introduction
Farcaster is a decentralized social networking protocol designed to facilitate the establishment of direct connections between users. Developers can access public data without permission through Farcaster, while supporting diverse and flexible client and application development.
Farcaster is also a sub-track project of the social graph in the SocialFi track, aiming to establish a decentralized social network architecture to achieve social connections, content sharing and data ownership among users through smart contracts and hybrid storage technology.
Basic information analysis
project team
core team
Dan Romero: Founder CEO, former Vice President and General Manager of Coinbase, responsible for Coinbase Pro, Coinbase Prime, Coinbase Custody and other businesses; previously served as Business and Product Development Manager at Envoy.
Varun Srinivasan: Co-founder, former Director of Engineering and Product at Coinbase, responsible for products such as Coinbase Wallet. Previously, he worked as a project manager for OneNote at Microsoft. He is a veteran in the blockchain field with rich experience and resources.
Advisory Team
Anand Iyer: A visiting partner at Pear VC, he also served as CEO and founder of Trusted, CPO and co-founder of Threadflip, and senior product manager and senior developer evangelist at Microsoft, with a strong background in resources.
In summary, Farcasters leadership team has a rich experience and technical foundation in the Crypto industry, which provides impetus for the rapid development of the project.
Financing
Farcaster has raised approximately $30 million in funding:
On July 13, 2022, 19 investors participated, led by a16z, Coinbase Ventures, Multicoin Capital and Balaji Srinivasan, with an investment amount of US$30 million.
a16z, Coinbase Ventures, and Multicoin Capital are top investment institutions in the Crypto industry. Their involvement can not only bring sufficient financial support to Farcaster, but most importantly, it can bring Farcaster relatively strong industry resources.
Development History
Farcaster was established in 2020 by founder Dan Romero and co-founder Varun Srinivasan. The key events in the development of the project are shown in Table 1-3-1:
Table 1-3-1 Summary of Farcaster development events Well-known users include: Brain Amstrong (CEO co-founder of coinbase) and Vitalik (founder of Ethereum).
Operation Mode
Technology Core
Farcasters main advantages over other SocialFi projects include: low gas fees, interaction speed close to that of Web 2 social projects, and a plug-in market similar to the Chrome App Store. Farcasters basic design logic divides the entire project framework into three layers: identity layer, data layer, and application layer.
Identity layer: The bottom layer of the protocol is built on the Ethereum and OP chains, and is used by Farcaster to manage user identity information. Users create, manage, and store accounts through this layer.
Data layer: The data layer of the protocol, Farcaster Hubs, is built off-chain. In Farcaster, except for the users identity information, all other data information is stored in this layer.
Application layer: The APPs on the protocol chain are combined into the application layer, which is a variety of applications built by all developers based on the user data of the identity layer and the content data recorded in Farcaster Hubs.
Operation Logic
User registration: For the first use, you need to register your own domain name through ENS or Fnames, and then register the ID, storage and key on Farcaster, as shown in Figure 1-1-4.
Figure 1-4-1 Farcaster registration process diagram
ID registration is to generate a key pair for the newly created Farcaster account linked to its Ethereum address;
Storage registration is to improve the quality of user storage content. Users subscribe to storage space according to their own needs, the price is $12/unit/year, which is one of the important sources of income for the protocol;
Key registration allows users to grant and revoke account ownership, allowing them to write and sign messages on their behalf.
App entry: Developers access Farcasters API and then build their own project smart contracts based on Farcasters project framework. All interaction data generated during this period will be stored in Farcaster Hubs off-chain, and the Dapp party also needs to pay a reserve fee. Since user data and Dapp data interact on the same layer, the interaction speed is close to the experience of Web2 Internet.
Frames plugin: This is the main catalyst for the explosion of this innovation, which lays the foundation for Farcasters advantage over other SocialFi projects. Frames allows users to directly access various functions and services in social media interactions without leaving the Farcaster platform, similar to Chrome in Google. Users can do the following through Frames:
NFT interaction: users can mint and trade NFTs;
Games: Embed and participate in mini-games directly in your posts;
Content subscriptions: Subscribe followers to newsletters or other media content;
Shopping: Users can purchase goods or services directly from within a post;
Receive airdrops: Receive token airdrops according to the requirements released by the project party;
In summary, Farcaster firstly transforms the storage of the project itself from the on-chain storage used by the original SocialFi project to the hybrid storage method of on-chain + off-chain, which not only greatly reduces the storage cost of Farcaster, but also improves the operation speed of the project. Secondly, Farcaster uses the Frames plug-in, which has led to an explosive growth in the number of Farcaster users. The overall operation logic of Farcaster is shown in Figure 1-4-2.
