No chance on Farcaster?

Written by: Kaori, BlockBeats

Edited by: Jack, BlockBeats

Over the weekend, an article from Fortune magazine stated that Farcaster would launch a token like most protocols, causing the daily active user data of Farcaster, which had been in a downward trend for nearly half a month, to warm up again. On May 22, Farcaster completed a $150 million financing led by Paradigm with a valuation of nearly $1 billion. This news once again drew attention to Farcaster and its largest front-end application, Warpcast, which had garnered market enthusiasm earlier this year, with daily active users reaching an all-time high the day after the financing announcement.

Last week, well-known casual game publisher Voodoo spent €500 million to acquire BeReal, which focuses on social networking among acquaintances, attracted by its 40 million active users and growth model. Voodoo completed this acquisition using nearly a year’s worth of its own revenue, indicating that the user base and growth potential of social media platforms are extremely attractive to investors. This also supports why Farcaster was able to complete a $150 million financing with a valuation of nearly $1 billion, which may be a reasonable expectation given that TikTok is valued at $200 billion.

With TikTok facing boycotts and Twitter and Facebook increasingly censoring and banning accounts, geopolitical and censorship issues have become significant challenges that mainstream social media inevitably faces today. This situation has also provided space for the rise of censorship-resistant, decentralized social products like Mastodon and Farcaster. After Musk took over Twitter, Mastodon, which focuses on decentralized architecture, saw its active users grow by 600% in less than a year.

However, the core team of Farcaster has made it clear that to win mainstream users, they must first win over the cryptocurrency community, and Farcaster has only just taken its first step. The financing news has stimulated not only DAU but also developers, who see Farcaster as a fertile ground for developing clients, building niche applications, designing Frames, and more. For ordinary users, betting on Farcaster's token launch and actively operating accounts is the simplest way to engage, but for developers, understanding the ecosystem's landscape and getting involved may be the best choice.

Everyone is Working for Warpcast

The Frames feature of Warpcast brought the first wave of mainstream user growth, but its control over core functionalities means that other clients can only act as "spare tires." The difficulty of developing the Farcaster protocol, combined with Warpcast's funding and user advantages, poses a significant challenge for third-party client developers. This competition is not just a battle of technology and features; it is also an exploration of the future of decentralized social ecosystems. With Warpcast continuing to dominate and the rise of aggregated applications, the future of the Farcaster ecosystem is full of uncertainties.

The Most Competitive Prince

On June 4, a Farcaster client supporting customizable information feeds, Nook, announced it would cease development, sparking discussions within the Farcaster ecosystem about the survival of clients. Currently, there are over a dozen front-end applications available for the Farcaster protocol, with a total user count exceeding 463,000, but over 90% of users are using Warpcast, the client developed by Farcaster protocol's parent company, Merkle Manufactory.

Within the Farcaster developer ecosystem, some have realized that Warpcast is overly monopolistic, becoming a shadow in this ecosystem.

Earlier this year, Warpcast gained its first wave of expansion momentum with the launch of the Frames feature. Frames for Warpcast is similar to mini-programs for WeChat, allowing users to interact without leaving the app and unlocking more scenarios. In addition to Frames, Warpcast also controls several core features, such as Direct Casts (private messaging) and Channels.

This means that if you use a Farcaster protocol client other than Warpcast, you cannot send private messages to other users and can only browse channels without posting content in them. As a result, some front-end applications of the Farcaster protocol can only become "spare tires," serving as temporary solutions when Warpcast goes down.

Developing a Farcaster protocol client is not an easy task. Dan, the founder of the Farcaster protocol and Warpcast, once said that developing Warpcast took about 20 people a year, and its core architecture is not much different from mainstream social apps. However, even so, Warpcast cannot be considered perfect in terms of algorithms, search, private messaging, and other features.

In contrast, other Farcaster clients are developed independently by small teams or individuals. Some of these clients aim to enhance Warpcast's functionalities, such as Recaster, which has a built-in translation feature for non-English users, and the now-defunct Nook, which had a customizable information feed feature. Although the second-largest client, Supercast, is praised for its lightweight operation and smoother user experience, it still does not have the user base of Warpcast.

