Decentralized social media platform Friend.tech is preparing for its version two launch and airdrop on May 3, but a leaked smart contract suggests it may have controversial features, including a non-transferable token.
The nontransferable tokens may be introduced with the airdrop, according to pseudonymous decentralized finance researcher CBBOFE, who claims in a May 2 X post to have potentially found the smart contracts.
“Ticker is $POINT, not transferable unless to some whitelisted addresses. $POINT will be tradable on BunnySwap (FT native DEX).”
A nontransferable token means that airdrop recipients won’t be able to sell or exchange the coins, except for certain whitelisted protocol addresses.
Restaking protocol EigenLayer has also decided to issue a nontransferable token for its EIGEN airdrop, which was one of the main reasons behind the recent outrage surrounding EigenLayer.
Friend.tech made the token nontransferable to make users pay the 1.5% fee, according to Kasper Vandeloock, a quantitative crypto trader and adviser at the X10 exchange. He told Cointelegraph:
“If you can’t transfer it, you are forced to sell it through them, which has the 1.5% fee. […] Which is kind of ironic, they bring this strong ‘we are anti-VC’ vibe to the table while being a profit factory for Paradigm.”
The new potential token, POINTS, will function as a utility token that allows for the creation of social clubs on the platform, which may cost a 1.5% platform fee, according to CBBFOE:
“New smart-contract called Clubs. Anyone can create multiple clubs and a bonding curve among several options. 1.5% platform fee and 1.5% staking contract. Club keys are bought with $POINT.”
The new tokens will also be offered as rewards for users staking their Ether (ETH) and POINTS tokens in the Friend.tech smart contract.
The announcement caused concerns among crypto enthusiasts. Pseudonymous crypto trader MK commented:
“I hate Eigen so much for starting this non-transferrable meta.”
Related: EigenLayer sees over 12,000 queued withdrawals — How far will TVL fall?
Non-transferable tokens could reduce initial airdrop selling pressure
While nontransferable tokens have been causing significant community outrage, they could benefit the long-term price action of the cryptocurrency, as tokens tend to see drastic declines following airdrops.
At the end of April, the Omni Network’s OMNI token fell 55% in less than 18 hours following it airdrop, losing over half of its market capitalization.
Wormhole’s W token is another example, falling nearly 25% in value only a couple of hours after an airdrop on April 3. The token is down over 47% since the airdrop, according to CoinMarketCap.
Crypto airdrops are often riddled with professional airdrop hunters (or squatters) that farm the same airdrop with multiple cryptocurrency wallets with no intention of using the protocol in the long term and market selling the rewards after claiming.
In March 2023, it was revealed that airdrop hunters consolidated $3.3 million worth of tokens from Arbitrum’s ARB airdrop from 1,496 wallets into just two wallets they had controlled.
Related: LayerZero cross-chain interoperability protocol completes first airdrop snapshot