ABCDE has announced the cessation of new project investments and the suspension of fundraising for its second fund, triggering another round of "VC is dead" lamentation on Crypto Twitter. However, in the previous cycle, VCs shone brightly, relying on storytelling to inflate valuations, packaging each PowerPoint presentation as the future of the internet.

As the decentralized social media leader Farcaster, which has raised a total of $180 million in two bull markets, undoubtedly embodies the VC narrative. However, Farcaster's answer is gradually becoming clear—not betting on "decentralized imagination" anymore but on "assetization execution." Farcaster is not a failed product but rather another narrative collapse in the crypto world. VCs have realized they do not possess the ability to reshape the world; they were merely cashing out of a pre-funded valuation story.

From Farcaster to Warpcast and Back to Farcaster

Recently, Dan, the co-founder of the Farcaster protocol, announced that the team is considering renaming the current official client app, known as Warpcast, back to Farcaster and simultaneously adjusting its web domain to farcaster.xyz. This move aims to simplify the brand system and address the confusion between the protocol and the application for new users.

In 2021, Farcaster was launched as a desktop product, which later transformed into a mobile and web application in 2023 under the name Warpcast. Although the initial renaming was intended to make it easier for other developers to build their own clients based on the protocol if the client (Warpcast) and the protocol itself (Farcaster) had different names, this vision did not materialize as anticipated. According to feedback from the team, in reality, the vast majority of users still register accounts and access the protocol through Warpcast.

In May of last year, BlockBeats analyzed the Farcaster ecosystem, noting that the front-end application Warpcast held the core features of the Farcaster protocol, such as private messaging and channels. The ecosystem exhibited a significant Matthew effect, with unofficial clients struggling to survive in the margins and identifying pain points of Warpcast for feature development. Nevertheless, applications like Supercast and Tako adopted differentiation strategies to build their social platforms.

Related Reading: "No Opportunity on Farcaster anymore?"

Today, the Farcaster team officially announced the rebranding of the Warpcast frontend to Farcaster, somewhat betraying the frontend application developers who chose the Farcaster protocol.

In fact, this renaming operation is just a small reflection of Farcaster's transformation. Since last October, the Farcaster protocol has made adjustments in product updates, strategic positioning, personnel changes, and more.

One detail is that after this, developer meetings will no longer distinguish between "Farcaster topics" and "Warpcast updates" but will focus on specific overall issues such as Growth, Direct Cast, reducing registration costs, Hub stability, FIP governance, and identity systems.

However, in terms of user stickiness, Farcaster has so far failed to overcome the typical cold start platform problem. According to Dune data, since open registration in the second half of 2023, its DAU/MAU ratio has long hovered around 0.2, briefly reaching 0.4 in early 2024 due to DEGEN's popularity surge, then quickly falling back.

The DAU/MAU ratio refers to the ratio of daily active users to monthly active users, used to measure the number of days users interact with the application per month. A ratio approaching 1 indicates higher user activity, while a ratio below 0.2 suggests weak application virality and interactivity.

In contrast, early Web2 community products such as Reddit or Mastodon have maintained a stable DAU/MAU ratio in the range of 0.25 to 0.3. Even smaller-scale, more niche social apps like Discord servers often maintain an active ratio above 0.3. Farcaster's data shows that despite its high relevance in the Crypto community, user usage habits have not truly been established, with active users mainly concentrated among a few heavy creators and on-chain natives, without forming a sustainable content consumption and social loop.

Creating Content? Creating Assets? Farcaster Has No Answer

In the initial product logic, Farcaster attempted to build a decentralized social graph through content tools, where the once promising Channel (similar to topic groups) was the core unit carrying communities and traffic in this graph. However, the incentive effect of assets far surpassed the self-organizing ability of content, leading to a shift in product logic.

Abandoned Channel

In February 2024, the social token $DEGEN rose to fame in the Warpcast channel named Degen, becoming a key driver of Farcaster's mainstream adoption. At that time, Farcaster had only opened network registration four months prior, with daily active users surpassing 30,000. With the $DEGEN token fermenting and other similarly popular channel tokens like Higher emerging, Farcaster's daily active users peaked at 70,000.

The Farcaster team realized that channels were a vehicle to bring people, attention, and liquidity together. Farcaster's founder, Dan, saw this as a key difference from centralized social media platforms like Twitter, allowing small communities to exist within a broader social graph. Although just a feature of Warpcast, the plan was for full decentralization, where channels could enhance user engagement and create a more intimate social experience by fostering these small, focused communities.

