The harsh reality of SocialFi, which attracted public attention

• The Social Pie service initially received a lot of attention. This is because the combination of decentralized finance and social services allows users to monetize content and directly manage their data. But the initial hype in this field was short-lived. This is because platforms have struggled to sustain user engagement and provide innovative experiences that go beyond simple token speculation.

• Platforms like Friend.tech illustrate these limitations. It relied heavily on the initial investment craze, and since then, the number of users has plummeted as it fails to provide continuous updates, new content, or special user experiences. Ultimately, the number of daily active users decreased significantly and the influence of the platform decreased.

• For the Social Pie service to come back to life, great differentiation is needed. Simply applying blockchain technology to existing social services is not enough. Three things are needed for sustainable success. First, we need to create an innovative user experience. Second, genuine participation must be elicited. Third, it must provide real value beyond speculation.

At one time, Social Pie was attracting attention as a next-generation trend. This is because it combines decentralized finance and social media to create a platform where users can 1) monetize content, 2) manage their data, and 3) participate in governance.

This is a concept that combines blockchain and social experiences, and is a WeChat or TikTokIt was expected that it would bring about innovative changes. Just as Zepetto and Roblox captivated the younger generation, Social Pie is expected to change the way people interact and create value online.

However, contrary to these expectations, the initial enthusiasm for Social Pie cooled. As user engagement and interest waned, questions were raised about its sustainability. As a result, user activity on major Social Pie projects began to decline sharply.

It is important to understand the cause of this decline. This is not simply to point out mistakes, but to find opportunities for resurrection. In this report, we will analyze the growth and decline of major Social Media platforms according to the business life cycle and look at trends and challenges that companies should consider in the future.

Source: Tiger ResearchFriend.tech experienced a complete downfall. Source: @cryptokoryo Dune Dashboard

Despite its brilliant beginnings, Friend.tech eventually fell into complete decline. The platform, which immediately attracted users’ attention through airdrops and a second version update (V2), attracted attention for its unique model for tokenizing social media interactions. As a result, a market where users’ social influence and participation can be traded was instantly formed, sparking active activity among early users and a frenzy of token speculation.

Friend.tech official announcement on Twitter. Source: @friendtech Twitter

However, the initial success was short-lived, and the Friend.tech team made an unexpected move. On September 8, 2024, after the release of V2, the team give up controland transferred it to an empty address on Ethereum. This decision to decentralize became toxic, making any future updates or new features impossible.

The service still worked, but the lack of new features didn’t keep it fresh, and user engagement plummeted. This stagnation took a direct toll on user loyalty, and the lack of consistent updates caused many early users to leave the platform.

A massive drop in fees generated from Friend.tech. Source: Defillama

As the platform stagnated, the FRIEND token, which once played a key role, lost its use and became just another meme coin in the Social Pie ecosystem. By September 2024, Friend.tech’s revenue had plummeted, with fees falling from over $2 million on September 14, 2023 to just $71 a year later. The value of FRIEND tokens, which had lost practical use value, plummeted, showing that Friend.tech was no longer a meaningful presence in the market.

The failure of Friend.tech clearly shows how dangerous premature decentralization is without ensuring the sustainability of the platform. This is especially true in new markets like Social Pie, where user interest can wane quickly. Companies must carefully strike a balance between decentralization and central control to avoid stagnation. The lesson is that in order to continuously secure users, one must maintain interest in the product through constant innovation and updates, even if it sometimes deviates from the principles of decentralization.

Contrary to initial expectations, Social Pie has had great difficulty maintaining long-term growth. Like other trends in the blockchain industry, many SocialFi platforms struggled after the initial craze passed. The Lens Protocol, which attracted attention during the 2024 boom, is a representative example.

A similar pattern to Farcaster. Source: @filarm Dune Dashboard

Lens Protocol saw an explosion in account registrations due to FOMO (Fear of Missing Out) and early buy-in for decentralized social features. The platform’s growth looked promising, attracting thousands of new users. However, as the freshness disappeared, growth slowed sharply. In recent months, the number of new registrations has reached only 142, which is a significant drop compared to the early days of activity.

Lens Profile price is also decreasing. Source: NFT Price Floor

Another clear indicator of the decline of the lens protocol is the sharp decline in lens profile prices. In its heyday, a single lens profile was worth more than $200, but today it has dropped to less than $1. This clearly shows that users’ interest in and perceived value of the platform have significantly decreased.

