When ABCDE announced it was halting new investments and cancelling its second fundraise, Crypto Twitter mourned the “death of VC.” Yet in the previous cycle, VCs basked in glory, spinning narratives to inflate valuations and packaging one PPT after another as the future of the internet.

Farcaster, the decentralized social darling that raised a total of $180 million across two bull runs, epitomized that VC storytelling. But now Farcaster’s story has changed—from betting on “decentralized imagination” to betting on “tokenized execution.” It isn’t a product failure so much as another collapse in crypto’s narrative economy. VCs discovered they couldn’t rebuild the world—they were merely cashing out on a pre‑paid valuation story.

From Farcaster to Warpcast and Back

Recently, Farcaster co‑founder Dan announced the team is considering renaming its official client app, currently called Warpcast, back to Farcaster, and switching the web domain to farcaster.xyz. The goal is to simplify branding and eliminate confusion between the protocol and the app for new users.

In 2021, Farcaster launched as a desktop protocol. In 2023, it pivoted to mobile and web, rebranding its flagship client as Warpcast. The idea was that separating the protocol name (Farcaster) from the client name (Warpcast) would let third‑party teams build their apps more easily, thus boosting network growth. In practice, however, most users still sign up and access the network via Warpcast itself.

Last May, BlockBeats analyzed the ecosystem: Warpcast held virtually all of Farcaster’s core features (DMs, Channels, etc.), while unofficial clients survived only by finding niches—apps like Supercast and Tako tried differentiating themselves with unique social features.

Featured reading: No Opportunities Left on Farcaster?

Today’s renaming of Warpcast to Farcaster is a clear blow to those third‑party client developers. But it’s just one small token of Farcaster’s ongoing transformation. Since October, the team has made sweeping changes in product updates, strategy, and personnel.

One subtle sign: developer calls now drop the split between “Farcaster protocol agenda” and “Warpcast updates,” focusing instead on unified issues—Growth, DirectCast, onboarding costs, Hub stability, FIP governance, identity systems.

Yet in terms of user stickiness, Farcaster remains ensnared in the classic cold‑start trap. According to Dune data, since open registration in H2 2023 its DAU/MAU has lingered around 0.2—briefly spiking to 0.4 in early 2024 during the DEGEN frenzy, then plummeting back down.

DAU/MAU—the ratio of daily active to monthly active users—measures how often users engage in a month. A ratio near 1 indicates high engagement; below 0.2 signals weak virality and interaction.

By contrast, early Web2 community platforms like Reddit or Mastodon sustain DAU/MAU between 0.25–0.3. Even smaller, niche social apps such as Discord servers often exceed 0.3. Farcaster’s numbers show that while it still holds buzz in the crypto community, true usage habits haven’t taken root. Most engagement comes from a small cadre of power users and on‑chain natives, with no sustainable loop of content consumption and social interaction.

Content or Asset? Farcaster Has No Answer

In its initial product logic, Farcaster sought to build a decentralized social graph through content tools—Channels (akin to topic-based groups) were envisioned as the core units aggregating communities and traffic. But very quickly, the incentive power of assets far outstripped content’s ability to self-organise, and the product focus shifted.

The Abandoned Channels

In February 2024, the social token $DEGEN went viral within Warpcast’s “Degen” channel, becoming the main catalyst for Farcaster’s breakout. At that time, just four months after open registration, daily active users (DAU) surpassed 30,000. As $DEGEN and other popular channel tokens like Higher took off, Farcaster’s DAU peaked at 70,000.

The team realized Channels could gather people, attention, and liquidity in one place. Co‑founder Dan argued this was Farcaster’s key differentiator from centralized platforms like Twitter, which allows small communities to flourish within a broader social graph. Although Channels were only one feature of Warpcast, the plan was to fully decentralize them: by nurturing these tight‑knit micro‑communities, Channels would boost engagement and create more intimate social experiences.

Accordingly, Channels became a core development focus. The team introduced concepts such as channel‑owner privileges and channel ownership, spawning channel‑centric projects and even standalone client apps. Dan even urged users not to preemptively register channel names, so they could later sell them to brands—infamously, the Bankless podcast and users once scrambled for the same channel name.

