Alfafrens is a subscription-based social-finance app built on Base and powered by DEGEN and Superfluid.

The platform allows users, or "creators," to set up private group chats, or "channels," that others can join via a monthly DEGEN subscription fee.

Subscribers gain access to the creator's channel, where they can interact, ask questions, and view the creator’s trading activities on their connected wallet.

Upon subscribing to a creator's channel, users immediately begin to accumulate rewards in the form of ALFA tokens. These tokens cannot be purchased or transferred and must be earned through active subscriptions. Subscribers can stake (“lock-up”) their ALFA in any creator’s channel, including their own, to earn a share of the creator’s monthly DEGEN subscription revenue.

The more ALFA staked in a channel, the more ALFA the channel generates for its subscribers.

TL;DR: Alfafrens is a gated group chat with ponzunomics. Use it wisely, and it could make you money, or at the very least, provide you with value in the form of alpha.

To understand the nuances here, we must first explore what makes Alfafrens different from the other gated group chat apps, and that is the underlying tech.

Superfluid's (the developer) “super token” framework enables “money streaming,” which is the continuous transfer of tokens across users whereby in-and-out flows are netted in real-time and automatically. This allows for a seamless stream of funds from sender to receiver with auto-updated real-time balances.

The second pillar of Superfluid's framework is its distribution mechanic, which allows these real-time streams of funds to be distributed among many parties.

With this understanding of the underlying tech, we can move on to how the app actually works.

First, users must create an account, which can be done through your Farcaster login. Once your account is created, the app will automatically generate a smart wallet for you on the backend. Users can then send Base DEGEN to this new wallet, which they can use to create their channel and start subscribing to other creators.

At this point, you'll notice your DEGEN was converted to xDEGEN on some of the Alfafrens menus. That’s a 1:1 wrapper needed to enable the real-time money streaming, and not to be worried about. It’s converted back when you withdraw your DEGEN.

As you subscribe to creators, you’ll notice that your DEGEN balance will start to decrease. Recall that all subscription-based transfers happen in real-time. So you’re paying that monthly fee on a second-to-second basis.

The more creators you subscribe to, the more ALFA you receive, which accrues every second for up to 24 hours. For this reason, it's critical that you claim your ALFA rewards every day as they won’t accrue for more than 24 hours.

The gas you pay to set up your channel and now to subscribe to your first few users is paid in DEGEN on Base. While Base is among the fastest chains, congestion can still occur, so there’s no need to claim your ALFA more than once per day as you'd be paying unnecessary gas fees.

Now that you have claimed your first 24 hours of ALFA rewards, it's time to put it to work. Recall that you can now stake that ALFA in any channel to earn some of that channel’s subscription revenue.

Once you’ve staked some ALFA, you’ll now notice that your “cashback earned” will start to accrue DEGEN. This is your share of their revenue. Each channel distributes 70% of its monthly revenue to its stakers. You now own a piece of that 70%.

So now you know how to stake in others’ channels, but what if you wanted to grow your own?

When creating your channel, you set your subscription cost to 500, 1000, 1500 DEGEN per month. Once you’ve received your first subscriber, you’ll start to earn DEGEN immediately.

Now, to earn money on Alfafrens as a creator, your net DEGEN inflow (subscribers) must outpace your outflow (subscriptions). But to earn money as a subscriber, now, that becomes a little more complicated given the nuances around ALFA.

Buckle up. Let’s pretend to look at the math.

Before diving into the complexities of Alfafrens, it's crucial to step back and consider what you want to get out of the app. Why did you join?

If your goal is to gain more intimate access to specific individuals, your path is straightforward. Find their channels, subscribe, and consistently stake your ALFA to support their growth. This investment not only increases the channel's ALFA rewards but also creates a virtuous cycle, whereby your growing ALFA allows you to claim more each day, which is more staked, which grows your percentage of revenue as well as incentivizes new subscribers, which is ultimately more cash back.

Generally, there are three areas you can optimize around:

1. Channel Growth

2. Cash Back Rewards (Profitability)

3. Alpha

We've discussed number three, alpha, but what about channel growth and cash back?

If your goal is to grow your own channel, the objective here is obviously more subscribers, which will increase your monthly revenue.

