Author:Kaori
ABCDE announced that it would stop investing in new projects and suspend fundraising for its second phase fund, triggering another round of lamentations on Crypto Twitter that "VC is dead." However, in the previous cycle, VCs were in their heyday, raising valuations by creating narratives and packaging PPTs as the future of the Internet.
Farcaster, a decentralized social leader that raised a total of $180 million in two rounds of bull markets, is undoubtedly the best representative of VC narratives, but Farcaster's answer is gradually becoming clear - no longer betting on "decentralized imagination", but betting on "assetized execution". Farcaster is not a failed product, but another narrative collapse in the crypto world. VCs found that they did not have the ability to reconstruct the world, but just cashed out and exited in a story of pre-paid valuation.
Farcaster to Warpcast, then to Farcaster
Recently, Farcaster protocol co-founder Dan announced that the team is considering renaming the current official client application named Warpcast to Farcaster, and simultaneously adjusting its web domain name to farcaster.xyz, in order to simplify the brand system and solve the problem of new users being confused between the protocol and the application.
In 2021, Farcaster was launched as a desktop product, and in 2023 it was transformed into a mobile and web application and renamed Warpcast. Although the initial name change was based on the idea that if the client (Warpcast) and the protocol itself (Farcaster) had different names, it would be easier for other developers to build their own clients based on the protocol, thereby driving the growth of protocol users. But in the end, this idea was not really implemented. According to feedback from the team, in reality, the vast majority of users still register accounts and access the protocol through Warpcast.
In May last year, BlockBeats wrote an article analyzing the Farcaster ecosystem. At that time, the front-end application Warpcast controlled the core functions of the Farcaster protocol, such as private messages and Channels. The Matthew effect of the entire ecosystem was very obvious. Unofficial clients could only survive in the cracks and find the pain points of Warpcast to develop functions. Despite this, there are still applications such as Supercast and Tako that adopt differentiated strategies to develop their own social platforms.
Now the Farcaster team has officially announced that the front-end Warpcast will be renamed Farcaster, which is undoubtedly a stab in the back to some extent to those front-end application developers who chose the Farcaster protocol.
In fact, this name change is just a small microcosm of Farcaster's transformation. Since October last year, Farcaster Protocol has made adjustments in many aspects such as product updates, strategic layout, and personnel changes.
One detail is that in subsequent developer meeting discussions, there will no longer be a distinction between the "Farcaster topic" and the "Warpcast update" sections, but instead the focus will be on specific overall issues, such as Growth, Direct Cast, reducing registration costs, Hubs stability, FIP governance, and identity systems.
However, in terms of user stickiness, Farcaster has not yet been able to get out of the typical dilemma of a cold-start platform. According to Dune data, since the registration was opened in the second half of 2023, its DAU/MAU ratio has long hovered around 0.2, and only briefly touched 0.4 in early 2024 due to the explosion of DEGEN, and then quickly fell back.
The DAU/MAU ratio refers to the ratio of daily active users to monthly active users, and is used to measure the number of days a user interacts with an application each month. The closer the ratio is to 1, the more active the users are. When the ratio is lower than 0.2, the spread and interactivity of the application will be weak.
In contrast, early Web2 community products such as Reddit or Mastodon have a stable DAU/MAU range of 0.25~0.3. Even social applications with smaller user bases and more vertical topics, such as Discord mini-servers, can often maintain an active ratio of more than 0.3. Farcaster's data shows that although it has maintained a high level of popularity in the Crypto community, user usage habits have not really been established. Active users are mainly concentrated in a small number of heavy creators and chain natives, and a sustainable content consumption and social closed loop has not yet been formed.
Build content? Build assets? Farcaster has no answer
In the initial product logic, Farcaster attempted to build a decentralized social graph through content tools, such as the once highly anticipated channel (similar to a topic group), which was the core unit of the graph that carried the community and traffic. However, the incentive effect of assets soon exceeded the self-organizing ability of content, and the product logic deviated accordingly.
Abandoned Channel
In February 2024, the social token $DEGEN became popular in a channel called Degen in Warpcast, becoming the main driving force for Farcaster to break out of the circle. At that time, Farcaster had only been open for network registration for only four months, and the number of daily active users exceeded 30,000. With the fermentation of the $DEGEN token and the emergence of similar popular channel tokens such as Higher, Farcaster's daily active users reached a maximum of 70,000.