Thus, the team established the core development focus of channels, creating various concepts around it, including channel host rights, channel ownership, and even projects and clients centered around channels. Dan even urged users not to squat on channel names to later sell them to brands, referencing a past incident involving the podcast show Bankless and a user squabble over channel names.

However, this approach did not last long. In July 2024, Farcaster Protocol's network scalability bottleneck became apparent. During a developer conference, the team announced a pause in the decentralization of channels to rethink the implementation path.

When responding to users asking why they couldn't speak in certain topic channels, Dan stated that channels would not bring any additional distribution bonuses. Although there had been attempts in the past, the results were unsatisfactory. He said, "Channels are suitable for community operation but not for discussing a specific topic. We won't recommend them to new users." Historical data showed that channels had a limited impact on user growth, and due to limited resources, the Farcaster team had no immediate plans to add new features to channels.

On the product priority list, Mini App and Wallet took precedence, shifting Farcaster from a content- and social graph-centric social protocol to a transaction-focused protocol, as the latter could attract more native users in the crypto space.

Built-in Wallet Exacerbates Monopoly

In a podcast, Farcaster co-founder Dan shared his latest understanding of the "User" concept: users who only register an account and engage lightly, although superficially increasing activity levels, the true value to the network comes from wallet users who hold cryptocurrency assets and are willing to engage on-chain. This refined user cognition directly influenced the team's product strategy on the wallet system.

By the end of November 2024, Farcaster began exploring the integration of a tradable wallet within the application to facilitate on-chain transactions. The goal is to increase on-chain interaction frequency to enhance ecosystem stickiness and monetization potential. In fact, each Warpcast user already has a "Farcaster Wallet" created by default at registration, which binds user identity for logging into Warpcast and Frames, but since it is only stored locally on the phone, its functionality leans towards authentication and signature rather than fund movement.

In contrast, the newly launched "Warpcast Wallet" is a wallet that can send and receive assets, which users can generate at registration and use for token deposits, exchanges, transfers, and on-chain interaction.

The timing of integrating the tradable wallet by Farcaster is hard not to associate with the emergence of Clanker.

Clanker is an AI Token Issuer on Warpcast, where users can post and tag Clanker to release tradable tokens on Uniswap. Its official token $CLANKER surged 20x in November last year, making Base and Warpcast competitive with Solana in the AI concept space. Also, due to the wealth effect of $CLANKER, Farcaster's daily active users reached a new high since last summer.

Unlike the fate of $DEGEN, as another breakout target from Warpcast, $CLANKER received attention and support from the team and the core community from the beginning. However, in this process, the Agent, DEX, consumer wallet, etc., all benefited from this asset issuance frenzy, but Warpcast did not receive any economic return.

Clanker's success made the team realize that if more on-chain interactions are to occur within the Farcaster ecosystem, relying solely on open protocols and third-party integrations is not enough; they must have a native tradable wallet system, thus giving rise to the Warpcast Wallet.

From a product design perspective, the role played by the Warpcast Wallet is to act as a bridge between user social interactions and on-chain activities—users can complete transactions, tip, or claim airdrops by simply clicking on Frame without needing to switch interfaces or connect an external wallet. This "social meets financial" product logic makes Farcaster more like a "Singapore" of the crypto world—having a small user base but high wallet activity and per capita funds.

According to the official documentation, users are required to pay a 0.85% fee when using the Warpcast Wallet, with 0.15% going to the 0x Protocol providing transaction routing, and the remaining 0.70% going directly to Warpcast's revenue. Data from Dune shows that since its launch, the revenue curve of the Farcaster protocol has been steadily rising, providing initial validation of the feasibility of the embedded wallet as a monetization path.

However, it is worth noting that the Warpcast embedded wallet is not written into the protocol layer. Additionally, with the intention of renaming the Warpcast client to Farcaster, BlockBeats has learned that some Farcaster developers believe the protocol is becoming increasingly centralized and monopolistic.

The Greatest Innovation is Just a "WeChat Mini Program"

With the introduction of the embedded wallet, Farcaster has made further progress towards becoming an asset-oriented social application. The official statement mentioned that one of the purposes of launching the wallet was to attract developers to build applications based on the Frame framework and thereby drive the integration of transaction activities and content distribution.