Figure 1-4-2 Farcaster overall operation logic diagram
Advantages compared with projects on the same track
As a project in the social graph segment of the SocialFi track, Farcasters main competitors are other social graph projects, such as Lens. Its advantages are:
Use of Frames plugin: The use of Farcaster Frames plugin indicates that Farcaster has given the SocialFi project more capabilities. With the popularity of Meme tokens, more and more Meme projects have begun to release information through Farcaster. The Frames plugin can reach users with these messages in a timely manner, and the timeliness of obtaining information in the trading activities of Meme tokens has become the key to obtaining it. Therefore, a large number of users have begun to flock to Farcaster to obtain the most timely information. At the same time, users can use Frame to receive airdrops, mint NFTs, and other operations, eliminating the need for users to switch back and forth between social platforms and wallets, greatly improving efficiency. This is the main reason why the Frames plugin has brought a hot effect to Farcaster.
Top team: Farcaster was co-founded by Dan Romero and Varun Srinivasan, both of whom were executives at Coinbase, and Dan Romero even served as the general manager of Coinbase. It can be seen that they have a deep industry background in the industry. With the blessing of Coinbases halo, the project has a strong advantage in both resource acquisition and financing capabilities in the industry.
Hybrid storage: Generally speaking, SocialFi projects all use on-chain storage, which results in slow information processing speeds for most projects. Farcaster uses a hybrid storage method, storing important information on-chain and unimportant information off-chain, which greatly improves the projects information processing speed and is very user-friendly.
In summary, Farcaster’s adoption of Frames makes the project more like a traditional social platform in Web 2.0, making it easier for users to accept and greatly improving the efficiency of users. Farcaster’s adoption of Farcaster Hubs’ hybrid storage structure greatly improves Farcaster’s operating efficiency, reduces gas fees, and makes it more user-friendly.
Economic Model
The Farcaster economic model consists of two roles: application developers and users.
Application developers: Farcaster is a framework maker that has formulated various rules within the framework in detail. It requires a large number of applications to enter Farcaster and build a rich and complete ecosystem. In order to attract traffic to themselves, many projects in the Farcaster ecosystem generally pay various on-chain fees for users. At the same time, the application developers project also requires a lot of data storage, so a certain storage fee must be paid. Therefore, the on-chain fees and storage fees paid by application developers are one of the important sources of income for the Farcaster project.
Users: Users participate in Farcaster to obtain more information about blockchain projects and participate in various project activities, such as airdrops, NFT casting, game participation, etc. Whether users purchase IDs and storage space after entering Farcaster, or participate in project interactions later, on-chain fees will be incurred. At the same time, users will also store data that they think is important, thereby paying certain storage fees and contributing to project revenue.
From the above analysis, it can be seen that Farcaster’s revenue comes from the gas fees and storage fees paid by application developers and users. The protocol revenue is shown in Figure 2-1.
Figure 2-1 Farcaster protocol revenue statistics (Source: https://dune.com/pixelhack/farcaster)
From the statistics, we can see that Farcasters revenue has maintained a good growth momentum, and the total project revenue has exceeded 1 million US dollars.
data analysis
Daily activity data
As can be seen from Figure 3-1, Farcaster’s DAU continues to grow and remains above 40,000. From the right figure, we can see that among the three message interaction methods: casts, reactions, and links, reactions is the most used option, that is, the behavior of users liking published posts is the most common type of interaction, which shows that the largest proportion of Farcaster’s daily active users are existing customers.
Figure 3-1-1 Farcaster daily user activity data (data source: https://dune.com/pixelhack/farcaster)
Registration Data
Figure 3-2-1 shows Farcasters daily registrations in the past two months. The number of daily registrations changes with the market sentiment. Although the number of registrations has decreased significantly due to the recent sluggish market, it still maintains an increase of about 2,600 per day.