These clients have innovated in ways that differ from Warpcast, and there are a steady stream of developers eager to create new Farcaster clients. However, they face the challenge of Warpcast's new funding reserve of $150 million and the fact that 90% of users access the Farcaster protocol through Warpcast. Additionally, the development costs are rising because the Farcaster protocol is not open enough. Some developers mentioned to BlockBeats that while the Farcaster protocol's architecture is more user-friendly compared to protocols like Nostr, the developer documentation is not as comprehensive as that of Web2, and there is limited auxiliary material during the development process.

In addition to having relatively complete functionalities and support from the protocol's official resources, Warpcast's competition with third-party clients will also be influenced by the inevitable trend of platform consolidation in the traditional internet development process. Almost every mainstream internet social application, such as Weibo, Twitter, Facebook, Instagram, and LinkedIn, has a history of competing with and defeating third-party clients.

Their third-party clients have performed well in user experience and differentiated features, but official clients have strengthened their competitiveness through API call restrictions, acquisitions, and mergers, gradually dominating the competition. This may also become the competitive path between Warpcast and third-party Farcaster clients in the future.

Kartik, the founder of Nook, stated in the shutdown announcement that Farcaster is currently just a platform suitable for side projects, not a serious company, and he believes that no other client can compete with Warpcast. "Alternative Farcaster clients can innovate, but most of the time, people just want to browse content and interact with other users. In my opinion, Warpcast is sufficient."

The founder of Airstack, a Farcaster protocol API service provider, also directly stated, "While anyone can build a client, there is really no reason to do so unless you have some unique insights into user needs that have not been addressed by Warpcast."

The general consensus is that if you want to develop a Farcaster client, you need a sufficiently strong pain point or demand, either to transfer a large number of users from Warpcast to your client or to attract new users to join and stay on your client. Alternatively, you could build a single truly valuable feature that Warpcast is unlikely to develop itself (such as streaming video or audio spaces), but that can work seamlessly with Warpcast.

In summary, trying to replace Warpcast is an irrational choice; without an economic model, developing a third-party client feels more like working for the Warpcast team.

Aggregated Applications Further Squeeze Space

The challenges faced by third-party clients in growth come not only from Warpcast but also from increasingly mainstream aggregated applications, which have become strong competitors in the Farcaster ecosystem. As social protocols evolve and mature, content fragmentation will become as challenging as liquidity fragmentation, and the necessity of social aggregation has yet to be widely recognized, but it is one of the core pain points of the decentralized social ecosystem.

Speaking of aggregated clients, the most deeply rooted is Firefly, a social application under Mask Network. Its features are extensive, aggregating decentralized social protocols like Farcaster and Lens, and due to its early launch, it has low-cost access to the Twitter API. Additionally, users can browse articles on Mirror and Paragraph within the app. In the past two months, another major social protocol, Lens Protocol, has seen two of its largest front-end applications, Buttrfly and Phaver, announce their integration with the Farcaster protocol, allowing users to publish content to both Farcaster and Lens simultaneously.

Social aggregation applications; left: Firefly; right: Yup

It is said that Vitalik is also using the Firefly client. For KOLs with significant influence across different platforms, the setup of an aggregated client is sufficient to meet the need for synchronizing content across platforms in the simplest way.

In addition, aggregated clients like Firefly are also establishing social matrices for individual users. As Farcaster pioneer 0xluo.eth stated, the direction of Firefly is not only to send synchronized messages but also to aggregate on-chain activities. "The purpose of aggregation is to redistribute information, connect different social graphs, find more people of interest, and discover more content of interest."

These clients, which already have a certain user base, will have a more straightforward onboarding process and smoother user experience when integrating Farcaster. Moreover, Twitter remains one of the social platforms with the highest content density, and for most crypto users, the existence of aggregated social clients has a clear product scenario, further squeezing the market share of Farcaster's native client.

Where Are the Opportunities?

The Farcaster protocol is gradually opening up its core functionalities, thereby weakening Warpcast's monopoly advantage and encouraging the development of more third-party clients. Despite some operational challenges, the Farcaster protocol is still in the early stages of discovering its benefits.

Warpcast Is Not Perfect

Your enemy is not as strong as you imagine. Complaints about Warpcast's "dictatorial" operations are common, such as the black box of active badges and the prioritization of English. Although Warpcast's application interface is not much different from traditional social applications, the user experience is far from perfect. If one must stubbornly compete for front-end applications, finding Warpcast's weakest points for optimization may be a wiser choice.