Frame was first introduced in early 2024 as a lightweight application standard running on top of the Farcaster protocol, allowing developers to embed small programs into social clients. When a user clicks on Frame, developers can identify their wallet address and push content to them or trigger interactive operations. However, as the overall popularity of Farcaster has declined, the use of Frame has also shown a clear downward trend.

To address this situation, Farcaster launched Frame v2 at the end of 2024. The new version supports the development of applications with HTML, CSS, and JavaScript that provide a near-native experience. Developers can deploy products quickly using the Mini App SDK without having to go through the app store approval process. Frame v2 not only enhances interaction complexity but also deeply integrates with the embedded wallet, further strengthening transactional attributes, making the overall experience more akin to a WeChat Mini Program.

In March 2025, Linda Xie, co-founder of Scalar Capital and Bountycaster, joined the Farcaster team to lead developer relations, with a focus on advancing the development and promotion of Frame. Simultaneously, Farcaster launched the "Airdrop Plan," encouraging developers to build applications using Frame v2 and reach users through asset airdrops. While not an official token airdrop, this mechanism effectively drove user growth. In mid-March, Farcaster's daily active users briefly exceeded 40,000, reaching a milestone.

In early April 2025, Farcaster officially renamed Frame to Mini App and positioned it alongside the Wallet in the bottom navigation bar of the Warpcast client.

Currently, a set of lightweight applications supporting on-chain interactions have been integrated into Warpcast, with Mini App now a key part of the ecosystem. However, from user growth data, it is evident that Mini App's user acquisition capabilities have not been significantly leveraged, and its long-term impact is still under observation.

The Disappearance of "Web3" and the Decline of Silicon Valley Titans

In fact, Farcaster's transformation is not unique; it simply was the first to expose the structural dilemma of the entire Web3 social track—a scenario where open protocols struggle to achieve user scale, content distribution fails to drive engagement, and ultimately, platforms revert to the asset-driven reality.

Do We Really Need a "Decentralized Social Platform"?

From $DEGEN to $CLANKER, almost every time Farcaster gained traction, it was closely tied to assets. What truly propelled the surge in daily active users was not the protocol's evolution or the client's innovation but rather repeated wealth effects driven by tokens. This recurring pattern reveals a core fact: Farcaster is not "unused" but rather "only used when there is a profit to be made." These platforms indeed fulfill a certain market demand, but their role is not that of a social network but rather an asset distributor.

This is not by chance but rather the inevitable outcome of the long-standing misalignment between crypto narratives and real-world usage.

In 2020, BlockBeats wrote in an article titled "The World Hates Current Social Media" that decentralization and protocolization may be the only way for social products to break free from the "platform dilemma." In the face of increasing content censorship and platform monopolies, open protocols carry people's hopes for a "new social order."

Back then, Twitter was seen as a typical failure of protocol: it briefly opened its API, encouraged developers to build an ecosystem, but eventually returned to the old path of being an advertising platform with data monopolies. The original ambition of Farcaster was to "not become the second Twitter," claiming to be centered around an open protocol to connect developers, users, and assets, realizing a co-constructed, mutually beneficial decentralized social network.

However, three years later, Farcaster's replication was not of Twitter's initial protocol ideal but rather its later platform logic. Dan, who once urged everyone to "build their own client based on the protocol," now personally announced that the client is also called Farcaster, intertwining "protocol" and "product" significantly.

This shift in product, looking for Product/Market Fit (PMF), is rational at the surface, even a realistic compromise, but it also indicates that the so-called "open ecosystem" in the implementation process has quietly been misappropriated as a narrative tool for user growth. The developers' role is not truly supported but used to tell a story. Like when Twitter closed its API years ago, the developer ecosystem is only temporary fuel for driving the platform into a closed loop.

Over three years, Farcaster has proven one thing: In the Crypto context, a social protocol cannot fundamentally form the ecosystem we expected in 2020. Not because no one developed clients, but because no one used them. Not because it was not decentralized enough, but because decentralization was not a concern for users at all.

Today, SocialFi, like GameFi, has to some extent been labeled on the death track. Not long ago, a certain Key Opinion Leader (KOL) criticized the founder of a decentralized social application, saying, "After so long doing traffic, your fans are not as high as an ordinary individual KOL like me. What skills do you have? What have you done with your 2M funding? It's not as profitable as my SOL wallet." While it is a wry smile, it also can't help but reflect that the era of infrastructure built on narratives has ended, and the valuation systems of all VC projects are being reconstructed.

