Farcaster, the decentralized social media platform built on Ethereum, has raised a staggering $150 million during its Series A funding round even though it only has about 80,000 users.
The round was led by the investment firm Paradigm while other major venture capital companies including Andreessen Horowitz with its a16z crypto fund, Union Square Venture, Standard Crypto, Variant, and Haun Ventures.
The funding provides a tremendous boost for the fast-growing network and values the startup at a lofty $1 billion, making Farcaster the latest crypto unicorn.
Co-founder Dan Romero, a former Coinbase executive, announced the results of the capital raise in a post on Tuesday, outlining the project’s key priorities when it comes to how the funds will be deployed.
“We’re focused on two things for the rest of the year: Growing daily active users [and] adding developer primitives to the protocol like channels and direct messaging,” Romero commented.
Rapid Growth Since Going “Permissionless”
Farcaster is built on Optimism, the popular layer-2 protocol used by developers to scale projects that rely on the Ethereum blockchain.
Farcaster has grown rapidly since it became available to the general public, currently amassing a total of 350,000 sign-ups and reporting a 50x increase in its network activity.
Its main app is called “Warpcast”, a social media platform that looks pretty similar to X (formerly Twitter). Users have to pay $5 annually to access this interface.
In October 2023, the blockchain-based network went “permissionless,” meaning that it was open for everyone – both users and developers.
“There are hundreds of developers building on the protocol and a growing number of apps and frames for people to use,” Romero further added.
Farcaster Promotes a New Paradigm: Decentralized and User-Controlled
Founded in 2020 by Romero and fellow Coinbase alum Varun Srinivasan, Farcaster represents a new approach to social media. Unlike platforms like X (formerly Twitter), Farcaster is built as a decentralized protocol with no central authority controlling user data or moderating content.
Instead, Farcaster stores users’ identities on the Ethereum blockchain, ensuring that they maintain full ownership and control over their privacy. All other data like posts, follows, and reactions are stored off-chain for efficiency but secured by smart contracts.
“Actions are performed onchain only when security and consistency are critical. Use of onchain actions is kept at a minimum to reduce costs and improve performance,” the platform’s website explains.
This hybrid model aims to balance decentralization with scalability and usability. By anchoring identities to Ethereum wallet addresses, Farcaster also provides a novel way to verify users and link their social activities to the broader web3 ecosystem.
Frames Bring Decentralized Apps (dApps) to Farcaster Without Leaving its Feed
One of Farcaster’s most amazing features is “Frames.” These are interactive mini-apps that can be embedded within social media posts published on Warpcast. They help keep users engaged by adding a content format that centralized platforms lack. Users can interact with the apps without leaving the main feed.
The feature was released on 26 January and immediately attracted the attention of both users and the media due to its ground-breaking design.
From minting non-fungible tokens (NFTs) to playing Pokemon alongside friends, Frames have unlocked a new format that developers can tap on to create rich and interactive experiences directly into the Warpcast social feed.
Just recently, Arbitrum announced that developers who rely on its layer-2 scaling protocol could bring their apps to the Farcaster ecosystem as well. As a result, a total of four blockchain solutions are now being supported by Farcaster – Ethereum, Solana, Optimism, and Arbitrum.
How Does Farcaster Compare to X?
While often billed as a blockchain-based Twitter, Farcaster shares more DNA with X than just microblogging. Like X, Farcaster has profile pages, follows, replies, and the same core mechanics of its social feed. However, some unique features help it stand out:
- Channels: In addition to the main feed, Farcaster has dedicated channels for specific topics like #Stocks or #DeFi. This allows users to engage in discussions that are solely focused on a single topic or expose themselves to very specific content.
- Subscription Cost: Accessing Warpcast is not free. Users have to pay a $5 subscription annually to have access to the social media network. The developing team likely imposes this cost to prevent bots from flooding the protocol.
While Farcaster currently has a much smaller user base than X at around 80,000 daily active users (DAUs), its decentralized model and blockchain-based architecture have rapidly attracted the passionate web3 community as users seek alternatives to Big Tech’s grip on social media.
DEGEN Token Surges on Funding News
The Farcaster ecosystem’s unofficial community token, DEGEN, saw its price surge by 17% following the Series A funding announcement. The meme coin, launched in January by a prolific Farcaster user, has taken on a life of its own as an incentive layer for creators on the protocol. Farcaster users can be rewarded with DEGEN tokens when the post on the platform, adding an important extra incentive for users.
According to CoinMarketCap, the token is up by nearly 12% so far this morning at $0.022. In the past year, it has delivered gains of 38.9% while its market cap stands at around $300 million.
While not an official Farcaster token, DEGEN’s price reaction highlights users’ enthusiasm regarding the growing decentralized social network and its upstart role in shaping the evolution of the web3 ecosystem.
Investors Double Down on Decentralized Vision for Social Media
It is no small feat to raise $150 million when your project only has a fraction of the number of users that its rivals have. This achievement showcases how eager investors’ are to find the next big thing on the crypto space and the remarkable value proposition that Farcaster brings to the table.
“Farcaster is a fledgling but quickly growing protocol,” said Jesse Walden, co-founder and general partner at investor Variant.
VCs like Paradigm and a16z are well-known from their crypto exposure and expertise. Their support to the ecosystem’s growth has been crucial as projects have been able to find the resources they need to scale their protocols.
“This will support our work on Farcaster for many years to come,” Farcaster’s Romero stated.
Can the startup end up dethroning well-established and powerful web2 social media companies like X? At least they are not bringing knifes to a gun fight as they have a sizable war chest they can now rely on to further build their vision.