Friend.tech therapy abandoned, Farcaster growth stagnated... Why is social so difficult?

Author: Azuma, Odaily Planet Daily

Today, there were two slightly negative hotspots in the decentralized social track.

One is that the friend.tech team has set the Admin and ownership parameters to 0x 000…000, which means that the developers of the team have relinquished control over the smart contract, and the protocol will no longer have any upgrades or improvements in the future ------ many disappointed users and investors pessimistically interpret this as friend.tech choosing a "soft rug."

The other is that the number of new users on Farcaster has nearly stagnated, with only 545 new users on September 8, a significant drop from the peak of about 15,000 users in February this year.

As two phenomenally popular projects in the decentralized social track, friend.tech and Farcaster experienced a surge in traffic in the fall of last year and the spring and summer of this year. The former launched the token FT in March this year after securing funding from Paradigm, while the latter raised $150 million in Series A funding led by Paradigm at a valuation of $1 billion in May. Both protocols have driven the overall excitement in the track through their explosive growth at different stages.

In May this year (shortly after Farcaster's funding), Fred Wilson, co-founder of USV, the lead investor in X (then still Twitter), stated on X that his X account had been dormant for the past 18 months, but he had been active on Farcaster during that time, sharing his views on technology, startups, venture capital, music, and life through the protocol. Fred also urged his X followers to pay attention to his Farcaster account instead.

At that time, many decentralized believers viewed Fred's declaration as a milestone event signaling the imminent explosion of decentralized social, but in hindsight, it seems more like "a short-term peak in a market cycle." In the following months, the traffic observed from products like friend.tech, Farcaster, and Lens showed a downward trend, and this trend has become more evident today with the fermentation and discussion of the aforementioned two hotspot events.

Why is social so difficult? This is not a problem unique to Web3. Looking back at the development history of Web2 social, you will find that there are very few successes and countless failures. Overall, creating a universal social product is a very challenging task; acquiring users, retaining them, and enabling them to establish new relationships in new products are all extremely complex matters.

The Three Mountains of Decentralized Social

Combining the setbacks faced by decentralized social, we can roughly attribute the issues to three perspectives.

First, current decentralized social products generally lack an irreplaceable advantage, making it difficult for users to form a "hard demand."

In other words, the product itself does not possess irreplaceability on the social level ------ "What I can do here, I can do elsewhere." This is a challenge that all emerging social products must face, as traditional social giants have almost covered all potential service directions, making it hard for new products to find a function innovation that is strongly related to demand.

For friend.tech, its innovation is more focused on the Fi side of SocialFi, that is, realizing the monetization and value circulation of influence through Keys, while the social aspect has not brought substantial changes; Farcaster and Lens, on the other hand, are almost replicas of X in terms of social functions. Although the on-chain social graph based on addresses has certain innovative significance, it is not closely related to user needs.

In this regard, a relatively noteworthy case in the Web2 field is TikTok, which broke through with short videos, and Discord, which has irreplaceability in large-scale community management scenarios.

Second, current decentralized social products have a clear disadvantage in terms of network effects.

The so-called "network effect" simply means that the value of a single product increases as the number of users using that product increases, and this value also feeds back to all individuals using that product.

In this regard, Farcaster actually did quite well in its early stages. The protocol attracted a group of investors, founders, and developers to form a high-quality user group with certain "technical" characteristics, and the intellectual collisions among this group attracted a wave of loyal users seeking knowledge. I remember that Farcaster co-founder Dan Romero used to hold exclusive AMAs on the platform, inviting big names like Vitalik and Coinbase founder Brian Armstrong to attend and comment using personal resources. As a media worker, I once regarded Farcaster as an irreplaceable source of information.

However, the problem is that only a small group is obsessed with "technical" discussions, and high-quality AMA models like this PGC do not have scalability, which makes it difficult for Farcaster to maintain its early growth momentum. From the perspective of ordinary users, especially those with certain content promotion needs (such as project parties and KOLs), the social reach effect within Farcaster's own traffic pool is still not ideal, and the value individuals can obtain in return is relatively low ------ "I want brand exposure, why not go to X? I want to attract new users, why not go to Telegram…"

Third, current decentralized social products have seen a general decline in wealth effects, which is the most critical and fatal issue.

The so-called "wealth effect" can essentially be understood as a "subsidy" mechanism for users. The entry threshold for the Web3 world is already high, and the user profile tends to be more "speculative," so it is necessary to provide users with sufficient value "subsidies" to attract them to abandon mainstream social platforms and switch to new products.

In this regard, Yan Meng, co-founder of Solv Protocol, commented today on X: "Essentially, the new Web3 Social platform cannot afford the migration costs of users. Users only need to add a payment transaction function, but how much are you asking them to give up in terms of years of accumulated social relationships and data assets? Well, it's not impossible, but how much are you offering? The people who are more active on Farcaster are mostly its investors or connections. If they develop, their migration costs can be compensated, but what about ordinary users? No chance."

For decentralized social products, the presentation of the "subsidy" mechanism is tokens (including tradable NFTs), but the effectiveness of this mechanism has long been greatly diminished. On friend.tech, FT is currently reported at 0.073 USDT, having dropped over 97% from its high of $3.26, and the price trend of Keys has also faced criticism; meanwhile, on Farcaster, as the total number of users grows and the benefits of industry airdrops decline, the expectations for profit from airdrops are also decreasing… This has caused the "subsidy" mechanism of new decentralized social products to gradually fail, further weakening the attractiveness of the products themselves.

It's Too Early to Declare Defeat, but New Explorations Are Needed

As mentioned earlier, a few months ago, the popularity of decentralized social seemed like "a short-term peak in a market cycle." Following this logic, we are also reluctant to view the current low point as a failure of decentralized social; instead, we prefer to see it as a "phase low point in a long-term market."

Although from the perspective of individual products, the demise of friend.tech seems to have become a foregone conclusion, more decentralized social products, including Farcaster, Lens, and UXLINK, still have ample development potential. Looking ahead, we are eager for decentralized social products in the field to find unique innovative directions and irreplaceable positioning on the Social level, and we hope that more products can gradually accumulate considerable network effects through various strategies.

At the same time, we also look forward to seeing more attempts from decentralized social products on the Fi level. Although friend.tech has failed, its exploratory actions on the Fi level are still commendable. Blockchain and tokens inherently possess financial attributes, and good economic model design may be a potential path to achieving sustainable wealth effects (the "subsidy" mechanism).