DeFi: friend.tech's revenue is plummeting; Binance.US partner with MoonPay
Friend.tech has shot to fame with a model like BitClout, whilst Binance.US look to get user deposits and withdrawals back up and running.
The Fintech Blueprint is a newsletter authored by me, Lex Sokolin, and a small group of brilliant researchers who focus on frontier technologies impacting the future of financial services. I am glad you are here. Was this email forwarded to you? You deserve your own:
👉subscribe here.
Gm Fintech Futurists —
Today we highlight the following:
DEFI & DIGITAL ASSETS: friend.tech Crosses 100,000 Users As Crypto Community Debates Its Longevity (link here)
DEFI & DIGITAL ASSETS: Binance.US Looks to Crypto Startup MoonPay as Alternative After US Banks Cut Ties (link here)
CURATED UPDATES
To support this writing and access our full archive of newsletters, analyses, and guides to building in the Fintech & DeFi industries, subscribe below.
DEFI & DIGITAL ASSETS: friend.tech Crosses 100,000 Users As Crypto Community Debates Its Longevity (link here)
After lying dormant for three months, friend.tech, a decentralized social media dApp that lets people buy "shares" of X (formerly Twitter) users, has attracted 100,000+ users and generated $2.7MM+ in revenue within the past week.
Previously, friend.tech was known as Stealcam - a social dApp that enabled users to upload images that were then transformed into NFTs on Arbitrum. The catch was that you couldn't view the pictures until you "stole" them by purchasing them with ETH. The platform yielded tens of thousands of dollars for some influencers. However, by April, the leading earners experienced complete income stagnation. Subsequently, in May, the developers rebranded it as friend.tech.
Built on Coinbase's L2 Base, friend.tech lets users tokenize their persona by selling “Keys” of themselves to their followers, allowing the followers to “own” a portion of their friend.tech persona. These shareholders then gain direct messaging privileges—hence the name "Keys." The Key's price appears tied to follower count and engagement levels. And if your friend gains popularity, their Key's value rises, and vice versa. The platform levies a 10% transaction fee, divided evenly between friend.tech, and the account holder.
Concerns about the app's viability arose due to the absence of a privacy policy. Notably, Banteg, a core contributor to Yearn Finance, raised doubts by sharing publicly scraped data - wallet addresses on Base and corresponding Twitter usernames for over 101,000 friend.tech users - via a now-deleted repository on GitHub. Friend.tech defended itself, asserting that the data was publicly available, not leaked. The other concern revolves around the nature of Keys. This setup raises the possibility of these Keys being deemed securities by the Securities and Exchange Commission (SEC), mainly if the dApp gives the impression that owning them could yield anticipated profits.
Now, onto the big question: Is friend.tech here to stay? Remember, emphasizing a creator's value over their content isn't novel. Friend.tech is just a new spin on BitClout (now called DeSo). BitClout, on its Proof-of-Work blockchain DeSo, scraped X accounts, mainly from social media influencers. These accounts were integrated into the platform and linked with individual bonding curves. Users could share updates and images, financially reward others' posts, and trade "creator coins"—personalized tokens with values tied to individuals' reputations. Sound familiar? Based on the number of imported followers, it generated implied market caps of all those accounts en masse; Elon Musk hit $38MM.
BitClout’s initial interest drew $200MM+ in Bitcoin deposits. Fast forward and the initial excitement dwindled - BitClout's creator coin trading volumes plummeted, concerns about unauthorized monetization of Twitter profiles surfaced, and a final blow was dealt by Anderson Kill P.C.'s privacy-related lawsuit.
Maybe friend.tech won't get sued like BitClout did, but its fees and revenues have already tumbled over 5x in just two days. Crypto is no stranger to short-lived projects - a few weeks ago, there was another PEPE rally, whose gains have already practically vanished. Outside of crypto the same stands true, Marcus Aurelius emphasized the transience of things, Kierkegaard delved into aesthetic stages, and Plato examined the concept of "mania." Financial markets and DeFi follow many of those principles and friend.tech will need to truly differentiate itself and garner creator adoption if it is to avoid the same fate as BitClout did.
👑 Related Coverage 👑
🤓 Insights Report
Before we move onto our next topic, we would like to highlight an Insights Report from Fintech Nexus and Brighterion, a Mastercard company. In their survey of 100 financial institutions, they explore how financial institutions are using artificial intelligence for transaction fraud monitoring in the dynamic digital landscape.