This decline in value highlights how quickly the Social Pie platform can lose relevance if it fails to provide consistent value and engagement to its users. For SocialFi companies to succeed, they must focus on going beyond simply attracting users and continuously engaging them through meaningful content, community interaction, and practical applications.

While Lens Protocol’s initial performance has excited the market, its rapid decline is a wake-up call for companies in the space. The lesson is that without a clear strategy for long-term growth, even the most promising platform can fall into stagnation.

Farcaster and Warpcast, an app that uses the social network, received a lot of attention in May 2024, attracting more than $150 million in investment. This service also suffers from the initial FOMO phenomenon. Daily active users surgeAnd it looked like it was going to be a success.

From a daily peak of more than 15,000 in early February to less than 500 new users at present. Source: @filarm Dune Dashboard

However, despite constant infrastructure updates and the potential for decentralization, it has failed to expand its user base. This reveals the problems with Social Pie in general. It is not easy to sustain interest after the initial craze. For example, more than 15,000 new subscribers signed up on February 5th, but only 545 new subscribers arrived in September.

However, Farcaster Daily Users is showing a positive trend. Source: The Block

Additionally, Parcaster’s loyal user base eventually faced a lack of content. Although the number of daily users of the service did not drop significantly, user participation fell 60% from its peak. The main reason for this decline was the inability to maintain user interest due to a lack of engaging content. In other words, even though it was a social platform, it lacked attractive content to retain users, making it difficult to maintain long-term interest.

In conclusion, Parcaster’s case reveals an important truth about blockchain-based platforms. The point is that content and service quality are much more important than decentralization features. The core of social services is continuous content creation and interaction between users. Blockchain-based social networks must invest heavily in content creation and encourage meaningful user contributions. From a business perspective, the lesson is that rather than relying on airdrop speculation, the priority should be on creating a diverse and attractive ecosystem that users will want to return to every day.

Faced with declining user engagement and interest, some SocialFi platforms have attempted to pivot to new business models to regain momentum. A notable example is CyberConnect, which recently rebranded as Cyber ​​and focused on layer 2 blockchain solutions.

Source: DefiLlama

The switch seemed strategic, but it did not generate the renewed interest from users that Cyber ​​had hoped. The platform’s total deposited assets (TVL) declined sharply, reaching only $35,000, well below its previous high. Despite these business transformation attempts, cyber challenges demonstrate that simply adapting to new technologies or trends is not enough to revive long-term user engagement.

This leaves an important lesson for the Social Pie business. Transitioning to a new model or technology must be accompanied by an innovative and engaging user experience. This suggests that without continuous innovation, even strategic transformation attempts, such as cyber rebranding, may be difficult to achieve success.

The rise and fall of platforms like Friend.tech have exposed significant flaws in the social media sector. Initial excitement and FOMO may drive initial adoption, but long-term success requires more than speculative enthusiasm. A meaningful and engaging experience is essential to sustain user interest. Unfortunately, many projects fail to deliver on their promises, leading to disillusionment and a steep decline in user engagement.

As the case shows, Social Pie projects face several key challenges that hinder their growth. These include 1) lack of consistent user engagement, 2) excessive reliance on decentralization, and 3) gap between content and innovation. Additionally, additional problems arise at the service planning stage, further exacerbating these difficulties:

• Inconvenience in using wallet: Using wallets introduces additional steps that increase service complexity and is often accompanied by unfamiliar terminology. This makes the user experience less smooth and creates a barrier to entry for new users unfamiliar with decentralized systems.

• Lack of competitive differentiation: Most Social Pie services are very similar to existing Web3 services and lack differentiation. Without distinctive features, it is simply viewed as an “inconvenient alternative” and has limitations in attracting active users. Just as TikTok made a short-form transition from the existing long-form video system to short-form content and viral challenges, Social Pie also needs differentiated competitiveness.

• Absence of native influencers: The success of platforms like TikTok and Instagram is largely due to the rise of native influencers. Influencers like the D’Amelio sisters who have amassed a following on TikTok have been able to attract new users and increase engagement. The emergence of these influencers is essential to driving the growth of new platforms. However, decentralized social media platforms have not yet been able to foster native influencers, limiting their potential for organic growth.

The key lessons from Social Pie’s classic are clear. It is not enough to replicate the Web2 model on top of blockchain technology. Success in this field requires providing truly new experiences and real value to users. Only platforms that innovate and adapt will thrive in the long term.

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