. 3, a string of Friend.tech users reported similar incidents, with musician Daren Broxmeyer saying he was SIM-swapped and drained of 22 ETH.

His phone was earlier “spammed with phone calls,” which he believed was to force him to miss a text from his service provider warning him that someone was trying to access his account.

The same day another user, “dipper,” also said their account was compromised, adding they have “no idea” how exploiters could hack their account, as they use strong passwords.

The fourth user, “digging4doge,” was drained of around 60 ETH after falling for a phishing scam that tricked them into sharing a login code.

Crypto investment firm Manifold Trading explained that any hacker gaining access to a Friend.tech account is then able to “rug the whole account.”

Assuming that a third of Friend.tech accounts are connected to phone numbers, around $20 million is at risk of being exploited through Friend.tech user-focused exploits, they said.

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Manifold also suggested that, technically, all of Friend.tech is at risk due to how the platform’s security is set up, and solving the issues “should honestly be the number 1 priority.”

Manifold suggested Friend.tech allow users to add 2FA to logins, key decryptions and transactions.

Users should also be given the option to change the login method from a number to email and allow for third-party wallets to be used.

High-profile crypto figures have previously been successfully SIM-swapped, with their accounts used to carry out phishing attacks, such as Ethereum co-founder Vitalik Buterin’s X account in September.

Cointelegraph contacted Friend.tech for comment but did not immediately receive a response.

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Base surges past Solana as total value locked nears $400M

As per DeFi Llama data, Solana’s TVL has decreased by 9.64% over the past month to sit at $358.96 million, while Base’s TVL has surged to $397.32 million.

The total value locked (TVL) on Coinbase’s layer 2 network Base has surged to $397.32 million in roughly a month and a half since launching in August. That figure now places Base ahead of the Solana network in terms of TVL, which has $358.96 million at the time of writing.

The past 30 days have been significant for Base, with data from DeFi Llama showing that the network’s TVL increased by a whopping 97.21% over the past month.

In comparison, Solana’s TVL has decreased by 9.64% over that same time frame.

Top 10 chains in terms of TVL. Source: DeFi Llama

Two Base-native projects account for the largest shares of the TVL on the network.

Decentralized exchange (DEX) Aerodrome Finance takes the top spot with a TVL of $97.83 million, while decentralized social media (DeSo) app Friend.tech ranks second with a TVL of $36.53 million.

Aerodrome was launched on Aug. 28 and it enables users to deposit liquidity to earn AERO tokens, among several other features. While it failed to pull in a significant amount of deposits on its first couple of days, Aerodrome’s TVL skyrocketed on Aug. 31 with $150 million piling in on that day alone.

Its TVL went on to reach as high as $200 million on Sept. 2, however the initial hype appears to have cooled since then, with the TVL decreasing by roughly 51% from its its peak.

Aerodrome TVL since launch. Source: DeFi Llama

Friend.tech launched on Aug. 11 and the platform enables users to tokenize their social networks via the buying and selling of “Keys.” Despite being pronounced as “dead” in late August due to tanking user activity and fees, the platform surged dramatically in September.

As per DeFi Llama, Friend.tech’s TVL increased by 540% over the past month, with most of that coming after a pump that started on Sept. 9 alongside a resurgence in daily trading volume.

Looking lower down the list, Base’s TVL is generally accounted for by multi-network DeFi platforms like Compound, Curve and Uniswap.

Friend.tech TVL since launch. Source: DeFi Llama

Base transaction ATH

Cointelegraph also reported earlier this month that Base hit a new peak in terms of daily transactions, hitting 1.88 million on Sept. 14, according to data from BaseScan.

That figure placed it well ahead of rival chains like Optimism and arbitrum on the day, which had almost 880,000 combined.

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That all-time high remains intact for Base, with daily transactions decreasing to roughly 908,000 as of Sept. 22.

Base daily transactions. Source: Base Scan.

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DJ 3LAU causes a stir after opting out of Friend.tech over regulatory risks

3LAU noted that there risks were necessarily high, but that he has a “responsibility” to avoid any regulatory gray areas.

Popular DJ and crypto investor 3LAU (Justin Blau) has caused a stir in the crypto community after suddenly opting out of decentralized social media platform Friend.tech. Explaining the decision, the DJ highlighted concerns over the regulatory risks that the platform may pose.

In a Sept. 15 X (Twitter) thread, 3LAU revealed that he stepped away from Friend.tech after “understanding more of the risks.”

“I think it’s an awesome product, but a bit too risky for me (unfortunately). I will be donating the 8-ish ETH to a music-specific charity that I’m passionate about called the Paid In Full Foundation.”

3LAU added that his main concern was around the automated market maker (AMM) that enables the trading of user keys (formerly know as shares) on the platform.

He suggested that such a feature on a social media platform sits in a regulatory gray area that could cause issues for users down the track.

