2024-05-04
The decision to implement nontransferable tokens on Friend.tech's decentralized social media platform could have an unexpected impact on users.
It may result in users being required to pay a 1.5% fee to the platform, which is a departure from their previous approach of avoiding venture capitalists.
Friend.tech is preparing for the launch of its version two and airdrop on May 3. However, a leaked smart contract suggests that there might be some controversial features, including the introduction of nontransferable tokens.
According to CBBOFE, a decentralized finance researcher who wishes to remain anonymous, the nontransferable tokens may be included in the airdrop.
CBBOFE claims to have potentially discovered the smart contracts in a post on May 2.
The $POINT token, represented by the ticker symbol, will only be transferable to specific whitelisted addresses.
However, it will be tradable on BunnySwap, which is a native decentralized exchange for FT tokens.
A nontransferable token means that recipients of the airdrop will not be able to sell or trade the coins, except for specific addresses that are whitelisted by the protocol.
EigenLayer, a restaking protocol, has also decided to issue a nontransferable token for its EIGEN airdrop.
This decision has caused controversy and outrage within the community.
Friend.tech made the token nontransferable to ensure that users pay the 1.5% fee.
Kasper Vandeloock, a quantitative crypto trader and adviser at the X10 exchange, explains that by making the token nontransferable, users are compelled to sell it through Friend.tech, resulting in the 1.5% fee.
This situation is ironic considering Friend.tech's stance against venture capitalists and their goal of being a profit factory for Paradigm.
The new potential token, POINTS, will serve as a utility token that allows users to create social clubs on the platform.
CBBFOE mentioned that creating these clubs may incur a 1.5% platform fee. The club keys will be purchased using $POINT.
Additionally, users will be rewarded with the new tokens for staking their Ether and POINTS tokens in the Friend.tech smart contract.
The introduction of nontransferable tokens has raised concerns among crypto enthusiasts.
MK, another anonymous crypto trader, expressed their dissatisfaction with EigenLayer's decision to implement nontransferable tokens.
While nontransferable tokens have sparked significant community outrage, they could potentially have a positive impact on the long-term price action of the cryptocurrency.
This is because tokens often experience significant declines in value following airdrops.
Recent examples include the OMNI token from the Omni Network, which fell by 55% in less than 18 hours after its airdrop, resulting in a loss of over half of its market capitalization.
Similarly, Wormhole's W token dropped nearly 25% in value just a few hours after its airdrop on April 3 and has since declined by over 47%.
Crypto airdrops are often targeted by professional airdrop hunters who collect the rewards without any intention of using the protocol long-term.
They then sell these rewards in the market. In March 2023, it was discovered that airdrop hunters consolidated $3.3 million worth of tokens from Arbitrum's ARB airdrop from 1,496 wallets into just two wallets that they controlled.