Figure 3-2-1 Farcaster registration data (data source: https://dune.com/pixelhack/farcaster)
Daily/monthly active conversion ratio
Figure 3-3-1 Farcaster DAU/MAU conversion ratio statistics (data source: https://dune.com/pixelhack/farcaster)
As can be seen from Figure 3-3-1, the DAU/MAU ratio is continuously rising, which means that Farcasters monthly active users are constantly converting into daily active users, and the conversion rate has now reached 0.47. Users are gradually relying on Farcaster, and nearly half of the users will use Farcaster every day after registration, gradually treating Farcaster as a fixed lifestyle.
The percentage of Farcaster users on the same chain
Figure 3-4-1 Farcaster DAU/MAU conversion ratio statistics (data source: https://dune.com/pixelhack/farcaster)
The data in Figure 3-4-1 shows that the chain with the largest share of Farcaster user transactions is the Base chain, which indirectly proves that the main reason why users choose Farcaster now is still because of meme. Therefore, Farcaster has built a channel for the dissemination of meme information, and users can directly participate in the airdrops and points of meme projects through Frames within the Farcaster project, which helps the growth of Farcaster data.
DEGEN
Farcaster is special because it does not issue its own tokens, so it lacks a transaction medium for on-chain behaviors such as transactions and rewards in the Farcaster ecosystem. Therefore, the community decided through consensus and repeated discussions to use DEGEN as the main transaction medium in the Farcaster ecosystem.
DEGEN is a meme token, not an official token issued by Farcaster. DEGEN was originally a reward token for participants in the Farcaster Degen channel. After more than 5 months of community recognition and promotion, DEGEN token has now become the first token recognized within the Farcaster community, close to the status of Farcasters project token.
The total issuance of DEGEN tokens is 37 billion, of which 70% are distributed to the community, 15% of the tokens have been allocated to the liquidity pool, and the remaining 15% will be distributed to the team, investors and the wider ecosystem that supports DEGEN. In addition, a 1% inflation rate will start in 2028.
Its main uses are:
Sharing and Rewarding: DEGEN can be used to reward content creators in the community, promoting content sharing and community participation;
Minting NFTs: On platforms such as Zora and Highlight, users can use DEGEN to mint NFTs, thereby increasing their liquidity in the art and collectibles markets;
Trading: DEGEN is used for various applications and in-game transactions, such as Drakula and Bracket game;
Community Building: DEGEN is also used to support and fund community projects, such as development and operations on Degen L3.
Protocol Ecosystem
After several months of development, the Farcaster Protocol ecosystem has taken shape:
Warps Points
In the Farcaster ecosystem, Warps points, as an internal points system, not only increase the interactivity of the platform, but also provide an incentive mechanism to encourage users to actively participate in community activities.
Earn points: Warps points are earned through social behaviors such as posting content, commenting, and sharing, which is designed to encourage users to use the platform more frequently and share valuable content. In addition, Farcaster may set specific social tasks or challenges, and users can also earn Warps points after completing these tasks. Users who contribute to the community, such as content creators or technical supporters, can earn Warps points through community recognition or direct rewards.
Using Points: In terms of usage, Warps Points can be used to pay for fees, and users can use points to perform specific activities on Farcaster, such as participating in specific social events or purchasing social features. In addition, users can also use points to create new social channels, which may be organized around specific topics or interests. In addition, users can also give points to other users as rewards for their content or interactions.
Management and issuance of points: The Warps points system is centrally managed by the Farcaster team, which means that the issuance, allocation and rules of points are formulated and controlled by the platform administrator. Therefore, Warps is not equivalent to tokens, but a functional point within the Farcaster ecosystem.
As an important part of the Farcaster platform, Warps points will provide users with more opportunities to participate and contribute, and provide support for the stable development of the platform ecosystem.
Searchcaster
Searchcaster is a search engine service based on Farcaster, which allows users to retrieve content by keywords, tags, etc. This tool supports multi-dimensional searches such as users, topics, and applications. It can not only search for information in the Farcaster protocol through API or graphical user interface (GUI), ensuring that the required information is found efficiently. In addition, Searchcaster also provides a web application for real-time audio conversations in the Farcaster community to promote dynamic interactions.