A few days ago, Dan held a text AMA on Warpcast, where someone asked, "What advice do you have for non-native English speakers who encounter difficulties in obtaining a power badge (an active level mark for Warpcast)?" Dan did not provide an answer but stated, "If you can't speak English, then the game is hard to play." He emphasized that the core of Warpcast is English, and if you are not a native English speaker, you might want to look at other clients. In the post, Dan also mentioned aggregated applications like Firefly.

"Warpcast is a team based in the United States, and there are no plans for international expansion. We believe we can create an excellent client for English users because there isn't enough bandwidth to serve international users well." Dan's arrogant remarks often leave community users feeling displeased. "The reason you can raise $150 million is due to explosive growth from users outside the United States. Imagine if Jesse Pollak said Base would only prioritize the Onchain Summer event for the American community."

In addition to being unfriendly to non-English users, Warpcast has also faced criticism from the community regarding its one-size-fits-all algorithm and opaque ranking system.

To combat bots and spam, Warpcast has implemented active badges, priority modes, and other settings. Users who obtain active badges are defined as active, interested in others, and not spam, but the criteria for assessment are not transparent. The priority mode means that once activated, users can only see content from accounts they follow, those with active badges, and accounts that have interacted with the poster.

Warpcast's priority mode button

The priority mode is enabled by default, which means that new users entering Warpcast find it difficult to gain visibility. Without interaction, even users with active badges may lose their badges if they interact too much with new users. Some people have started to view Warpcast as a closed circle for active badge users or an echo chamber.

Moreover, Warpcast's search functionality is also lacking; it only offers the simplest chronological search without advanced search features like Twitter, and the core architecture of Warpcast, Channels, also lacks search functionality, which is a significant flaw for content discovery.

In the early competition among social media, MySpace was the leader, but Facebook gradually attracted a large number of users through a simpler, user-friendly interface design, stronger privacy controls, and personalized experiences, ultimately surpassing MySpace to become the largest social network platform globally. In the search engine arena, AltaVista once led the market with technological advantages and a large user base. However, Google changed the landscape of the search engine market by continuously optimizing the relevance and speed of search results through more precise search algorithms, greatly enhancing user experience.

These two cases highlight the importance of product thinking; even without a first-mover advantage, focusing on user experience and providing better services can win user support and market recognition. For decentralized social products, social data is in the hands of users, which means the decision-making power is also in the hands of users. Users will vote with their feet for which product is better.

The "Protocol Dividend" Is Strengthening

Despite the severe Matthew effect of Warpcast, the Farcaster protocol has recognized the need for greater openness, bringing trend-based dividends to ecosystem developers.

The following image shows a user being asked why they purchased Supercast but were still forced to use Warpcast. They replied, "You can only use the private messaging feature on Warpcast (Supercast founder Woj said Farcaster's parent company, Merkle, does not want to share). Additionally, users cannot join channels with Supercast; many things can only be logged into using Warpcast."

As mentioned earlier, the private messaging feature is currently limited to Warpcast, and Channels are in a "semi-decentralized" state, where non-Warpcast clients can only display Channels but cannot create them. To put it simply, if Weibo is Warpcast, then alternative clients lack private messaging functionality, and super topics can only be viewed, not created within their own clients.

In the financing announcement of Farcaster, the official stated that the upcoming focus would be on increasing daily active users and upgrading the Farcaster protocol, such as adding Channels and private messaging features to the Farcaster protocol itself.

Behind this, it can be seen that Farcaster is weakening the application and strengthening the protocol. Opening core functionalities weakens Warpcast, and the lack of monopoly advantages encourages other clients.

At that time, users could also create a channel in third-party clients, and all data could operate across multiple different clients. This would be a good thing for clients like Supercast that already have a certain user base, as it could combine advantages that differ from Warpcast, potentially impacting the first tier in terms of user volume. For small to medium-sized niche clients, a more open protocol would also increase developers' freedom to implement more functionalities.

In this way, developers would not need to reinvent the wheel, thus reducing development costs. The enhancement of third-party clients' functionality would also weaken users' spare tire mentality, providing them with competitive opportunities on par with Warpcast.

The Landscape Is Opening Up

The early dividend of an ecosystem lies in solving the protocol's pain points. For Farcaster, enhancing decentralization, reducing development costs, and other urgent development needs make this the best time for innovators to enter.