Crypto is Not the "Next Internet"

However, a16z is the biggest advocate of this narrative. Having invested early in Twitter, Facebook, and other social media, when the investment behemoth encounters decentralized social products, it naturally cannot ignore their presence. As a Google executive once said, "They're like a lunatic, aggressively intervening in every transaction."

The full name of a16z is Andreessen Horowitz, derived from the surnames of the two founders, Marc Andreessen and Ben Horowitz, established in 2009. As a famous software catcher, nearly all of the most prominent companies in the Internet field have been hit: Facebook, Twitter, Airbnb, Okta, Github, Stripe, etc. Their investment strategy combines early sensitivity and growth-stage decisiveness, being able to invest in Instagram in the seed round, enter Github in the Series A competition, and lead the Series G investment in Roblox with $150 million.

Its keen foresight and aggressive investment style are exemplified in its layout in the crypto field. When Coinbase, invested in 2013, went public, its market value soared to as high as $85.8 billion, making it one of the largest tech IPOs in history. After cashing out $4.4 billion, a16z still holds 7% of the company's shares. Well-known crypto projects such as OpenSea, Uniswap, and dYdX are also representative works of a16z.

The crypto bull market since 2021 has caused the paper value of major venture capital portfolios to skyrocket, with fund returns reaching 20 times or even 100 times, making cryptocurrency venture capital suddenly look like a money-printing machine. Limited partners (LPs) are flocking in, eager to catch the next big wave. The new funds raised by venture capital firms are 10 to 100 times larger than before, firmly believing that they can replicate those excess returns.

Farcaster is undoubtedly the product of the peak of this liquidity craze. In July 2022, Farcaster announced the completion of a $30 million financing round led by a16z. Two years later, Farcaster raised $150 million at a valuation of $1 billion, with Paradigm leading the round and notable VCs such as a16z crypto, Haun, USV, Variant, and Standard Crypto participating. With a valuation of $1 billion, it became the largest funding in the Web3 social track's history. At that time, a comment in Fortune magazine pointed out that this valuation was more of a result of internal fund game-playing rather than a true reflection of market demand.

Cryptocurrency investor Liron Shapira said, "If venture capital still has LP capital available, choosing to invest $150 million instead of returning it can earn an additional $20-30 million in management fees." This is not a market recognition of Web3 social, but a self-contained loop of capital operation. An article in Fortune magazine also stated that a source who requested anonymity due to business constraints expects Farcaster, like most protocols, to launch a token, and investors will be eager to capture its fully diluted value.

a16z partners have proposed that "technological waves often appear in combination," endorsing the intersection of Web3, AI, and hardware. However, they avoid a fundamental fact: every leap of the mobile Internet, whether it be smartphones or search engines, has been built on real user pain points and technological breakthroughs, not on a structural bubble under a capital narrative.

"Technology eats the world" was once a radical and precise judgment, but its applicable premise is that technology has a crushing advantage at the foundational level. The reason AI has erupted is that it challenges individual intelligence—a structurally irrepressible power differential; whereas blockchain challenges "sovereign currency," which is a credit system unchanged for two thousand years. It will not explosively disrupt societal structures like the Internet or AI; it will slowly evolve over long periods, be absorbed and co-opted by vested interest systems, and eventually become part of the existing order.

Therefore, in reality, the truly accepted and value-creating cryptocurrency systems are almost without exception "mechanism-driven + liquidity-first." From Uniswap to Lido, from GMX to friend.tech, they rely on capital attraction rather than idealism. The VC model of "investors driving world change" does not apply in this world.

Crypto has never lacked social tools. The so-called protocol ideal is just this industry's illusionary projection onto the internet platform era, attempting to replace business models with consensus mechanisms, but ultimately only deferring structural issues to the asset monetization stage.

The biggest crisis in the current crypto industry is not regulation, not technology, but strategic confusion and a vacuum of demand. Apart from "casino logic" and cross-border payments, almost no area demonstrates a sustained ability to create user value. The failure of VCs is fundamentally a loss of direction in the absence of value: if this industry itself lacks real value, then the discussion of value discovery is futile from the start.

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