Farcaster is a decentralized social network founded in 2020 by former Coinbase developers Dan Romero and Varun Srinivasan. The crypto protocol has been in the spotlight for the past week. It has seen a nearly 100-fold increase in users since the end of 2023.
Farcaster aims to create a censorship-free environment, where users have full control over their data and audience. Rather than having a central platform like traditional social media services, Farcaster is a decentralized protocol specifically designed to build and connect social applications. Users can choose from a variety of applications to interact with the network. The most popular application is Warpcast. Warpcast is a social media platform similar to X (formerly Twitter) in it's UI. Users can post "casts" (tweets) with a 270-character limit, respond to messages, and share casts in dedicated channels along with some other interesting features.
Preventing spam through small on-boarding fees
The easiest way to get started with Farcaster is to download the Warpcast app. Upon launching the Warpcast app, users will be guided through the account setup process. Since it is a crypto-native app, meaning that the application is built on blockchain technology, it is necessary for users to set up a wallet. The wallet is used as a type of user ID to generate the FID (Farcaster ID). When using the Warpcast app, the wallet setup is automated in the signup flow. The first and only time users get in touch with blockchain terminology is when the seed phrase needs to be saved. If desired, in a later step, a personal Ethereum address can be linked to the personal profile. This can be used for mints and other in-app actions. Due to this easy and streamlined onboarding, the app represents a great opportunity to onboard Web2 native users.
The account setup comes with a small annual fee ($5 at the time of writing). This setup fee covers transaction costs and grants users a storage unit amount. The storage is used to buy a contingent of casts, reactions, and follows. The amount granted for the $5 during setup is 5,000 casts, 2,500 reactions, 2,500 follows. This type of setup with an annual fee and capped storage amount was intentionally picked by the developers. It reduces bot activity, prevents spam posts, contributes to high quality posts and positive user traffic.
How is Farcaster different from other social media applications?
Farcaster isn't exactly an app itself, but rather, as the founders describe it, a sufficiently decentralized network. Sufficiently decentralized in this case means that it is a hybrid system and the most important and necessary parts of the application are decentralized. This is in line with the blockchain ethos of not having single controlling entities, but rather a distributed network and more decision-making power in the hands of the individuals. Farcaster is built on Optimism, a layer 2 of the Ethereum blockchain, where the smart contracts of the protocol’s on-chain system run. On chain actions are creating an account that is linked to the FID and a wallet (Farcaster ID), paying rent for storage units and giving permission to connecting to other dapps.
The off-chain component of the protocol are the network of peer-to-peer (P2P) servers called Hubs. Hubs store the interaction data such as user profiles, casts, channels, cast reactions, follows, and verifications. Currently there are 1,038 Hubs setup globally. One can imagine Farcaster as a unified platform where different applications work side by side. For example, if X, Instagram, cryptopanic and Substack were all connected with the same decentralized ID. Farcaster makes this possible, through other apps that are part of the Farcaster ecosystem. These application are for example Warpcast (X alternative), Zora (Instagram alternative), Kiwi news (cryptopanic alternative), Paragraph (Substack alternative). The Farcaster ecosystem boasts over 30 apps that have been created independently of the Farcaster development team.
Due to the nature of the setup, even if certain applications enforce restrictions, users retain their identity and can easily move to alternative applications that provide similar services within the network. In addition, Farcaster operates on a permissionless basis and is open source. This allows open access for anyone to develop applications and integrate APIs or other applications.
Farcaster's sudden influx of users
The number of registered Farcaster users exploded from around 1,500 at the end of 2023 to a staggering 140,000 in just two months. Of all registered users, 70% have connected a personal wallet to their profile. This shows a large crypto-native user base, a factor to consider when choosing social media platforms to build a following for the launch of future Web3 projects. Correlated to the new users, the number of daily active users (DAU) and casts have also increased. An indicator of a strong and healthy community forming on the new decentralized application.
Farcaster DAUs, their cast and reactions / Source: Dune Analytics
A large part of the influx of new user activity was sparked by DEGEN's airdrop incentive and the release of "Frames". Frames are an innovative feature that allows users to engage with external links and apps without leaving the Warpcast UI. As for the DEGEN token, the airdrop is currently in phase 2. Users earn points based on their cast / reply ratio and can give out tips in the comment section. Due to the ongoing airdrop and novelty of the Frames, more users are onboarding to the platform.
What are frames and why are they important?
Frames allow users to perform a variety of activities directly within a cast without leaving the page or application. Frames allow users to mint NFTs, make transactions, claim tokens, read external blog posts, answer polls, and even offer gameplay. All of these actions and more are seamlessly available within the Warpcast interface. Frames are a use case of blockchain interoperability at the protocol and base layer, enabling cross-consumer applications. It allows for the seamless handling of cryptocurrency transactions and the use of digital property.
This turns any cast into an interactive application. Because the application is open source, users can code the frames themselves. For example, some users have coded automated mints, chess games, or even video games like the classic "Doom" directly into a post. Users who interact with free minting or gameplay frames do not have to worry about signing a malicious transaction or having their wallet drained. Free minting or gameplay does not require the creation of an Ethereum-compatible transaction. This is built into the EDDSA algorithm and protects Warpcast users. However, this changes when paying for items or services because then a transaction must be signed by the user's wallet.
Frame logic and signer wallets on Farcaster / Source: Warpcast @gmoney.eth
Will Farcaster outlive other Web3 social media platforms?
Farcaster stands out with a lot of real conversations, in stark contrast to Twitter's abundancy self-promotion, spam comments, bot activity and product hawking. To date, Farcaster has fostered a highly technical and engaging environment with many high quality users and high quality content. Interestingly, one of Farcaster's competitors, Lens Protocol, also a Web3 native social media platform, offers an overall very good social media experience but lacks real interaction, as analyzed by Moonrock Capital, a blockchain advisory and investment firm.
Friend.tech transactions and total revenue / Source: The Block
Meanwhile, Friend.tech, which launched in late 2023 and dominated the decentralized social media space, has been largely inactive since December 2023. Transactions on the platform have plummeted down by 97% and revenue on the platform has stagnated. Ethereum Co-Founder Vitalik Buterin commented on the demise of friend.tech. He attributed it to bad gameplay and the use of financial speculation as a substitute for fun. In the same tweet he praised Farcaster and predicted that the platform will still be very much alive after 4 months and even 1 year.
"Bad gamefi is using financial speculation as a substitute for fun. Blockchain games need to be fun as games" - approx quote I've said many times
I believe a similar thing for crypto social.
Registering a prediction: farcaster and lens will NOT be deserted in 4 months, or 1 yr.
— vitalik.eth (@VitalikButerin) February 5, 2024
However, it should be noted that Farcaster's impressive influx of new users, too, is highly motivated by financial gains. Many users are betting on future airdrops to active users, skewing some of the statistics. If Farcaster has truly come to stay will remain to be seen, as many social platforms in the space have had massive boom and bust cycles.