The Farcaster team realized that channels are a vehicle that brings people, attention, and liquidity together. Farcaster founder Dan believes that this is an important difference from centralized social media such as Twitter, allowing small communities to emerge in a larger social graph. Although it is only a feature of Warpcast, the plan is to fully decentralize it. By cultivating these small, centralized communities, channels can enhance user engagement and create a more intimate social experience.
The team thus established the core development positioning of the channel and created many concepts around it, including various rights and interests of channel owners, channel ownership, and derived projects and clients with channels as the core of operation. Dan even called on users not to register channel names so that they could sell them to brands later, because there was a story about the podcast Bankless competing with users for channel names.
But this practice did not last long. In July 2024, the network expansion bottleneck of the Farcaster protocol emerged. At the developer meeting, the team stated that it would suspend the decentralization of the channel and rethink the implementation path.
In response to users' questions about why they cannot speak in certain topic channels, Dan said that channels will not bring any additional distribution bonuses. There have been channels in the past, but the effect was not good. He said, "Channels are suitable for running communities, but not for discussing a certain topic. We will not recommend them to new users." Judging from historical data, channels have limited impact on user growth. In view of limited resources, the Farcaster team will not have plans to continue to add new features to channels in the short term.
Mini App and Wallet were replaced as product priorities, which transformed Farcaster from a social protocol that focuses on content and social graphs to a transaction-oriented protocol, as the latter can attract more native users in Crypto.
Built-in wallet exacerbates monopoly
In a podcast, Farcaster co-founder Dan shared his latest understanding of the concept of "users": users who only register accounts and interact lightly may increase activity on the surface, but those wallet users who hold crypto assets and are willing to interact on the chain are the ones who really bring value to the network. This detailed understanding of users directly affects the team's product strategy on the wallet system.
At the end of November 2024, Farcaster began to explore integrating a tradable wallet into the app to facilitate on-chain transactions. The goal is to increase the stickiness and monetization potential of the ecosystem by increasing the frequency of on-chain interactions. In fact, each Warpcast user has created a "Farcaster wallet" by default when registering. It binds the user's identity and is used to log in to Warpcast and Frames, but because it is only saved locally on the phone, its functions are still biased towards authentication and signing rather than capital flow.
In contrast, the newly launched “Warpcast Wallet” is a wallet that can send and receive assets. Users can automatically generate it when they register, and use the wallet to recharge, exchange, transfer tokens, and interact on the chain.
When Farcaster started to have a built-in tradable wallet, it was hard not to think of the emergence of Clanker.
Clanker is a token-issuing AI Agent on Warpcast. Users can publish tradable tokens on Uniswap by posting and tagging Clanker. Its official token $CLANKER soared 20 times in November last year, making Base and Warpcast competitors with Solana in the AI concept track. Due to the wealth-creating effect of $CLANKER, Farcaster's daily active users have broken through the highest level since last summer.
Unlike $DEGEN, $CLANKER, which also emerged from Warpcast, has received attention and support from the team and core circle since the beginning. However, in this process, Agent, DEX, C-end wallets, etc. all benefited from this asset issuance carnival, while Warpcast did not receive any financial returns.
The success of Clanker made the team realize that if they wanted to allow more on-chain interactions to occur in the Farcaster ecosystem, it would not be enough to rely on open protocols and third-party integration. They had to master a native tradable wallet system, so Warpcast Wallet came into being.
From the product design point of view, the role played by Warpcast Wallet is to bridge the gap between user social interaction and on-chain behavior. Users can complete transactions, give rewards or receive airdrops by clicking on Frame without jumping or connecting to external wallets. This "social is finance" product logic makes Farcaster more like the "Singapore" of the crypto world. The user base is not large, but the wallet activity and per capita capital volume are high.
According to official documents, users need to pay a 0.85% handling fee when using Warpcast Wallet, of which 0.15% goes to the 0x protocol that provides transaction routing, and 0.70% is directly included in Warpcast revenue. Dune data shows that since its launch, the Farcaster protocol's revenue curve has continued to grow, preliminarily verifying the feasibility of embedded wallets as a commercialization path.
But it is worth noting that the Warpcast built-in wallet is not written into the protocol layer. In addition, the Warpcast client will be renamed Farcaster. BlockBeats learned that some Farcaster developers believe that the protocol is becoming more and more centralized and monopolistic.