To rapidly expand your subscription base, it's effective to kickstart the process yourself—essentially purchasing your growth. This requires a substantial initial investment, typically between 50-100K DEGEN. It's important to recognize that this amount might not be recouped, so treat it as a buy-in cost or a bet on your own channel's potential.

Realistically, without a large existing audience that you can convert into subscribers, regaining your initial investment could be challenging, especially in the early months. Ultimately, achieving breakeven depends on your ability to sustain and continually grow your subscriber count over time, and, to a lesser extent, manage your staking effectively.

Assuming you decide to proceed, you'll use your initial DEGEN to subscribe en masse, starting with your own channel. As you subscribe to additional channels, your daily ALFA rewards will increase. You can then reinvest these ALFA rewards back into your own channel via staking. This strategy refuels the growth flywheel, incentivizing more users to subscribe and stake in your channel as both ALFA and cashback rewards are growing.

When choosing which channels to subscribe to, aim for those with a low subscriber count but a disproportionately high amount of ALFA staked. This setup provides more ALFA earned due to the high stake. The advantage of a smaller subscriber base is that it minimizes the dilution of your daily ALFA rewards, as each new subscriber slightly reduces the ALFA you earn each day. This strategy maximizes ALFA accumulation.

Now you’re probably already seeing how the ponzunomics come into play here.

Given that new users' primary goal is to start earning ALFA ASAP, they'll naturally navigate to the explore page to make their initial subscriptions. As it goes, if you join the app early enough, your channel is more likely to appear at the top of these leaderboards, becoming one of the first options new users see. This visibility creates a runaway effect, sustaining your channel's growth so long as new users keep joining Alfafrens.

Breaking into this leaderboard can be challenging without a large, pre-existing follower base. That's why making a substantial initial investment of 50-100K DEGEN is critical if you aim to compete effectively. The earlier you invest and establish your presence, the better your chances of competing as later entrants will find it increasingly difficult to overtake established leaders.

Now that you've subscribed to a variety of channels and your daily AFLA rewards have become meaningful, you'll need to decide on the type of channel you want to grow.

You face two primary staking strategies:

1. Stake in Your Own Channel: Reinvest all your daily ALFA rewards back into your own channel. This approach focuses on refueling your channel's growth and attractiveness each day, potentially increasing both your subscriber base and the cashback rewards.

2. Optimize for High Alfa or Cash Back: Alternatively, you can look to maximize your returns by staking your ALFA in other channels that offer higher returns or cash back. This strategy involves identifying channels that not only have high ALFA accumulation but also have staying power.

Each option has its benefits, depending on your goals and the dynamics of your channel.

If you decide to stake exclusively in your own channel, as I do, it's important to understand that you are effectively redistributing your DEGEN to your subscribers in the form of ALFA, which is essentially investing in growth.

Here's how it works: You begin by subscribing to a multitude of channels, which boosts your daily ALFA rewards. However, this strategy initially turns your streamed DEGEN balance net negative, as the outflow from these subscriptions exceeds the inflow from your own channel's subscribers. One could recoup some of these outflows and potentially reach breakeven by building high stakes in channels offering substantial cash back. While this might seem the best way to optimize purely for profitability, our focus here is on channel growth.

By choosing to stake all your daily ALFA back into your own channel, you're refueling the growth flywheel each day. This reinvestment strategy enhances the channel's value, attracting more subscribers who then contribute more ALFA, further increasing the channel’s appeal and growth potential.

Smart subscribers will notice this strategy. They'll see that by consistently reinvesting all my ALFA into the channel, I am committed to its growth. This realization encourages them to also stake their ALFA in the channel, understanding that as long as I continue to stake, the channel will keep growing, and so will its revenue. Therefore, they are incentivized to continuously stake their ALFA in the channel. By doing so, they build a larger proportional position within the channel, leading to a larger share of the cash back as the total revenue pie expands. This strategy not only supports the channel's growth but also maximizes their profitability from their investment in the channel.