"Sufficiently Decentralized" is a slogan proposed by Varun Srinivasan, co-founder of Farcaster, which is also the goal Farcaster has been striving to achieve. However, the Farcaster protocol cannot yet be fully considered decentralized.

In addition to the front-end layer that users directly interact with, Farcaster also includes both on-chain and off-chain components. The on-chain part is responsible for ID registration, storage registration, and key storage, while the off-chain part consists of servers made up of Hubs. The concept of Hubs is similar to nodes in a chain, running on traditional hardware, responsible for processing data that does not require on-chain confirmation to speed up response times and reduce transaction costs. Their main tasks include processing user-published content and disseminating synchronization data.

Running Farcaster Hubs is often something developers do as they build clients or request data for developing Frames. Operating Hubs incurs costs, but the protocol layer itself does not provide economic incentives for Hub operators. To some extent, this is one reason why the Farcaster protocol is not as decentralized.

A year ago, a user asked whether there were incentives for operating a Farcaster Hub. Varun replied that most application developers would run a Hub, just as every cryptocurrency trading platform runs a node. "There are no economic incentives because we have not found a solution that is not easily manipulated," was his reason for the lack of incentives for operating a Hub.

However, as the Farcaster protocol continues to develop, new solutions regarding incentives are gradually emerging. Previously, running Hubs could periodically earn some internal flow tokens, Warps, from Warpcast, although Dan later suspended this incentive. On June 6, the official account of EigenLayer retweeted a project called "Ferrule," which aims to incentivize people to run Farcaster Hubs and enhance the decentralization of the Farcaster protocol.

Ferrule's incentive mechanism allows Hub operators to re-stake assets (such as ETH) into the Ferrule contract, dynamically delegating assets to Hubs based on network behavior. A portion of the staking rewards will be distributed as rewards to Hub operators, while also covering some storage account rental costs. By staking ETH into the Ferrule contract, Hub operators bind their assets to the security of the Farcaster protocol, and any inaction or malicious behavior by a Hub will incur economic penalties through a slashing mechanism.

In addition, to manage state growth, Ferrule has introduced data sharding and routing mechanisms to ensure that no single Hub needs to store all data, thereby distributing the storage load across the entire network. It will also create a data location map to ensure efficient data retrieval.

Through the AVS framework, Ferrule can add an incentive layer to the Farcaster protocol. Currently, this idea proposed by the Anagram research team is in the implementation stage, and the proposer has publicly stated that developers willing to collaborate on this project can join as EIRs (Entrepreneurs in Residence).

Moreover, the Farcaster ecosystem has many such entrepreneurial projects for third-party services, showing impressive performance in terms of implementation and financing. One of the most representative is the developer tool Neynar, which was selected for this year's a16z Crypto Spring Accelerator. On May 30, Neynar announced it had completed a $11 million Series A financing round with participation from a16z, Coinbase, and other institutions.

Before Neynar, the only way to develop within the Farcaster protocol was to run a Hub, which could cost hundreds of dollars per month. Neynar essentially operates Hubs for developers, requiring a minimum of only $9 per month, significantly reducing development costs.

Farcaster protocol API service provider, Neynar has become the second-largest independent user connector; image source: Suji Yan

In addition to Neynar and Ferrule, other ecological entrepreneurial projects are also emerging, and the Farcaster team itself is developing solutions for core issues such as network synchronization, data replication, and state growth, all aimed at enhancing the decentralization level of the Farcaster protocol and preparing for the influx of the next order of magnitude of users. Therefore, this ecosystem still holds many possibilities worth exploring for developers.

Farcaster Sees No Endgame

Dan often says, "Build your own client or use another client," which is not a remedy for making the Farcaster protocol more decentralized or for user growth. The greatest significance of Warpcast currently lies in providing a possibility and offering a creative space for ordinary cryptocurrency users. Even aggregated clients still have significant room for improvement in search functionality and content integration.

The Farcaster ecosystem is gradually maturing, with the protocol's openness, continuously enriched functionalities, and active community participation laying a solid foundation for Farcaster's future growth. Currently, many products have already emerged from the Farcaster protocol, such as the creator platform Paragraph, content financialization application Jam, and community task platform Bountycaster. In the future, many products developed by developers may not even be referred to as Farcaster clients; they will use the Farcaster protocol but will do entirely different things.

By expanding the cake, Farcaster remains a rich mine.