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Despite concerns, traders are still optimistic that the Friend.tech app is still on the up.
Friend.tech is a social media app on the Coinbase-incubated Base blockchain that tokenizes Twitter accounts. Once users buy “keys,” previously called “shares,” they get access to private chat groups. It gathered significant momentum over the weekend.
Riding the hype, decentralized derivatives platform Aevo launched perpetual swaps linked to Friend.tech yesterday. The FRIEND-PERP contract on Aevo enables betting on the Friend.tech’s on the total market cap of all Friend.tech accounts.
The contract’s trading volume exceeded $550,000 since yesterday, per the exchange data.
Perpetual swaps are specialized futures contracts without an expiration rate and a funding rate mechanism that influences the price of the contracts based on the relative demand for short and long orders for it.
The reference price of this specific contract is calculated based on the amount of Ethereum (ETH) stored on the Friend.tech smart contract on Base, converted to dollars at the ETH/USD spot rate, and divided by 1 million, according to the exchange.
According to Etherscan, $7.2 million in Ethereum has already been deposited into Friend.tech’s contracts, which gives it a reference value of $7.20.
The funding rate and volumes for the perpetual swaps also influence the contract’s price along with the spot reference value. It was last trading at $7.24.
The value of the perpetual swap contract dropped from Monday’s peak of $8.83 to a low of $6.84 this morning, according to data on the exchange.
However, the funding rate for FRIEND-PERP suggests that traders are still optimistic.
The average 24-hour funding rate for the contracts stood at 0.48% or over 4,200% annually, indicating that traders are paying a significantly high premium for placing long orders.
The last funding rate reading was at 0.14% hourly or over 1,200% per annum.
The open interest volume, representing the amount of outstanding contracts, stood at $76,700 at the time of writing.
NBA players, gamers join the bandwagon
The app generated $1.68 million in fees over the last 24 hours, exceeding all crypto applications like Lido, Uniswap and blockchains like Bitcoin, falling behind only Ethereum, per DeFiLlama data.
Friend.tech’s user base has risen four times since last week, jumping from around 22,500 on August 15 to 90,671 users at press time.
The buzzy new app also generated interest among celebrities like NBA player Grayson Allen and professional gamers behind FaZe Clan, and Nadeshot.
Still, some experts have raised concerns about the application's business model, leading to concerns about its long-term sustainability.