In addition, Searchcaster is described as enabling users to search for keywords from Farcaster data and browse popular information within Farcaster without logging in. This shows that Searchcaster is not only a powerful search tool, but also committed to the shift to a decentralized social media landscape, providing users with a more diverse content retrieval experience.
Jam
The Jam project is a creator economy client, and its main functions include posting and browsing in its APP. It is worth noting that users must attach pictures when posting using Jam, so it is called onchain Instagram.
Additionally, Jam introduces the concept of “Friends Tokens,” a feature that allows users to purchase and trade shares in content creators and their posts directly within the social dApp.
In summary, the Jam project is not only a social media application, it also provides users with a new participation and revenue model by introducing innovative features such as Friends Token, making it a key component in the Farcaster ecosystem.
Wield
Wield is focused on providing free, open-source Farcaster API services. The Wield project aims to allow users to explore cryptocurrency in an interesting way through far.quest, while also providing a decentralized social network protocol to provide users with a more open, free and secure social experience.
In addition, the Wield project also involves the concept of running centralized servers (Hubs), which is to maintain the operation of the network through centralized servers operated by community members. This includes using services such as wield.co to obtain free read permissions, as well as accessing and writing information to the network by running your own centralized servers or using services like wield.co. These centralized servers allow users to verify data, prevent network spam, and support static and dynamic frame images.
In general, the Wield project in the Farcaster ecosystem is a comprehensive platform that aims to create a more open, free and secure social environment for users by providing free, open source API services and decentralized social networking protocols. At the same time, it also emphasizes the interest and exploration of cryptocurrency and decentralized technologies.
Yup
The Yup project is an important part of the Farcaster ecosystem. Yup is a Web3 social networking platform designed for curators. Users can curate and share content on this platform, which not only increases interaction between users, but also earns rewards through taste and gains influence in specific topics.
Farcaster itself is a decentralized social application protocol that supports multiple clients, similar to an email system.
The Yup project plays the role of a bridge between users and content curation in the Farcaster ecosystem. Through its unique Web3 social network function, it provides users with a platform to display and share content, while also encouraging user participation and interaction. In addition, as a decentralized social application protocol, Farcaster provides technical and platform support for projects such as Yup, enabling these projects to operate and develop in an open and free environment.
Project Risks
Unissued protocol tokens: Although Farcaster has developed rapidly, it has not issued its own tokens since its establishment in 2020. Users still rely on other meme tokens such as DEGEN to conduct rewards and other activities in the Farcaster project, which still depends on the consensus of the community. Therefore, the lack of a token model not only affects the community cohesion of Farcaster, but also lacks the wealth-creating effect, reducing the markets attention to Farcaster itself. Even if the token model is released later, there may be defects that affect the development of the Farcaster project.
Paid use: Users need to pay a storage fee of $12 before using Farcaster, and also need to spend money to create their own ID on the Ethereum network. Social products require paid registration, which will greatly reduce the interest of new users in registering.
Summarize
Farcaster is a decentralized social network protocol that aims to achieve social connections, content sharing and data ownership between users through smart contracts and hybrid storage technology. Farcaster uses Farcaster Hubs to achieve hybrid storage, making the operation much smoother than other projects in the same track. Secondly, Farcaster uses the Frames plug-in, which allows users to participate in airdrops, mint NFTs, participate in games, etc. directly on the Farcaster page without switching between Farcaster, wallets and project websites. It is closer to the user experience of existing Web 2.0 social projects, so that Farcaster has gained a great advantage in the competition in the SocialFi track.
Farcaster itself has been slow to announce its token model, so users in the Farcaster community can only use Farcaster as a social platform to obtain various industry information or participate in other projects airdrops and other activities. However, without project tokens, the attention will be reduced and the development of Farcaster will be restricted. At the same time, Farcasters model of consuming first and then participating has brought a relatively large negative impact on Farcasters user growth.
In summary, the Farcaster project itself has completely changed the way traditional SocialFi project data is stored through its unique project framework, and at the same time introduced the Frames plug-in to make its application effect and efficiency far superior to other SocialFi projects, helping it become a leader in the Social industry.