The biggest innovation is just "WeChat Mini Program"
After the introduction of the built-in wallet, Farcaster has made smoother progress in the direction of asset-oriented social applications. Officials have stated that one of the purposes of launching the wallet is to attract developers to build applications based on the Frame framework, thereby promoting the combination of transaction behavior and content distribution.
Frame was first launched in early 2024. It is a set of lightweight application standards running on the Farcaster protocol, allowing developers to embed small programs into social clients. After the user clicks on the Frame, the developer can identify their wallet address and push content to them or trigger interactive operations. However, as the overall popularity of Farcaster declines, the use of Frame has also shown a clear decline.
To address this situation, Farcaster launched Frame v2 at the end of 2024. The new version supports the use of HTML, CSS and JavaScript to build applications with a near-native experience. Developers can also use the Mini App SDK to quickly deploy products without going through the app store review process. Frame v2 not only increases the complexity of interaction, but also deeply integrates with the built-in wallet, further enhances transaction properties, and the overall experience is closer to WeChat mini-programs.
In March 2025, Linda Xie, co-founder of Scalar Capital and Bountycaster, joined the Farcaster team to be responsible for developer relations and focus on promoting the development and promotion of Frame. At the same time, Farcaster launched the "Airdrop Plan" to encourage developers to build applications with the help of Frame v2 and reach users through asset airdrops. Although this mechanism is not an official token airdrop, it effectively activated user growth. In mid-March, Farcaster's daily active users briefly exceeded 40,000, setting a stage high.
In early April 2025, Farcaster officially renamed Frame to Mini App and placed it alongside Wallet in the bottom navigation bar of the Warpcast client.
Currently, Warpcast has integrated a number of lightweight applications that support on-chain interactions, and Mini App has officially become an important part of the ecosystem. However, judging from the user growth data, Mini App's ability to attract new users has not yet been significantly released, and its long-term role remains to be seen.
"Web3" is gone, and Silicon Valley legends are ineffective
In fact, Farcaster’s changes are not special. It is just the first to expose the structural dilemma of the entire Web3 social track - open protocols cannot build user scale, content distribution cannot drive transactions, and ultimately it can only return to the only realistic path of asset-driven.
Do we really need a "decentralized social platform"?
From $DEGEN to $CLANKER, Farcaster is almost always linked to assets every time it goes viral. What really drives the surge in daily active users is not the evolution of the protocol or the innovation of the client, but the wealth effect driven by tokens again and again. This recurring pattern reveals a core fact: Farcaster is not "no one uses it", but "only people will use it when it can make money". Such platforms do meet certain market needs, but their role is not a social network, but an asset distributor.
This is not accidental, but the inevitable result of a long-term misalignment between encryption narratives and real-world usage.
In 2020, BlockBeats wrote in an article titled "The World Hates Modern Social Media" that decentralization and protocolization may be the only way for social products to get out of the "platform dilemma" - in the increasingly stringent content censorship and platform monopoly, open protocols carry people's hopes for a "new social order."
At that time, Twitter was called a typical loser of the protocol: it briefly opened its API to encourage developers to build an ecosystem, but eventually returned to the old path of advertising platform and data monopoly. Farcaster’s original ambition was “not to become the second Twitter”. It claimed to connect developers, users and assets with open protocols as the core to achieve a decentralized social network of co-construction and win-win.
But three years later, Farcaster did not replicate Twitter's original protocol ideals, but its later platform logic. Dan, who once called on everyone to "build their own clients based on the protocol", now personally announced that the client will also be called Farcaster, making the "protocol" and "product" highly bound.
This shift is rational in terms of product search for PMF, and can even be said to be a realistic compromise, but it also shows that the so-called "open ecosystem" has been quietly used as a narrative tool for user growth during the implementation process. The role of developers is not to be truly supported, but to tell stories. Just like when Twitter closed its API, the developer ecosystem is only a temporary fuel to the closed loop of the platform.
Farcaster has used three years to prove one thing: the social protocol in the context of Crypto cannot form the ecosystem we expect in 2020. It’s not because no one develops clients, but because no one uses them. It’s not because it’s not decentralized enough, but because decentralization is not something users care about at all.
