Friend.tech, a decentralized social media platform, is getting ready to launch its version two and conduct an airdrop on May 3. However, leaked smart contracts suggest that the platform may include controversial features, such as non-transferable tokens. These tokens, which may be introduced during the airdrop, would prevent recipients from selling or exchanging them, except for specific whitelisted protocol addresses.
EigenLayer, a restaking protocol, has also decided to issue non-transferable tokens for its EIGEN airdrop, which has caused outrage within the community. Friend.tech’s decision to make their tokens non-transferable was made in order to enforce a 1.5% fee on users, according to Kasper Vandeloock, a quantitative crypto trader and adviser.
The new token, POINTS, will serve as a utility token that allows users to create social clubs on the platform, which may incur a 1.5% platform fee. Additionally, these tokens will be rewarded to users who stake their Ether (ETH) and POINTS tokens in the Friend.tech smart contract.
While the announcement has raised concerns among crypto enthusiasts, non-transferable tokens could actually benefit the long-term price action of the cryptocurrency. This is because tokens often experience significant declines following airdrops. For example, the OMNI token of the Omni Network fell by 55% in less than 18 hours after its airdrop, losing over half of its market capitalization. Similarly, Wormhole’s W token fell by nearly 25% in value just a few hours after its airdrop on April 3 and is now down over 47% since then.
In the crypto community, airdrops are often targeted by professional airdrop hunters who collect rewards from multiple wallets without any intention of using the protocol long-term. They then sell these rewards in the market. In fact, in March 2023, airdrop hunters consolidated $3.3 million worth of tokens from Arbitrum’s ARB airdrop from 1,496 wallets into just two wallets they controlled.
Overall, the introduction of non-transferable tokens may have both positive and negative implications for the crypto market.