Written by: Sage D. Young, Unchained (formerly at CoinDesk)
Translated by: Yangz, Techub News
Co-founder of the decentralized social network Farcaster, Dan Romero, made an announcement on Wednesday that Farcaster has completed a $150 million Series A funding round at a valuation of $1 billion, with Paradigm leading the investment and other participants including a16z Crypto, Haun Ventures, Union Square Ventures, Variant Fund, Standard Crypto, and more. Since becoming a permissionless social network in October 2023, Farcaster has reached 350,000 paid registered users, with network activity increasing by 50 times. This year, Farcaster will focus on increasing daily active users and adding developer primitives such as channels and direct message delivery to the protocol. Dan Romero stated, “Over the next few years, we will double down on Farcaster’s vision and truly develop it into an internet-scale protocol.”
According to data from Dune Analytics created by Pixelhack, on May 20th, Farcaster had nearly 45,000 daily active users, a 30% increase compared to the activity surge on February 11th due to the introduction of Frames, a feature that transforms posts into interactive applications. However, this data still lags far behind mainstream social media giants like Facebook, TikTok, and X (formerly known as Twitter).
As a leading decentralized social media protocol, how will Farcaster achieve its goals? To answer this question, Unchained interviewed Farcaster’s co-founders, Dan Romero and Varun Srinivasan. The co-founders shared their perspectives on various topics, including their upcoming decentralized plans, their current views on the landscape of cryptocurrency social networks, and their experiences at Coinbase. Here are the key points from the interview:
Question: Farcaster’s decentralized channels are set to launch soon. Can you provide more information about them?
Dan Romero: We believe that allowing channel creators to choose whether to set up an economic model in the community, either through subscriptions or requiring users to purchase specific assets for access, is necessary for higher-quality outputs. Being a community mod is no longer thankless work, and producing high-quality content can now be rewarded. This is the advantage of channels. They are similar to subreddits, but the creators own the channels and can manage them flexibly, adding economic benefits in any suitable way.
Question: What is the difference between the current channels and the upcoming decentralized channels?
Dan Romero: The current channels are centrally managed and stored in the Warpcast database. However, the channel content and casts (similar to tweets or Reddit posts) are on the protocol, so they are permissionless. The metadata and curation capabilities of the channels are not part of the protocol; they only exist in Warpcast.
Varun Srinivasan: If you create and set up a (decentralized) channel, then all the data, everything, including from the channel icon to the information source, can run on different clients. All data is decentralized, and any application developed can display the same version of the channel. Additionally, channel creators can actually control their channels, meaning if the creator wants to transfer ownership to a friend, it is possible. Or if, after accumulating a fan base, the creator wants to sell it to someone else, that is also okay. Channel creators have the freedom to do so.
Question: How much effort has been spent on Farcaster’s decentralized governance?
Varun Srinivasan: Our decentralized governance model is very effective, known as rough consensus and running code, which the IETF used to create all network standards like TCP-IP. It is powerful because it lacks rigid structures. Its logic is simple; if you can create something useful and make most people believe it is useful, you can release it. Someone is responsible for managing the Farcaster Hub (nodes storing data in the network). Someone develops applications to interact with the Hub to extract and generate data, and there are users who use these applications. These three groups balance each other. … (Therefore) you need to introduce something that most people in these three groups think is good. Otherwise, they will show their preferences through actions. Hub operators can run old versions. Applications can choose different Hubs. Users can also select different applications. This balance ultimately prevents anyone from forcing something harmful to the network’s broad interests.
Dan Romero: Currently, we are focused on keeping governance simple, increasing the total number of daily active users, and then launching truly useful developments. We could spend a lot of time building complex and convoluted governance structures, but it would not help us achieve our goals.
Question: What was the most important concept learned from transitioning from the centralized exchange Coinbase to building a decentralized social network?
Dan Romero: Despite concerns about Twitter’s development under Musk, the network effects of Twitter are stickier than I initially thought. When we entered the market in 2021, we found that people in the cryptocurrency space were talking a lot about decentralization and the need for other applications in the ecosystem. We naively thought, “Great, people will actually want to try something new.” However, it turned out that users prefer to continue using existing products. We really want to provide people with genuinely useful products. This realization has profoundly changed our thinking over the past few years… Ultimately, the only way we will succeed is not because of the architecture but largely due to creating products that people love.
Varun Srinivasan: In the early stages, we realized that we would spend just as much time attracting users as developers. We quickly realized that developing applications and social products is really, really hard. Just developing Warpcast (Farcaster’s client), it took about 20 people a year. Without users, expecting other teams to appear on day one and decide to spend 100% of their time developing Farcaster is unrealistic. It is only through building clients, storytelling, and attracting users that Farcaster’s value to developers can grow, which is the most useful. This is not about building an SDK, a toolchain, or adding a feature for me. It is about increasing the number of people using this product tenfold. This is the biggest shift in our mindset since the early days.
Question: What have the two learned from their experiences at Coinbase, and how can it guide Farcaster’s development?
Dan Romero: Based on my experience at Coinbase, I firmly believe that regular people do not care about everything you are building. They just want a user-friendly application, starting from when the user logs in. In fact, it starts even before that, positioning the product and explaining it to them. We can do better in this regard. The current issues with Farcaster and Warpcast can confuse people. We are not even competing with fintech applications; we must compete with the best social media applications in the world. So, once users enter the app, is it engaging enough to make them want to come back? Many cryptocurrency users enjoy comparing cryptocurrency applications, and the reality is if your app is not as fun, they will go back to TikTok or YouTube.
Varun Srinivasan: Another lesson I learned from Brian Armstrong is to always focus on building what people want, regardless of the changes in the market. He said things never look as good as they seem and never as bad as they seem. One reason Coinbase has always been successful is that whether the market is at a low or high, Coinbase continues to output and build. We have gone through multiple cycles in the cryptocurrency space, witnessing the implementation of this strategy. We know that long-term focus is the real key to success.
Question: Currently, the cryptocurrency social media ecosystem includes participants like Farcaster, Lens, Nostr, and Friend.Tech. How do the two view the current landscape?
Dan Romero: Compared to centralized social media like Facebook with billions of users, the total number of users in cryptocurrency is not important. We are talking about tens of thousands of users across all decentralized social media, who may be the same people using cryptocurrency daily. We are interested in how to gradually increase the user base of 100,000 cryptocurrency applications to 1 billion. I don’t think focusing on competitors is useful. The key question is: What do people want? What do people find interesting? If you can make the content interesting and fun for users so they use it every day, developers will follow. Anything else is irrelevant.
Varun Srinivasan: These competitors are taking slightly different paths, and our goal is very clear: to operate in the cryptocurrency space, allow users to build their communities, and enable developers to create applications for these users.