“I don’t think the risks are *high* but I certainly have a responsibility to not engage in less-clear regulatory space[s],” he said, adding that: “Everything there is probably fine minus the AMM mechanic, which holds more risk, and I don’t want my brand to have an AMM associated with it, in this way.”

The move caused a significant reaction on X, with the 3LAU hashtag fielding a long list of tweets from people adding their takes to the situation by either showing support or criticizing the DJ.

Looking at the comments responding to his post, there were some people accusing him of dumping his shares on his followers, or using them as “exit liquidity.” However, 3LAU has since stated that he will be reimbursing anyone that bought his keys.

Friend.tech was launched in mid-August and the platform enables users to tokenize their social presence by buying keys from other users, or selling their own.

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Given that the keys can financially impact users as they cost money and they can fluctuate in value in response to a myriad of factors, the move from 3LAU highlights a challenging situation for those who no longer wish to use this type of social media platform.

In a follow up post, 3LAU clarified how he will compensate impacted key holders after noting that there had been “too much drama” surrounding his initial announcement.

“Making a split contract to return all of this ETH to 3LAU Friend.tech key holders pro-rata at the block at which I sold the first key. Still donating the full value of all my keys to charity. We cool now? Will follow up w/ transaction once we get it done.”

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Friend.tech TVL tops $20M weeks after being declared ‘dead’

User activity on friend.tech has witnessed a major resurgence after briefly fizzling last week.

Decentralized social media platform friend.tech has seen a sudden surge in total value locked (TVL), doubling to reach more than $20 million within the last four days. 

Only two weeks ago, critics declared the platform “dead” after activity on the app looked to be fizzling out. 

Total value locked and fees on Friend.tech since Aug. 10. Source: DeFiLlama

However, activity on Friend.tech has witnessed a significant resurgence over the last few days, with the app witnessing $12.3 million in daily trading volume — the third-highest ever — on Sept. 9, according to data from Dune Analytics.

Trading volume and number of traders on Friend.tech since inception. Source: Dune Analytics

As the pseudonymous account TylerDidIt pointed out, the Sept. 9 trading volume on Friend.tech eclipsed that of OpenSea, outperforming the NFT platform by more than $3 million on the day.

While there’s no apparent reason why the platform saw such a surge, many crypto industry heavyweights shared some reasoning for its resurrection.

Prominent trader Hsaka jested that TVL had doubled since users realized that Friend.tech chats were “just yield farms rebranded” — a comment that refers to the potential gain from the 5% fee earned when users buy or sell someone’s “key.”

Another potential reason behind the resurgence of activity on Friend.tech may have something to do with the growing number of non-crypto figures that have joined the platform in recent weeks, including a number of prominent YouTubers and OnlyFans creators.

PancakesBrah, the pseudonymous account in charge of growth and business development at Friend.tech said this hammers home the point that the platform “isn’t an app for just crypto bros.”

Additionally, the app has shipped a number of updates that have offered improvements to user experience and functionality.

Initially plagued by bugs and various technical errors, the app has added a series of new features including the ability to upload photos, credit-card-enabled purchase options and new sections to view different types of activity.

Related: Friend.tech denies report that database of over 100K users was leaked

Friend.tech launched on Coinbase’s layer-2 Base on Aug. 11, and generated a staggering $5.9 million in fees by its 10th day.

Shortly afterwards however, user activity stalled — daily fees plummeted 87% and transaction volume fell 90% over the course of the next week, causing some to prematurely declare the platform “dead.”

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Friend.tech pronounced ‘dead’ after activity and fees tank

Buyers, sellers, inflows and transactions have all taken significant dives on the Friend.tech platform after its launch just over two weeks ago, prompting some critics to herald its death.

Less than three weeks after its launch, the decentralized social network Friend.tech has already been declared "dead" by critics,  following a recent drop in key metrics such as activity, inflows and volume.

Friend.tech had a buzzy beta version launch on Coinbase’s layer-2 Base on Aug. 11. A week later, its fees surpassed $1 million in 24 hours on Aug. 19 outshining Uniswap and the Bitcoin network.

However, its fees have since cratered. Daily fees peaked at $1.7 million on Aug. 21, but dropped over 87% to around $215,000 on Aug. 26 according to DefiLlama.

Transactions on Friend.tech also declined over 90% from the nearly 525,000 peak on Aug. 21 with just over 51,000 transactions on Aug. 27, Dune Analytics data complied by Crypto Koryo shows, leading many on X (Twitter) post condolences for the network.

Friend.tech is centered on buying and selling “keys” that enable the buyer to send private messages to the seller, with the platform reportedly taking a 5% cut.

It's attracted crypto and non-crypto influencers including UpOnly podcast host Cobie, YouTuber Faze Banks and Russian protest group Pussy Riot.