But the strategy didn’t last. By July 2024, network scaling bottlenecks emerged. In a developer call, the team announced they would pause decentralizing Channels and rethink the approach. Responding to users asking why some topic Channels were muted, Dan admitted, “Channels no longer deliver extra distribution lift. They once did, but poorly. Channels are great for community ops, not topic discussion—we won’t promote them to new users.” Historical data showed Channels had limited impact on user growth, and with resources tight, the team has no near‑term plans to add new Channel features.

Product priorities shifted to Mini Apps and an integrated Wallet, transforming Farcaster from a content‑centric social protocol into a transaction‑centric one—because on crypto, the latter attracts more native users.

Built‑In Wallet Fuels a New Monopoly

In a podcast, Farcaster co-founder Dan shared his latest understanding of the concept of “users”: users who only register accounts and interact lightly may increase activity on the surface, but those who truly bring value to the network are those wallet users who hold encrypted assets and are willing to interact on the chain. This refined user understanding directly affects the team’s product strategy on the wallet system.

At the end of November 2024, Farcaster began exploring integrating a tradable wallet within the application to facilitate on-chain transactions. The goal is to enhance ecological stickiness and monetization potential by increasing the frequency of interactions on the chain. In fact, every Warpcast user has created a “Farcaster wallet” by default when registering, which binds the user’s identity and is used to log in to Warpcast and Frames. However, since it is only saved locally on the phone, its functions are still biased towards authentication and signature rather than fund flow.

In contrast, the newly launched “Warpcast Wallet” is a wallet that can send and receive assets. Users can automatically generate it when registering, and use the wallet to recharge, exchange, transfer and interact on the chain.

At the time when Farcaster began to have a built-in tradable wallet, it is hard not to think of the emergence of Clanker.

Clanker is a token-issuing AI Agent on Warpcast. Users post and click Clanker to issue tradable tokens on Uniswap. Its official token $CLANKER surged 20 times in November last year, making Base and Warpcast competitors with Solana in the AI ​​concept track. Also, because of $CLANKER’s wealth creation effect, Farcaster’s daily active users have exceeded a new high since last summer.

Unlike $DEGEN, which met an unfortunate fate, $CLANKER, also originating from Warpcast, attracted attention and support from the team and its core community right from the beginning. However, during this process, third parties such as Agent, DEX, and C-end wallets reaped the benefits of the asset issuance frenzy, while Warpcast itself did not receive any financial returns.

The success of Clanker made the team realize that to drive more on-chain interactions within the Farcaster ecosystem, relying solely on open protocols and third-party integrations would not be enough. It became clear that a native, tradable wallet system was essential, which led to the creation of Warpcast Wallet.

In terms of product design, the role of Warpcast Wallet is to bridge users’ social activities with on-chain actions—users can complete transactions, tip, or claim airdrops with a simple click on Frame, without needing to switch or connect external wallets. This “social equals finance” product logic positions Farcaster like a “Singapore” in the crypto world—while the user base may be relatively small, wallet activity and per-user fund volume remain high.

According to official documentation, when using Warpcast Wallet, users pay a 0.85% transaction fee, of which 0.15% goes to the 0x protocol for transaction routing, and 0.70% goes directly into Warpcast’s revenue. Dune data shows that since launch, Farcaster’s revenue curve has been steadily rising, offering preliminary validation of the embedded wallet as a viable commercialization model.

However, because the wallet sits at the client layer—not in the protocol itself—and with plans to rename Warpcast to Farcaster, some protocol developers told BlockBeats they believe Farcaster is becoming increasingly centralized and monopolistic.

Their Biggest Innovation Is Just ‘WeChat Mini Programs’

With the introduction of an embedded wallet, Farcaster’s shift toward an asset‑driven social app has accelerated. The team has stated that one goal of launching the wallet was to entice developers to build on the Frame framework, thus blending on‑chain transactions with content distribution.