Nowadays, SocialFi, like GameFi, has been labeled as a death track to some extent. Some time ago, a KOL said to the founder of a decentralized social application, "You have been working on traffic for so long, but your fans are not as high as those of an ordinary KOL like me. What are you capable of? What did your company do with the 2M in financing? It's not even as profitable as my SOL wallet." While making people smile bitterly, they can't help but sigh that the era of relying on narrative to build infrastructure is over, and the valuation systems of all VC projects are being reconstructed.
Crypto is not the "next internet"
But a16z is the biggest evangelist of this narrative. It invested in social media such as Twitter and Facebook very early on. When the investment hegemon encounters decentralized social products, it naturally cannot ignore its existence. As a Google executive said, "They are like crazy people, domineeringly inserting a foot in every transaction."
The full name of a16z is Andreessen Horowitz, which is taken from the surnames of the two founders. It was founded by Marc Andreessen and Ben Horowitz in 2009. As a famous software catcher, it has bet on almost all the most dazzling companies in the Internet field: Facebook, Twitter, Airbnb, Okta, Github, Stripe, etc., and its investment strategy combines early sensitivity with growth-stage decisiveness. It can not only invest in Instagram in the seed round, grab Github in the A round competition, but also lead the $150 million investment in Roblox in the G round.
Its keen foresight and aggressive investment style are fully reflected in the layout of the crypto field. When Coinbase, which it invested in in 2013, went public, its market value reached 85.8 billion US dollars, making it one of the largest listed companies in the history of technology. After cashing out 4.4 billion US dollars, a16z still holds 7% of the company's shares. OpenSea, Uniswap, dYdX and other well-known crypto projects are also a16z's masterpieces.
The crypto bull market since 2021 has caused the book value of major venture capital portfolios to soar, with fund returns reaching 20 times or even 100 times. Cryptocurrency venture capital suddenly looks like a money printing machine. LPs are flocking in, eager to catch the next wave. Venture capital firms are raising new funds that are 10 times or even 100 times the size of the previous ones, believing that they can replicate those excess returns.
Farcaster is undoubtedly the product of the peak of this liquidity boom. In July 2022, Farcaster announced the completion of a $30 million financing led by a16z. Two years later, Farcaster completed another $150 million financing at a valuation of $1 billion, led by Paradigm, and participated by big-name VCs such as a16z crypto, Haun, USV, Variant, and Standard Crypto. The valuation is as high as $1 billion, making it the largest financing in the history of the Web3 social track. At that time, Fortune magazine commented that this valuation was more the result of a circular game within the fund rather than a true reflection of market demand.
Crypto investor Liron Shapira said: "If VCs still have LP capital available, they choose to invest $150 million instead of returning it, and they can charge an additional $20 to $30 million in management fees." This is not the market's recognition of Web3 social networking, but a self-consistent closed loop of capital operation. The Fortune article also stated that a source who requested anonymity due to business constraints said that like most protocols, he expects Farcaster to launch tokens and investors will be eager to capture its fully diluted value.
A16z partners once said that "technological waves often appear in combination", endorsing the intersection of Web3, AI, and hardware. However, they avoided a basic fact: every leap in the mobile Internet, whether it is smartphones or search engines, is based on real user pain points and technological breakthroughs, rather than structural bubbles under capital narratives.
"Technology eats up the world" was once a radical and accurate judgment, but its applicability premise is that technology has a crushing advantage at the basic level. The reason why AI exploded is that it challenges individual intelligence - this is an irresistible structural ability difference; while blockchain challenges "sovereign currency", a credit system that has not changed for two thousand years. It will not explosively subvert the social structure like the Internet or AI, but will only evolve slowly over a long period of time, be absorbed and recruited by the vested interest system, and eventually rewrite it as part of the original order.
Therefore, the reality is that the crypto systems that are truly accepted by users and create value are almost without exception "mechanism driven + liquidity first". From Uniswap to Lido, from GMX to friend.tech, they rely on capital attraction rather than idealism. The VC model of "investors driving world change" does not apply in this world.
Crypto has never lacked social tools. The so-called protocol ideal is just the industry’s illusion of the Internet platform era. It attempts to replace the business model with a consensus mechanism, but ultimately only postpones structural problems to the asset realization stage.
The biggest crisis in the crypto industry right now is not regulation or technology, but strategic confusion and a demand vacuum. Apart from "casino logic" and cross-border payments, almost no field has demonstrated the ability to continuously create user value. The failure of VC is essentially a directional aphasia under the absence of value: if the industry itself has no real value, then value discovery is out of the question from the beginning.