DEFI & DIGITAL ASSETS: Binance.US Looks to Crypto Startup MoonPay as Alternative After US Banks Cut Ties (link here)
As the regulatory cases against Binance.US proceed, the US-branch of the crypto exchange has seen an exodus of US banking partners. In turn, for the past month, US customers have been unable to withdraw or deposit dollars on the platform. The charges brought against Binance.US include operating unregistered exchanges, broker-dealers and clearing agencies; providing a misrepresentation of oversight and trading controls on the Binance.US platform; and offering and selling unregistered securities. When the allegations were made Binance.US had over $2B in AUM, commanding a market share of over 22% in March, but this figure has since dwindled to 0.7%.
Enter MoonPay, a crypto payments fintech that allows business and retail customers to on-and-off ramp between fiat and cryptocurrencies with a range of payment methods, including debit, credit, local bank transfers, Apple Pay, Google Pay and Samsung Pay. Notably, the payments firm is backed by a range of celebrities, with Justin Bieber and Ashton Kutcher, among others, joining their most recent round of funding last April. Its most significant previous round raised $555MM in late 2021 at a $3.4B valuation, but its internal valuation has since sunk 72%.
MoonPay is now providing Binance.US users with an alternate mechanism for converting dollars to crypto. Users can use any of MoonPay’s supported payment methods to buy the stablecoin Tether, which can then be swapped for other cryptos on Binance. The drawback is that MoonPay is performing KYC compliance checks for users in the US to avoid any unnecessary repercussions from the Binance.US lawsuits.
There has been little regulatory movement on the cases brought against Binance, or even fellow accusee Coinbase, since the cases were filed. Ripple’s XRP win last month was a move in the right direction, assuming it survives a potential appeal, and the SEC now seems to be moving their sights over to AI. The regulatory uncertainty looming over Binance.US at best deters users, who likely fear a repeat of FTX, and at worse could see it shut out of the world’s largest crypto market. But at least in the short term, business goes on thanks to MoonPay.
👑 Related Coverage 👑
Curated Updates
Here are the rest of the updates hitting our radar.
Financial Institutions and Adoption
⭐ Binance US Renews Banking Push With MoonPay Deal - Blockworks
Crypto Exchange EDX Markets Taps Anchorage As Custody Provider - CoinDesk
Gemini Moves To Dismiss SEC Lawsuit, Claims Accusations Flawed - Blockworks
DeFi and Digital Assets
⭐ Spark Protocol Users Max Out $200MM DAI Debt Ceiling - The Defiant
⭐ EigenLayer Pulls In $160MM Of Deposits Within Two Hours - The Defiant
BNB Token Stumbles To 1-Year Low Amid Mounting Scrutiny Over Binance - CoinDesk
Nodal Power Raises $13MM To Power Bitcoin Mining Centers With Flared Methane - Blockworks
Balancer Depositors Pull Nearly $100MM In Crypto After Vulnerability Warning - CoinDesk
Coinbase Gets A Stake In Stablecoin Operator Circle And USDC Adds 6 New Blockchains - CoinDesk
Wintermute Proposal To Borrow YFI Draws Fire From DeFi Community - The Defiant
Blockchain Protocols
⭐ Risc Zero Introduces ‘Type 0’ zkEVM To Make Zero-Knowledge Tech More Accessible - Blockworks
⭐ dYdX Declares War On MEV Ahead Of Appchain Migration - The Defiant
Shiba Inu Plans Shibarium's Public Restart Days After Botched Launch - CoinDesk
Starkware To Open-Source ‘Magic Wand’ Of Its Zero-Knowledge Cryptography Next Week - CoinDesk
Maple Finance Eyes Asian Expansion With $5MM Investment, Returns To Solana - CoinDesk
NFTs, DAOs and the Metaverse
⭐ NFT Platform Recur To Shut Down Despite $50MM Raise And Big Name Backers - Decrypt
Bored Ape Investors Sue Yuga Labs, Sotheby’s, 28 Others As NFT Prices Plunge - CryptoPotato
Billionaire Mark Cuban Says NFT Marketplace OpenSea Making ‘Huge Mistake’ With New Royalty System - The Daily HODL
Ex-OpenSea Exec Receives 3-Month Sentence In NFT Insider Trading Case - Decrypt
'Synergy Land' RPG On Polygon Gives Off 'Animal Crossing' Vibes - Decrypt
⭐ Shape your Future
Curious about what is shaping the future of Fintech andDeFi?
At the Fintech Blueprint, we go down the rabbit hole to help you innovate and compete.
Sign up to the Premium Fintech Blueprint newsletter and get access to:
Wednesday’s Long Takes on Fintech and Web3 topics with a deep, comprehensive analysis
Office Hours, monthly digital roundtable discussions with industry insiders
‘Building Company Playbook’ series, offering insider tips and advice on constructing successful fintech ventures
Enhanced Podcasts with industry leaders, accompanied with annotated transcripts
Archive Access to an array of in-depth write-ups, spanning across 15+ topics and encompassing over 50 Fintech and DeFi brands