Originally released in early 2024, Frame is a lightweight app standard running atop the Farcaster protocol that lets developers embed mini‑programs directly into the social client. When users tap a Frame, the developer can detect their wallet address and push content or trigger interactions. However, as Farcaster’s overall buzz faded, Frame usage has noticeably declined.

To counter this, Farcaster rolled out Frame v2 at the end of 2024. The update lets developers build near‑native experiences using HTML, CSS, and JavaScript, and deploy via a Mini App SDK—no app‑store approvals required. Frame v2 also integrates deeply with the built‑in wallet, boosting its transactional capabilities and making the overall experience feel much like WeChat Mini Programs.

In March 2025, Linda Xie—co‑founder of Scalar Capital and Bountycaster—joined Farcaster to lead developer relations, focusing on Frame’s development and promotion. Simultaneously, Farcaster launched an “Airdrop Initiative,” incentivizing developers to use Frame v2 to build apps and reward users with token drops. Though not official token distributions, these airdrops successfully re‑energized growth: mid‑March saw daily active users briefly top 40,000.

By early April 2025, Farcaster officially rebranded Frame as “Mini Apps,” placing it alongside the Wallet in Warpcast’s bottom navigation bar. Today, Warpcast hosts a suite of lightweight, on‑chain‑enabled Mini Apps, making them a core part of the ecosystem. Yet, early user‑acquisition data suggests the Mini Apps have yet to unlock significant new growth—their long‑term impact remains to be seen.

The Decline of Web3 and the Failure of Silicon Valley Legends

In fact, Farcaster’s transformation is not unique; it merely exposed the structural dilemmas of the entire Web3 social space ahead of others—open protocols can’t generate user scale, content distribution doesn’t drive transactions, and ultimately, the only viable path is back to asset-driven models.

Do we really need a “decentralized social platform”?

From $DEGEN to $CLANKER, Farcaster’s moments of breaking into the mainstream are almost always tied to assets. What truly drove surges in daily active users was not the evolution of the protocol or innovation in the client, but rather the repeated wealth effects created by tokens. This recurring pattern reveals a core truth: Farcaster is not “unused,” but rather “used only when it can make money.” These platforms do indeed satisfy a certain market need, but their role is not as social networks, but as asset distributors.

This is not coincidental; it is the inevitable outcome of the long-standing misalignment between crypto narratives and real-world usage.

In 2020, BlockBeats published an article titled “The World Hates Today’s Social Media,” which argued that decentralization and protocolization might be the only way for social products to break free from the “platform dilemma.” Amid increasingly strict content censorship and platform monopolies, open protocols held the promise of a “new social order.”

At that time, Twitter was seen as a prime example of a protocol failure: It briefly opened its API to encourage developer ecosystems but eventually returned to being an ad platform and data monopoly. Farcaster’s original ambition was to “not become the second Twitter.” It claimed to be focused on an open protocol to connect developers, users, and assets, thus creating a decentralized social network that benefits all parties.

But three years later, Farcaster has replicated not Twitter’s initial protocol ideals, but its later platform logic. Dan, who once urged everyone to “build their own clients on the protocol,” now announces the client will also be called Farcaster, tightly binding the “protocol” to the “product.”

This shift is rational in terms of the product’s search for PMF (Product-Market Fit) and can even be seen as a practical compromise. However, it also reveals that the so-called “open ecosystem” was quietly repurposed as a narrative tool for user growth. The role of developers is no longer to be genuinely supported but to serve as a part of the story. Much like when Twitter closed its API, the developer ecosystem becomes just a temporary fuel to reach the platform’s closed-loop.

Farcaster has spent three years proving one thing: Social protocols in the crypto context cannot form the ecosystem we hoped for in 2020. Not because no one is developing clients, but because no one is using them. Not because it’s not decentralized enough, but because decentralization simply isn’t what users care about.

Today, SocialFi, like GameFi, is in some ways labeled a “dead end.” A while ago, a well-known influencer harshly criticized the founder of a decentralized social app: “After all this time building traffic, you still don’t have more followers than me, a regular KOL. What have you accomplished? Your company raised $2M, what did you do with it? You haven’t even made as much as I have from my SOL wallet.” This remark, though amusing, also underscores the reality that the era of building infrastructure on mere narrative is over. All VC project valuation models are being restructured.

