CoinDesk Report:
Author: Wilson Lee, core contributor at Biteye
Farcaster is a decentralized social networking protocol that facilitates social connections, content sharing, and data ownership among users using smart contracts and hybrid storage technology. It supports diverse client and application development with flexibility.
In March this year, Degen, a memecoin project within the Farcaster ecosystem, gained significant attention with a more than 20-fold increase in value, reaching a market capitalization exceeding $1 billion. This has thrust the Farcaster ecosystem into the spotlight.
In May, developer Merkle Manufactory announced a new funding round led by Paradigm, raising $150 million and valuing the company at $1 billion.
According to Dune Analytics, Farcaster has amassed a user base of 540,000 people, with daily active users skyrocketing from 2,000 at the beginning of the year to 56,000 currently, marking a growth of over 28 times.
Farcaster, not a newcomer in the social sphere, strategically built its initial user base by leveraging founder Dan’s influence, including invitations to prominent OGs like Vitalik Buterin, and distributing early access codes through Twitter direct messages. This approach ensured a highly concentrated “elite” user group.
By setting these entry barriers, Farcaster aimed to attract a highly similar user base early on, akin to a refined version of Twitter where early adopters enjoy superior posting and interaction experiences.
Moreover, early adopters often influential KOLs themselves, possess significant social influence, potentially feeling socially superior for experiencing Farcaster early. This empowerment could drive stronger promotion and discussion of Farcaster on other platforms.
Since opening registrations last October with a $5 entry barrier, Farcaster effectively deterred numerous bot registrations, maintaining a conducive environment unlike Nostr’s decline due to bot overpopulation.
To date, Farcaster has generated nearly $1.9 million in revenue through registration and data storage fees.
Co-founders Dan and Varun, both former Coinbase executives, have tightly integrated Farcaster with the Base ecosystem. Jesse, a core figure in the Base chain, is notably active on Farcaster.
From another perspective, over 70% of interactions among the top 500 users on Farcaster occur on the Base chain, suggesting it as a potential treasure trove for alpha within the Base ecosystem.
Farcaster protocol data is stored in on-chain and off-chain hubs, allowing developers to operate their own hub nodes or use third-party service providers like Neynar for data access. All this data is permissionless, enabling developers to create various clients and applications, significantly enriching the Farcaster ecosystem’s diversity and innovation space.
Users can track ecosystem progress via the Decaster website, which highlights standout projects such as WrapCast.
WrapCast, the primary application under the Farcaster protocol, serves as the first client, developed by a top engineering team assembled by Dan over a year. Structured similarly to traditional Web2 social software, WrapCast accounts for 90% of Farcaster protocol traffic.
Registration on WrapCast is straightforward, automatically generating a wallet tied to a Farcaster ID for users, storing generated content in the Farcaster hub. This design accommodates both non-crypto users entering the blockchain world effortlessly and crypto-savvy users binding their preferred wallets.
Designed akin to Twitter, WrapCast allows users to post tweets (casts), comment, retweet, and follow others. Beyond standard social media functions, WrapCast introduces features like channels and actions, fostering additional interaction methods.
For instance, DEGEN leverages user engagement within the Farcaster ecosystem for token distribution, enabling users to participate in DEGEN airdrops by following channels and engaging with them, with tokens received as rewards also available for tipping other users.
Farcaster’s significant growth this year correlates closely with the Frames feature introduced in February. Embedded within WrapCast, Frames are mini-apps enabling diverse interactions such as NFT minting, content subscriptions, gaming, and token claiming directly within WrapCast without leaving the client.
For example, far.cards, a trading card project exclusive to Farcaster users developed on mint.club, assigns card attributes based on user activity on Farcaster, such as follower count, likes, and replies. Card prices are determined by a bonding curve, allowing for both collection and trade.
Frames’ introduction has substantially enriched WrapCast’s engagement potential, expanding Farcaster development beyond merely a decentralized Twitter.
Presently, almost 40,000 users utilize Frames, generating over 150,000 on-chain transactions, with 1624 interactive contracts designed.
Frames’ user experience parallels Ton’s MiniApp ecosystem. While Farcaster currently lacks Ton’s extensive user base, it should consider promoting straightforward Frames games like Not a coin on Ton, as seen in DEGEN’s success in market value and dissemination capability through Frame mini-apps.
Degen.Game serves as a platform for organizing Frame mini-apps, allowing users to log in via their Farcaster identity, view the latest Frames daily, and engage with them.
Jam
Jam, a creator economy platform based on Farcaster, converts every tweet on WrapCast into an NFT asset akin to Friend.tech Key. Users can buy/sell each tweet, with pricing determined by a bonding curve.
Jam surpassed $10 million in transactions within 72 hours of launch.
Initial use of Jam requires 10 warp points, provided upon registering with Farcaster. Once a Farcaster account is linked, users can explore the feed on the homepage to find tweets worthy of minting.
Unlike Friend.tech, each tweet can have only one owner at a time, eliminating a glut of opening and selling situations. However, profit strategy remains similar, aiming to identify and acquire potentially viral tweets early, targeting figures like Farcaster core developers, Vitalik Buterin, and KOLs to ensure subsequent buyers.
For KOLs or users adept at meme creation and propagation, continuous tweet writing via Jam can earn them a 5% transaction fee.
Jam currently lacks a token but operates with internal points, sharing similarities with Friend.tech and offering potential airdrops.
ClubCast
ClubCast, similar to Knowledge Planet on Farcaster, introduces token-gated casts, necessitating users to purchase other users’ club tokens to unlock hidden content on clubcast.xyz or Frames, requiring developer permission for use.
BountyCaster
BountyCaster, a task platform built on the Farcaster protocol by Linda Xie, allows users to post tasks when sending content via clients like WrapCast, tagged @Bountybot, for others to claim and earn rewards.
Similarly, users can publish services and prices they can offer. Users need to log in with a Farcaster account on the BountyCaster website to view posted bounties, available services, and even job opportunities.
AlfaFrens
AlfaFrens, a creator economy app built on the Base ecosystem and Farcaster protocol by Superfluid supporting on-chain asset flow, akin to Friend.tech, allows users to subscribe to KOL channels, access exclusive chat rooms, and earn tokens produced by channels.
The platform features two currencies, $Degen and $ALFA. $Degen is an ERC20 token on the Base chain, while $ALFA is exclusive to the AlfaFrens platform, not transferable.
$Degen serves as a consumption token on the platform. Upon using AlfaFrens, users need to prepare some $Degen to deposit into the wallet generated by the platform.
Users can subscribe to KOL channels with $Degen, available in three tiers of 500, 1000, and 1500 $Degen per month. Subscription costs are linear and cancellable at any time. 70% of subscription fees are distributed based on staking proportion to users staking $ALFA in channels.
The platform generates $ALFA tokens daily, distributed evenly among subscribing users based on the amount of $Degen received from subscriptions to each channel.
Thus, strategies can involve subscribing to popular KOL channels to stake $ALFA, thereby earning more $Degen.
$ALFA is currently non-circulating without pricing, initially exchanged for $Degen based on profit preferences (more established $DEGEN or more undervalued $ALFA).
Summary
As people increasingly “live” online, social graphs have become essential personal assets, with growing demands for data sovereignty.
Web3 solutions inherently address pain points of current Web2 social platforms. However, decentralized social spheres have not seen significant success.
Many projects overly prioritize decentralization, overlooking user experience. Dan highlighted in Bankless that Web3 social aims not to replace but enhance Web2 social, empowering users with data ownership and additional blockchain activities.
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