A guide on how to create a Ponzi scheme using friend.tech

Original source: Sukie's Moments

Before we dive into the specific operations, let's review how the (3, 3) and ve (3, 3) flywheels used by large Ponzi schemes work:

First is the (3, 3) mechanism. OHM utilizes a classic case study in game theory, the prisoner's dilemma, which is a type of nonzero-sum game. In simple terms, when users choose either (stake, stake) or (bond, bond), the bubble will continue to grow.

Next is the ve (3, 3) mechanism, which combines Curve's ve (vote escrow) model and OlympusDao's (3, 3) model. Ve refers to users who lock collateralized CRV tokens and can receive rewards such as a share of Curve's trading fees, LP yield boosts, voting rights for projects, and airdrops of tokens from cooperative projects. Ve (3, 3) adjusts the token issuance based on the locked token amount, encouraging everyone to lock their tokens to prevent dilution of token value (the founder AC has fled).

Now let's return to the economic model of FT. The pricing formula for FT shares is (ETH) = (supply^2) / 16000.

To explain this formula, the square of the total supply represents the market capitalization of a KOL, for example, if you have 10 holders, your market capitalization would be 100. Dividing that by 16000, the price of one Key would be 0.00625 ETH.

As we can see, this is a typical prisoner's dilemma.

The number of people joining the supply has increased exponentially. When the 10th person buys, the first person who bought earns 100 times. When the 100th person buys, the 10th person who bought earns 100 times.

However, there is always a price difference in buying and selling, and the price difference is ( 2 n + 1) / 16000. This formula shows that as n increases, the price difference will increase linearly. For every unit increase in n, the price difference will increase by 2/16000, which is 0.000125.

So selling is a typical weak equilibrium behavior (-3,-3).

So let's take these two models as an opportunity to talk about how an FT blogger can turn themselves into a Ponzi scheme model.

Actually, the core of Ponzi is just a few things:

1. Persuade holders not to sell coins through game theory, incentivize users but encourage them not to cash out rewards. Find ways to lock in or delay users from selling, and keep users in the system to reduce selling pressure.

2. Create a frenzy to increase influence, achieve early network effects through word-of-mouth propagation, and continuously attract new members and external funds.

3. Create income cash flow, provide incentives to users, and achieve positive externalities.

I have always said not to underestimate Ponzi. The most ideal form of Ponzi is actually a win-win situation, which is Nash equilibrium, on the premise that the speed of obtaining positive externalities is catching up with the slowing down of new participants.

This FT group is designed as follows:

1. Establish rules, incentive mechanisms, and ranking systems:

a. Users must purchase the KOL's Key to join the group. After joining, users should leave their Twitter account, introduce themselves, and state the value they can bring to the community, as well as promise to not sell and be part of the family. The KOL should reply to the user, making their message visible to everyone, and the other members of the group should follow their Twitter/buy their Key.

b. Design incentive mechanisms to provide users with more benefits without quitting the group, such as 1) gaining attention from other group members, self-promotion, and obtaining social value within the community, 2) gaining high-quality alpha information within the group, 3) upgrading within the group, and discussing cooperation with the community to obtain whitelist status, airdrops/advertisements, and other benefits.

c. Establish a ranking system and foster community identity.

Regularly elect community managers, appoint 10% of the members in the community as administrators, responsible for promoting a lively community atmosphere, organizing community activities, attracting new members, and more.

The group owner shares a portion of the transaction fees as incentives to a small number of people within the group, creating competition.

Ensure that everyone in the community has a sense of presence, for example, by selecting and promoting high-quality content produced by group members, reaching out to external audiences, attracting new members, and sharing benefits.

d. After inviting someone to join the group, new privileges will be unlocked for them.

2. Establish a punishment mechanism other than 0.000125:

a. Sellers will be publicly exposed, and everyone will unfollow those user accounts and write words like "shame on you" on Twitter.

b. For each person who leaves the group, the group owner will repurchase tokens using transaction fees, and encourage group members to buy tokens together, raising the price, making it more expensive for sellers to join the group.

3. Create a Ve model for the community to seek external revenue for community dividends:

a. Once the community grows, it can engage with project parties through AMAs (Ask Me Anything sessions).

b. Use voting to decide the direction of the community's future profitability.

c. Moral lock-up: Each user commits not to sell tokens at a certain point in time.

d. Token buyback using transaction fees.

If we consider the mechanism, I'd like to focus on the number 16,000. That is, if more community members choose to lock up their tokens, the divisor 16,000 will decrease. (This is just a small idea, I'm not sure what will happen.)

Based on this model, we can obtain a profit matrix for the "Friend tech" version:

In this matrix, if all users choose not to sell, the community will thrive, and each user will receive exponential profits, represented by (+3, +3). However, selling the "Key" token will result in a punishment of a price difference of 0.000125.

In fact, I have seen many criticisms that FT lacks social networks and content and is merely a Ponzi scheme. Examples like Facebook's "Thread" and Nostr Damus have shown that short-term influx of user traffic alone cannot sustain a social product.

What is the fundamental reason for a social product to exist in the long run?

The reason is to give users a reason to be trapped in your system.

The fundamental way to trap users is to increase the efficiency of establishing a relationship of interests.

For example, Taobao, a social app, connects merchants and users.

What is the user looking for in Friend tech? Besides the so-called airdrop expectation, I think there is also the opportunity to interact with top users. This is similar to the essence of some high-end communities, MBA classes, and paid communities, where I have the people you want to meet, and all you need to do is pay to have conversations with top KOLs, and if you come late, the price will increase.

What about you, do you "fo" or "fomo"? After all, going to Singapore for Token 2049 will cost you a few thousand US dollars in travel expenses. This small fee, absolutely worth it.

How to achieve early adoption of social products? Who says using Ponzi is not a good way?

Of course, I also think Friend tech has some obvious flaws when designing this economic model:

1. The "sell out" is very casual, when the value rises and buying decreases, there is no way to prevent subsequent selling pressure.

2. Others cannot see the comments of other people unless the group owner replies, which reduces the sense of community existence and decreases stickiness. It is difficult to classify the users in the group, as the group owner becomes a super node facing a large number of users. If the number of people exceeds 100, the group owner will be unable to manage it. Without user classification and users managing users, the group will die. The proven effective social software operation system is to attract top users and let medium-level users socialize with them. However, Friend tech seems to be a one-to-many system, where many ordinary users remain silent and find it difficult to gain attention or achieve sustainable growth.

3. The functionality is too simple, it cannot accumulate valuable content, and it is difficult to expand social functions such as red packets/voting/greetings.

4. Because compared to traditional social media, it has functional and product restrictions, it is difficult to expand external users except for degenerate users in the crypto industry, and subsequent growth is weak. Therefore, the story cannot be told.

So currently, it is only supported by the expectation of issuing coins. I don't think there are any other ways to continue the motivation after the coins are issued, unless it becomes Curve.

The problems that need to be solved urgently at this stage:

1. Increase the lock-up function, such as locking the Key, which allows free speech in the group without needing the group owner to reply.

2. Grant corresponding privileges based on the lock-up period to unlock more functions.

3. Develop a multi-chain ecosystem, no longer use ETH for payment, but instead use other cryptocurrencies or even develop a traditional knowledge planet model, advertise, and attract external funding. Of course, from the perspective of Base Chain and ETH interests, this matter is not a high priority.