Written by Sage D. Young, Unchained (formerly at CoinDesk)
Compiled by: Yangz, Techub News
Dan Romero, co-founder of the decentralized social network Farcaster, announced on Wednesday that Farcaster has completed a $150 million Series A financing with a valuation of $1 billion, led by Paradigm, with participation from a16z Crypto, Haun Ventures, Union Square Ventures, Variant Fund, Standard Crypto, etc. Since becoming a permissionless social network in October 2023, Farcaster has 350,000 paid registered users and a 50-fold increase in network activity. This year, Farcaster will focus on the growth of daily active users and add developer primitives such as channels and direct messaging to the protocol. Dan Romero said, "In the next few years, we will double down on Farcaster's vision and truly develop it into an Internet-scale protocol." According to Dune Analytics data created by Pixelhack, Farcaster's daily active users reached nearly 45,000 on May 20, a 30% increase from the activity boom caused by the launch of Frames (a feature that turns posts into interactive applications) on February 11. However, this data is far from mainstream social media giants such as Facebook, TikTok and X (formerly Twitter).
As a leader in decentralized social media protocols, how does Farcaster achieve this goal? To this end, Unchained interviewed Dan Romero and Varun Srinivasan, two co-founders of Farcaster. The two founders expressed their views on a range of topics, including their upcoming decentralization plans, their current views on the cryptocurrency social network landscape, and what they learned while working at Coinbase. The following is a summary of the key points of the interview.
Q: Farcaster’s decentralized channels are coming soon, can you tell us more about them?
Dan Romero: We believe that allowing channel creators to choose whether or not their community has a certain economic model, whether in the form of subscriptions or requiring users to purchase specific assets for access, is necessary and that this flexibility can lead to higher quality output. Being a community mod is no longer a thankless job, and you can get paid accordingly for producing high-quality content. This is the advantage of channels. It is similar to a subreddit, but the creator owns the channel and has the flexibility to manage it and increase economic benefits in any way that makes sense.
Q: What is the difference between the current channels and the decentralized channels that are being developed?
Dan Romero: Channels are centrally managed today and live in the Warpcast database. But channel content, casts (similar to tweets or Reddit posts) are on the protocol, so they are permissionless, and channel metadata and curation capabilities are not part of the protocol. They only exist in Warpcast.
Varun Srinivasan: If you create and set up a (decentralized) channel, all the data, everything, from the channel icon to the information source, can run on multiple different clients. All the data is decentralized, and any application developed by anyone can show the same version of the channel. And the channel creator can actually control their own channel, that is, if the creator wants to give ownership of it to a friend, it is OK. Or, after accumulating a group of fans, the creator wants to sell it to others, which is also OK. The channel creator has the freedom to do so.
Q: How much effort did you put into decentralized governance of Farcaster?
Varun Srinivasan: Our decentralized governance model works really well, which is called rough consensus and running code. It's what the IETF used to create all the network standards like TCP-IP. It's so powerful because there's no rigid structure. It's very simple, which is if you can build something useful and get the majority of people to believe it's useful, then you can release it. There are people who run the Farcaster Hubs (the nodes in the network that store data). There are people who build applications that talk to the Hubs to extract and generate data. And there are the users who use those applications. These three groups check and balance each other. … [So] you have to launch something that the majority of these three groups think is good. If not, they'll show their preference by their actions. Hub operators can run an old version. Applications can choose a different Hub. Users can choose different applications. All of these ultimately act as checks and balances to prevent someone from ramming something through that's detrimental to the broader interests of the network. Dan Romero: Right now, we're focused on keeping governance simple, growing the total number of daily active users, and then launching really useful developments. We could spend a lot of time building complex and circuitous governance structures, but that doesn't help us achieve our goals.
Q: What is the most important concept during the transition from centralized exchange Coinbase to the determination to build a decentralized social network?
Dan Romero: Despite people's concerns about Twitter's development after Musk took over, Twitter's network effects are more sticky than I (initially) thought. We entered the market in 2021, and at that time we found that "people in the cryptocurrency field talked about decentralization and the need for other applications in the ecosystem." Then we naively thought, "Great, there will really be people who want to play new things." However, it turns out that (users) would rather continue to use existing products. We really want to provide people with truly useful products. This has profoundly changed our thinking over the past few years... Ultimately, the only way we win will not be because of architecture, but to a large extent, it should be to build products that people love.
Varun Srinivasan: Early on, we realized that we were spending the same amount of time onboarding users as we were onboarding developers. We quickly realized that building apps and social products is really, really hard. Just building Warpcast (the Farcaster client) took us about 20 people a year. It was unrealistic to expect other teams to show up on day one and decide to spend 100% of their time on Farcaster when there were no users. Farcaster is most useful when it becomes more valuable to developers over time by building clients, telling stories, and getting users on board. It’s not about, build me an SDK, build me a toolchain, or add a feature. It’s about, can you get 10 times as many people using this product? That’s the biggest shift in our mindset since the early days.
Q: What did you learn from your experience at Coinbase that you can use to guide Farcaster's development?
Dan Romero: Based on my experience at Coinbase, I firmly believe that the average person doesn't care about all the stuff you're building. They just want an app that works, and that starts with them logging in. In fact, it starts even before that, how do you position your product and explain it to them? We can do a better job of that. The problem with Farcaster and Warpcast right now is that people are confused. We're not even competing with fintech apps, we have to compete with the best social media apps in the world. So once a user is in the app, is it interesting enough to keep them coming back? A lot of crypto users love to compare crypto apps, and the reality is that if your app isn't that interesting, they'll go back to TikTok or YouTube.
Varun Srinivasan: Another thing I learned from Brian Armstrong was to always stay focused on building something people want, no matter what happens to primitives. He said things are never as good as they seem, and never as bad as they seem. One reason Coinbase has been successful is that it has always output and built, no matter the market was at its bottom or its peak. We have seen this strategy in action firsthand through multiple cycles in the crypto space, and we know that long-term focus is what really wins.
Q: The cryptocurrency social media ecosystem currently has participants such as Farcaster, Lens, Nostr and Friend.Tech. What do you think of the current landscape?
Dan Romero: The total number of cryptocurrency users is not important compared to centralized social media like Facebook, which has billions of users. We are talking about tens of thousands of users (total) across all decentralized social media, which may be the same group of people as the 100,000 users who use cryptocurrency every day. We are interested in how to grow the number of users of cryptocurrency applications from 100,000 to 1 billion step by step. I don't think there is any use in focusing on competitors. The key question is: what do people want? What do people find interesting? If you can make users find the content interesting and fun, so that they come to use it every day, then developers will follow. Nothing else matters.
Varun Srinivasan: These competitors are all taking slightly different paths, and our goal is very clear, which is to do business in the cryptocurrency space, allowing users to build their own communities and allowing developers to create applications for these users.