Lens's flagship project Phaver has ceased operations. Is the crypto market about to face a new wave of shutdowns?

Author: Nianqing, ChainCatcher

Recently, DeFi researcher Ignas tweeted that after communicating with the team, it has been confirmed that the crypto social application Phaver has ceased operations. Additionally, Phaver needs to pay employees 1 to 2 months of severance pay. Some former team members are developing SocialDAO to seek new uses for the SOCIAL token.

The price of Phaver's token SOCIAL has dropped 99% since the TGE in September 2024, and as of the time of writing, the price is $0.000168, with 68% of the tokens still locked.

In 2023, Phaver was highly anticipated during the SocialFi boom. Phaver was the largest mobile application of the Lens protocol, with over 800,000 downloads and reaching a peak of 35,000 DAU, once accounting for 50% of Lens's traffic and 40% of Farcaster's external application share.

It is clear that Phaver, which aimed to "break the social barriers between Web 2 and Web 3 through Web 2.5," also struggled to overcome the ongoing growth dilemma in the SocialFi space. The end of short-term incentives after the TGE, combined with the waning SocialFi boom, made it difficult for the project team to continue.

In addition to Phaver, TreasureDAO, which once aspired to be the "Web3 Nintendo," recently announced a complete halt to game development and publishing, deciding to transition to AI.

Although entertainment applications such as social and gaming have borne the crypto industry's hopes for mass adoption, other sectors are facing pressure to be disproven, apart from financial use cases like stablecoins, DeFi, and RWA. Since the last bull market ended, the spring for social, NFT, and blockchain games has yet to arrive. In this prolonged winter, the crypto market may soon face a new wave of shutdowns.

The Rise and Fall of Phaver

Phaver was founded in 2020, with team members coming from major companies like Google, Goldman Sachs, and Alibaba. The founders have extensive experience in social applications in the Web2 space. Phaver aimed to provide a Web3 application that allows users to control their social experience through decentralized protocols like Lens and Farcaster. Phaver has always referred to itself as "Web 2.5," supporting Web2 logins at launch to simplify user entry into Web3. Additionally, it was the only social application that allowed cross-posting while integrating both Lens Protocol and Farcaster protocols.

In October 2023, Phaver completed a $7 million seed round, with participation from leading institutions such as Polygon Ventures, Nomad Capital, Symbolic Capital Partners, Foresight Ventures, dao5, f.actor, Superhero Capital, and Alphanonce. The valuation was approximately $80 million.

In May 2024, Phaver launched the SOCIAL token and initiated the first season of airdrop activities, officially completing the TGE in September of the same year. After the TGE, there have been few significant developments from the official team.

By the end of 2024, Phaver officially announced a complete transformation into SOCIAL DAO, which is an "AI-first internet organization." This means that only a few members of the Phaver team will continue to contribute to the DAO, and to reduce costs, AI agents have been introduced for the DAO's daily operations.

Phaver's mobile application has been discontinued since January of this year. Currently, its SOCIAL token, aside from staking functions, is almost equivalent to a Memecoin.

Is a New Wave of Project Shutdowns Coming?

On April 3, the blockchain gaming ecosystem TreasureDAO announced a complete halt to game development and publishing, attempting to gradually transition to AI. Treasure DAO's financial situation has deteriorated, facing restructuring, with annual operating expenses reaching $8.3 million, while the current treasury only has $2.4 million left, originally expected to last until July of this year. The DAO has laid off 15 people, leading to the decision to terminate the gaming business and Treasure Chain, and will assist partners in migrating to other chains.

Social and gaming, as the consensus for Web3 mass adoption, are collapsing comprehensively.

With the rise of new concepts like NFTs, Web3 social, and GameFi, the revolution of data ownership in Crypto is gradually linking with Web3.0, and the faith in cryptocurrencies is growing. However, in this market cycle, financial use cases such as Bitcoin ETFs, RWA, and stablecoins remain undefeated, while other sectors face pressure to be disproven. Since the last bull market ended, the spring for social, NFT, and blockchain games has yet to arrive. The faith in Web3 is beginning to waver—cryptocurrencies seem more like a significant innovation in the fintech field rather than a disruptive upgrade of the internet.

In this prolonged winter, the crypto market may soon face a new wave of shutdowns.

Survival Rule in a Bear Market: Staying Alive is the Top Priority

The dilemmas faced by Phaver and TreasureDAO have sparked a deeper discussion: how can projects survive in a cooling market?

Members of the Phaver team stated that there are three main reasons for the cessation of the original social project:

1. TGE and airdrop issues: During the TGE, the airdrop portal website malfunctioned for several hours, preventing users from immediately claiming tokens, leading to panic (FUD).
2. Excessive CEX listing fees: Over $1 million was spent to list on five exchanges, including Bybit, KuCoin, and Gate, depleting resources.
3. Lack of operational funds: Tokens were not sold during the TGE to avoid further FUD, resulting in a funding shortfall that hindered operations.

Phaver's shutdown also serves as a reminder to other teams that good financial management skills are essential for crypto projects and cannot be a shortcoming; otherwise, the probability of failure is high. The Phaver team indeed focused heavily on product development, but they neglected economics and token management, not selling any tokens at launch. Phaver's founder & CEO Joonatan Lintala previously stated in an interview with ChainCatcher: "The rapid growth of Friend.tech is interesting, but we are fundamentally different from it. We place much more emphasis on the social aspect rather than token economics."

Although last year, Farcaster completed a $150 million Series A financing with a valuation of $1 billion, it also faces listing pressures. The social sector has always struggled with the dilemma of short-term incentives versus long-term growth. Without killer use cases or incentives, it is challenging to attract people away from traditional social platforms like X or Weibo.

Additionally, Phaver serves as a cautionary tale explaining why projects should list on major exchanges. KOL @Chen Jian Jason believes that many projects, under the pressure of breaking even, bleed to list on Binance, ultimately not for how much they can sell, but more importantly to avoid going to zero. After all, as long as you have a shell on Binance, even if the price drops more than tenfold in a bear market, there is a high probability of bouncing back in the next bull market. However, if you don't list on major exchanges, going to zero is truly going to zero.

@Ye Su believes that second-tier projects like Phaver (funding below $10 million) spending large amounts of money to list on second-tier exchanges is accelerating their demise. The correct approach should be to avoid spending money on centralized exchanges and instead focus on decentralized exchanges, saving money to refine the product. If progress is smooth now, maintaining a market cap of $150 million is crucial to survive the winter.

Indeed, the downtime is the best opportunity for BUIDL. But the primary task for players is to survive and stay here.