Crypto Is Not “The Next Internet”

Yet a16z has been the biggest preacher of that narrative—having invested early in Twitter, Facebook, and other social media giants, they naturally couldn’t ignore decentralized social platforms. As a Google executive quipped, “They’re like maniacs, sticking their nose into every deal.”

a16z, short for Andreessen Horowitz, takes its name from founders Marc Andreessen and Ben Horowitz, who launched the firm in 2009. Renowned as software “hunters,” they’ve backed virtually every standout Internet company—Facebook, Twitter, Airbnb, Okta, GitHub, Stripe, and more. Their strategy combines early‑stage sensitivity with growth‑stage decisiveness: they seeded Instagram, fought for GitHub in Series A, and led a $150 million Series G into Roblox.

Their bold foresight and aggressive style are even more on display in crypto. They invested in Coinbase in 2013; by its IPO, Coinbase reached an $85.8 billion market cap—one of the largest tech listings ever. After cashing out $4.4 billion, a16z still holds about 7 percent of the company. Their crypto portfolio also includes marquee names like OpenSea, Uniswap, and dYdX.

Since the 2021 crypto bull run, VC portfolios have soared—fund returns of 20× or even 100×—making crypto investing look like a money‑printing machine. LPs poured in, and new funds were ten to a hundred times larger than before, convinced they could replicate those outsized gains.

Farcaster was unmistakably a product of that liquidity peak. In July 2022, it announced a $30 million round led by a16z. Two years later, it raised $150 million at a $1 billion valuation—led by Paradigm, with a16z Crypto, Haun Ventures, USV, Variant, Standard Crypto, and others participating. It remains the largest raise in Web3 social history. Fortune magazine noted that this valuation was more an internal power play among funds than a reflection of real market demand.

As crypto investor Liron Shapira put it, “If VCs still have LP capital available, choosing to invest another $150 million instead of returning capital nets them an extra $20–30 million in management fees.” This wasn’t genuine market endorsement of Web3 social, but a self‑contained capital loop. Fortune also cited an anonymous source predicting Farcaster would launch a token—and that investors would scramble to capture its fully diluted value.

a16z partners have argued that “technology waves tend to arrive in combinations,” using this logic to champion the intersection of Web3, AI, and hardware. But they overlooked a basic fact: every leap in mobile internet, from smartphones to search engines, was built on real user pain points and technological breakthroughs, not on a structurally inflated capital narrative.

“Technology will eat the world” was once a bold and accurate observation—but only if the technology offered a fundamental, overwhelming advantage. AI boomed by challenging individual intelligence itself—a structural gap impossible to ignore. Blockchain, by contrast, aims at “sovereign money,” a two‑millennia‑old credit system. It will not overthrow social structures overnight as the internet or AI did; instead, it will evolve slowly over long cycles, co‑opted and absorbed by existing powers until it becomes part of the established order.

In reality, every successful crypto system embraced by users has been “mechanism‑driven + liquidity‑first.” From Uniswap to Lido, from GMX to friend.tech, they thrived on financial gravity, not idealism. The VC playbook of “investors driving world change” doesn’t apply here.

Crypto has never lacked social tools; the so‑called protocol ideal was a projection of the internet era’s platform dream. It tried to substitute consensus mechanisms for business models, but only deferred the structural issues to the asset-monetisation phase.

Today, the crypto industry’s greatest crisis isn’t regulation or technology, but strategic confusion and a vacuum of genuine demand. Beyond “gambling logic” and cross‑border payments, no sector has demonstrated the ability to continually create user value. VC failure, at its core, is a loss for direction when value is absent: if this industry has no real value, there was never any true value discovery to discuss.

Disclaimer:

1. This article is reprinted from [BlockBeats], and the copyright belongs to the original author [Kaori]. If you have any objections to the reprint, please contact the Gate Learn team, and the team will handle it as soon as possible according to relevant procedures.

2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.

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