Friend.tech recently experienced a significant drop in its token price following its airdrop claims process. The token, which initially spiked to $167, plummeted to below $2 after its launch on May 3.

The SocialFi project introduced its native token, FRIEND, through an airdrop to users, coinciding with the release of version 2 of its protocol. The platform operates on Base, Coinbase’s Ethereum (ETH) L2 network, and offers an invite-based community through custom ERC-20 social tokens known as “keys”.

Shortly after the launch, data from DEX Screener revealed a 98% decline in the token’s price and low liquidity levels. Liquidity is crucial for trading, and a lack thereof can lead to significant price fluctuations. An analyst from Messari highlighted the imbalance between the liquidity added by the team and the fees collected.

“It’s free money bro why is CT upset? Um, it wasn’t? Users paid $60 million in fees, and $30 million of that was extracted by Friendtech. So collectively, users paid $30m in farming costs for a token that has a liquidity pool of only $3m ETH liquidity…”

Users also faced challenges with the claim portal, resulting in some successfully claiming and selling large amounts of the token, driving prices down while others struggled to collect their airdrops.

“Watching the value of my airdrop go from 7 figs to 5 figs in the span of 2hrs while I keep refreshing the page trying to claim…still can’t claim. Meanwhile I gotta watch this guy cashout while my wallet won’t even load. Adds insult to injury 💀💀💀”

Despite the drop in price, liquidity improved with over $8.3 million available at the time of reporting. FRIEND, with a supply of 14.5 million tokens, held a market cap of $67 million and boasted over 20,000 holders.

While liquidity increased and the number of holders grew, sellers outnumbered buyers significantly. Coinbase Director Conor Grogan highlighted the friend.tech token launch as a case study on airdrop culture and market reactions following distribution.

“The FriendTech airdrop is interesting because we get onchain proof of everyone’s trading acumen in an identity-linked way in about as good a natural experiment as you will ever get.”

Post Views: 7