In an Aug. 27 X post, Coinbase payments risk manager Lisandro Rodriguez opined that the platform is "dead," due mainly to "greed and poor execution."

Alongside the fee decline, buyers and sellers have also tanked, with Aug. 27 seeing around 10,000 buyers and 7,800 sellers compared to the Aug. 21 peak of over 58,000 buyers and 27,000 sellers, per Dune data.

Friend.tech buyers (green) and sellers (orange) have both steadily declined since the peak on Aug. 21. Source: Dune

Dune shows inflows have also taken a dive from the Aug. 21 high of $16.8 million with Friend.tech seeing around $1.6 million on Aug. 27 — a nearly 90.5% decrease.

Protocol inflows peaked on Aug. 21 but have since trended down. Source: Dune

Before the decline over the past week, some community members had already shared their bearish predictions for the platform.

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Last week, crypto commentator Yazan told Cointelegraph of factors that led him to believe Friend.tech had between six to eight weeks before it would see a decline in user key prices and activity.

Yazan said the user key price increases were unsustainable and questioned why so many would pay upwards of 1 Ether (ETH) “to be able to see a private chat.”

The platform has drawn parallels to the 2021 DeSo app BitCloud with pseudonymous Web3 marketer Legendary saying he believes Friend.tech “will collapse as BitClout did.”

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While Friend.tech booms, decentralized social has a retention problem — Execs

Decentralized social network Friend.tech may be booming right now, but execs say decentralized social media apps still have an onboarding and retention issue to fix.

Despite the recent hype around riend.tech, some decentralized social networks are still having a tough time getting users to sign up and stay on their social media platforms.

Two executives in the decentralized social (DeSo) media space told Cointelegraph that as much as 99% of users moving into DeSo for the first time will end up quitting, either due to clunky onboarding or simply not knowing anyone.

Ed Moss, the head of growth for layer-1 blockchain firm DeSo, said the process of cryptocurrencies from an exchange, transferring it to a wallet with an installed Chrome extension, and then paying high gas fees to transact on-chain or across chains is tedious and expensive for first-time users.

“We've found that 99% of mainstream users will drop off at that first step, so simplifying this flow is mission critical.”

Therefore, the single most important factor is to make sure the onboarding process is as frictionless as possible, Moss said.

But the problems can start even before this point, according to Suhail Kakar, the creator of DeSo app Onboard.

Because users need to familiarize themselves with blockchain, smart contracts, and wallets before they sign up, they often shy away from taking the first step, Kakar explained.

“A party where you don’t know anyone.”

Catching up to the massive network effects that web2 social platforms such as Facebook, Instagram and X (formerly Twitter) won’t be an easy task either.

Kakar said DeSo apps need to spend more time building their communities because making a presence in these applications is “a bit like going to a party where you don't know anyone.”

He believes that as more top-tier creators and influencers move on-chain it could be a tipping point, as users will ultimately follow where the high-quality content goes.

Data from April shows that Facebook, Instagram and Twitter hosted about 2.98 billion, 2 billion, and 372.9 million monthly active users, respectively. By comparison, one of the most visited decentralized social media networks Odysee averaged only 5.3 million average monthly unique users between January and April, according to CoinGecko.

Average number of monthly active users on decentralized social media platforms between January and April. Source: CoinGecko

Moss argues another reason why decentralized social media hasn’t hit the masses is because Ethereum and other smart contract platforms aren’t purpose-built to provide social media applications at scale.

The ideal solution would be to architect a "storage-heavy" or "infinite-state" blockchain, that is capable of storing and indexing massive amounts of data at the lowest cost possible, he explained:

“This is what a social application would require in order to store actions like ‘posts,’ ‘likes,’ ‘follows,’ ‘comments,’ and ‘social graphs’ directly on-chain to enable full decentralization from any corporate entity or centralized government.”

Without it, Moss believes end-users may never truly own their content, identity and social graph.

Friend.tech bucks trend?

Meanwhile, Base-powered social platform Friend.tech has seen strong uptake over the past week.

The platform allows creators to connect to their audience through tokenized attention, where a creator's influence is represented by shares, or keys that can be traded for access to exclusive private chat rooms.

Friend.tech has reeled in over 85,000 users from over 127,000 wallets, which have collectively sent over 630,000 requests to the network since it launched earlier this month, according to CoinGecko.

Related: Decentralized social media a game changer for creator monetization — Web3 exec

However, other industry pundits believe the model may turn out to be a six-to-eight-week fad.

Sales revenue from decentralized social media networks is projected to reach $12.1 billion in 2023 and is estimated to surpass $101 billion by 2033, a compounded annual growth rate of 23.6%, according to Future Markets Insights. 

Other decentralized social media networks include Jack Dorsey's Bluesky — a decentralized Twitter alternative, Mastodon and Lens Protocol. 

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