As the creator of the channel, your DEGEN outflows will continue to exceed your inflows until one of two things happens: either you attract enough subscribers to make your monthly subscription revenue exceed your monthly DEGEN subscription costs, or you utilize your daily ALFA to build a substantial staking position in another early channel whose creator also commits significant DEGEN to jumpstart the growth cycle.

For context, my channel currently has 212 subscribers. I charge a subscription fee of 500 DEGEN per month, resulting in an estimated monthly subscription earnings of 26,500 DEGEN. Remember, 70% of this revenue, which totals 18,550 DEGEN, is redistributed among the channel's 30 stakers. This division gives approximately 618 DEGEN as monthly cash back to each staker, assuming an equal stake amount, equating to about 20 DEGEN per day.

However, not all stakes are equal; assuming half of the channel’s stakers didn't fully understand this mechanic and spread their ALFA thinly across multiple channels (a less effective strategy that incurs higher gas fees), the now 15 stakers would share about 16,000 DEGEN of the monthly cash back, or roughly 1,050 DEGEN each month.

After deducting the monthly subscription fee, this results in a net monthly profit of approximately 500 DEGEN. This is why it's almost important to consider the monthly subscription fee, whether than be 500, 1000, 1500, against the value received.

While a 500 DEGEN monthly profit might not seem substantial—and indeed, it isn't if your primary aim is to use the app is merely to "farm" for profits—it's important to note that this is the case on an an optimized channel currently operating at a deficit while being bootstrapped. Currently, this channel costs me about $80 per day to maintain, down from about $100 when I first joined, which pays for 93 subscriptions generating approximately 630 ALFA each day. This gives a sense of the financial pressures and the scale of investment required, illustrating why 99% of channels, especially those unable to invest heavily upfront or capture the necessary amount of attention, might struggle to achieve profitability.

So, again, it’s important to reflect on what you truly aim to achieve with Alfafrens, because navigating its economics can be challenging and the margins may continue to compress. So, it's crucial that you derive additional value from the platform beyond just cash back.

To recap, for creators aspiring to grow their channels more effectively, it’s a three-pronged strategy:

1. Be Early: Timing is crucial in gaining a competitive edge. Being one of the first on the platform can significantly enhance your visibility and attractiveness to new subscribers, especially as your channel grows.

2. Fund Aggressively: Invest in your channel by subscribing and staking heavily. This financial commitment helps to kickstart your growth cycle and draws more subscribers and stakers to your channel.

3. Provide Additional Value: Given the volatility of DEGEN and the variable nature of subscriber rewards, simply operating as a "farm" may not be sustainable. Aim to provide content or interactions that are genuinely valuable to your subscribers. This could mean optimizing for the farm, for the content, or for both, just realize that doing so comes with a price.

Now, to perhaps make you think thrice about this, also realize that you’re likely not going to make it to the leaderboard unless you want to choke up several hundred thousand DEGEN, which could be worth it, but that is a risk you need to evaluate. The reality is that while you're still early, you're not early early, so you’re likely not going to enjoy the euphoric ponzunomics of a top 100 channel.

So growing a channel is hard, yes, but what if you just want to optimize for profitability as a user?

I’ve covered this a bit, but generally, you’ll want to find accounts with large followings that can grow subs faster than average. Ideally these accounts will fund their Alfafrens growth with at least 50k DEGEN and will stake the majority of their daily ALFA rewards back into their own channel each day to refuel the flywheel. Additionally, these channels will warrant their subscription price (tier) and provide value above and beyond cash back, though the channels entire strategy should be focused on optimizing for it. And lastly, but certainly not least, is to be early.

Once you identify channels that are poised for growth, well-funded, actively staking, and yet have relatively few subscribers, begin staking your ALFA in them daily. This strategy increases your share of the channel's earnings and, as the channel grows, so too will your ALFA and cash back rewards. Make sure that you're staking a meaningful amount of your daily ALFA each day alongside the creator.

Again, you want to build concentrated (staked) positions in channels you believe in. You don’t want to diversify your staked ALFA across a bunch of channels. This strategy will provide you with the best chance of outsized returns.

…and das itt. Hope this was helpful.

My channel can be found here. FWIW, I’m pretty transparent about my strategy (my deficit speaks for itself, lol) and also try to provide daily market briefs and other investment-related commentary.