Farcaster: SocialFi leader

Introduction

Farcaster is a decentralized social network 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 between 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, formerly Director of Engineering and Product at Coinbase, responsible for products such as Coinbase Wallet, and previously 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: Served as a visiting partner at Pear VC, and is also the CEO and founder of Trusted, the Chief Product Officer and co-founder of Threadflip, and a senior product manager and senior developer evangelist at Microsoft, with a strong resource background.

In general, Farcaster's leadership team has a brilliant experience and technical foundation in the Crypto industry, which provides impetus for the rapid development of the project.

Financing

Farcaster has raised approximately US$30 million:

On July 13, 2022, 19 investors participated, led by a16z, Coinbase Ventures, Multicoin Capital and Balaji Srinivasan, with an 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

In 2020, Farcaster was established 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

Technical Core

Farcaster's main advantages over other SocialFi projects are: low gas fees, interaction speed close to Web 2 social projects, and a plug-in market similar to the Chrome App Store. Farcaster's 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 protocol's data layer Farcaster Hubs is built off-chain. In Farcaster, except for the user's 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.

ID registration is to generate a key pair linked to the Ethereum address for the newly created Farcaster account;

Storage registration is to improve the quality of user storage content. Users subscribe to storage space according to their own needs at a price of $12/unit/year, which is one of the important sources of income for the protocol;

Key registration refers to allowing users to authorize and revoke account ownership, so that they can write and sign messages on their behalf.

App entry: Developers access Farcaster's API and then build their own project smart contracts based on Farcaster's project framework. All kinds of interaction data generated during the period will be stored in the Farcaster Hubs off-chain, and the Dapp party also needs to pay the reserve fee. Since the interaction between user data and Dapp data occurs at 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 that has laid the foundation for Farcaster's advantage over other SocialFi projects. This innovation has laid the foundation for Farcaster's 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 perform the following operations through Frames:

NFT interaction: users can mint and trade NFTs;

Games: embed and participate in mini-games directly in posts;

Content subscription: let followers subscribe to newsletters or other media content;

Shopping: users can purchase goods or services directly in posts;

Receive airdrops: receive token airdrops according to the requirements issued by the project party;

In summary, Farcaster first transformed the project's own storage from the on-chain storage adopted by the original SocialFi project to a hybrid storage method of on-chain + off-chain, which not only greatly reduced Farcaster's storage costs, but also increased the project's operating speed. 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.

Advantages compared with projects on the same track

As a project in the social graph segmentation track of the SocialFi track, Farcaster's main competitors are other social graph projects, such as Lens, etc. Its advantages are:

Use of Frames plug-in: The use of Farcaster Frames plug-in indicates that Farcaster has given the SocialFi project more capabilities. With the popularity of Meme tokens, more and more Meme projects have begun to publish information through Farcaster. The Frames plug-in 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 news. 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 plug-in has brought a hot effect to Farcaster.

Top team: Farcaster was co-founded by Dan Romero and Varun Srinivasan, who used to be executives in Coinbase, and even Dan Romero 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 Coinbase's halo, the project has a strong advantage in both resource acquisition and financing capabilities in the industry.

Hybrid storage: Generally speaking, SocialFi projects use on-chain storage, which results in most projects having a slower information processing speed. Farcaster uses a hybrid storage method, storing important information on the chain and unimportant information off the chain, which greatly improves the project's information processing speed and is very user-friendly.

To sum up, 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. After Farcaster adopted the hybrid storage structure of Farcaster Hubs, the operating efficiency of Farcaster was greatly improved, while the Gas fee was also reduced, making 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 developer's 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 the application developer are one of the important sources of Farcaster project income.

Users: Users participate in Farcaster to obtain more blockchain project information and participate in various project activities, such as airdrops, minting NFTs, participating in games, etc. Whether users purchase IDs, storage space, etc. after entering Farcaster at the beginning, or participate in the interactive operations of the project later, they will incur on-chain fees. At the same time, users will also store data that they think is important, so as to pay a certain storage fee and contribute to the project income.

From the above analysis, we can see that Farcaster's revenue is the gas fee and storage fee paid by application developers and users. The protocol revenue is shown in Figure 2-1.

From the statistics, we can see that Farcaster's revenue has maintained a good growth momentum, and the total revenue of the project has exceeded 1 million US dollars.

Data Analysis

Daily Active 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, 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.

Registration Data

From Figure 3-2-1, we can see the daily registration situation of Farcaster in the past two months. The number of daily registrations changes with the trend of market sentiment. Although the number of registrations has decreased significantly recently due to the sluggish market, it still maintains an increase of about 2,600 per day.

Daily active users/monthly active users conversion ratio

From Figures 3–3–1, we can see that the DAU/MAU ratio is in a continuous increase, which means that Farcaster's monthly active users are constantly converting into daily active users, and now the conversion rate has reached 0.47. Users gradually rely on Farcaster. After registration, nearly half of the users will use Farcaster every day, and gradually regard Farcaster as a fixed lifestyle.

Percentage of Farcaster users on the same chain

The data in Figure 3-4-1 shows that the chain with the largest proportion 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 airdrop and points of meme projects through Frames in the Farcaster project, which is conducive to 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 consensus and repeated discussions decided 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 tokens have now become the first token recognized within the Farcaster community, close to the status of Farcaster's project tokens.

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 allocated 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, promote content sharing and community participation;

Minting NFT: 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 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.

Get points: Post content, comment, share and other social behaviors to get Warps points, aiming 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 get Warps points after completing these tasks. Users who contribute to the community, such as content creators or technical supporters, can get Warps points in the form of community recognition or direct rewards.

Using Points: In terms of usage, Warps Points can be used to pay 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 a reward for their content or interaction.

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 APIs or graphical user interfaces (GUIs), 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 shifting to a decentralized social media landscape, providing users with a more diverse content retrieval experience.

Jam

The Jam project is a creator economy client whose main functions include posting and browsing within its APP. It is worth noting that users must attach pictures when posting using Jam, so it is called onchain Instagram.

In addition, Jam also introduced the concept of "Friends Token", a feature that allows users to purchase and trade shares of content creators and their posts directly in social dApps.

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 focuses 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), that is, maintaining 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 network 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 network platform designed for curators. Users can curate and share content on this platform, which not only increases the interaction between users, but also gets 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 connecting 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 reward 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 market's 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 to register.

Summary

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 smoother than other projects in the same track. Secondly, Farcaster uses the Frames plug-in, which allows users to use the Frames plug-in directly on the Farcaster page without switching between Farcaster, wallets and project web pages to participate in airdrops, mint NFTs, participate in games and other functions, which 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 own token model, so users in the Farcaster community can only regard Farcaster as a social platform, where they can 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, Farcaster's model of consuming first and then participating has brought a relatively large negative impact on Farcaster's user growth.

In short, the Farcaster project itself has completely changed the traditional way of storing data in the SocialFi project through its unique project framework, and at the same time introduced the Frames plug-in to make its application effect and efficiency far better than other SocialFi projects, helping it become a leader in the Social industry.

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