ABCDE announces the suspension of new project investments and the halt of its second-round fund-raising, triggering another round of "VC is dead" lamentations on Crypto Twitter. However, in the previous cycle, VCs were in their prime, creating narratives to boost valuations and packaging PPTs as the future of the internet.

As the decentralized social media frontrunner Farcaster, which has raised a total of $180 million across two bull markets, is undoubtedly the best representative of VC narratives, its answer is gradually becoming clear - no longer betting on the "imagination of decentralization," but on the "execution power of asset-ization." Farcaster is not a failed product, but another narrative collapse in the crypto world, where VCs realize they do not have the ability to reconstruct the world, but are merely cashing out of a story of pre-emptive valuation.

From Farcaster to Warpcast, and Back to Farcaster

Recently, Farcaster protocol co-founder Dan announced that the team is considering renaming the current official client application, Warpcast, back to Farcaster, and simultaneously adjusting its web domain to farcaster.xyz, aiming to simplify the brand system and resolve user confusion between the protocol and the application.

In 2021, Farcaster was launched as a desktop product, and in 2023, it transformed into a mobile and web application and was renamed Warpcast. Although the initial renaming was based on the belief that having different names for the client (Warpcast) and the protocol (Farcaster) would make it easier for other developers to build their own clients based on the protocol and drive protocol user growth, this idea ultimately did not materialize. According to team feedback, in reality, the vast majority of users still register accounts and access the protocol through Warpcast.

In May last year, BlockBeats published an analysis of the Farcaster ecosystem, where the frontend application Warpcast controlled the core functions of the Farcaster protocol, such as private messages and Channels, with a very obvious Matthew effect. Non-official clients could only survive in the margins and develop features by finding Warpcast's pain points. Despite this, applications like Supercast and Tako adopted differentiated strategies to develop their social platforms.

Related reading: 《No Chance on Farcaster?》

Now, the Farcaster team has officially announced renaming the frontend Warpcast to Farcaster, which undoubtedly backstabs those frontend developers who chose the Farcaster protocol.

In fact, this renaming is just a microcosm of Farcaster's transformation. Since October last year, the Farcaster protocol has made adjustments in product updates, strategic layout, and personnel changes.

One detail is that in subsequent developer meetings, discussions no longer distinguish between "Farcaster topics" and "Warpcast updates," but instead 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 yet to overcome the typical cold start platform dilemma. According to Dune data, since opening registration in the second half of 2023, its DAU/MAU ratio has long hovered around 0.2, only briefly reaching 0.4 in early 2024 due to the DEGEN outbreak, before quickly falling back.

The DAU/MAU ratio indicates the number of days users interact with the application each month, with a value closer to 1 indicating higher user activity. When the ratio is below 0.2, the app's spread and interactivity will be very weak.

In comparison, early Web2 community products like Reddit or Mastodon maintained a stable DAU/MAU ratio between 0.25 and 0.3. Even smaller, more vertical social applications like Discord small servers often maintain an activity ratio above 0.3. Farcaster's data suggests that despite maintaining a high topic volume in the Crypto community, user 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 closed loop.

Content or Assets? Farcaster Has No Answer

In its initial product logic, Farcaster tried to build a decentralized social graph through content tools. Channels (similar to topic groups), once highly anticipated, were the core unit carrying communities and traffic in this graph. However, the incentive effect of assets quickly overwhelmed the self-organizing ability of content, and the product logic subsequently shifted.

Abandoned Channels

In February 2024, the social token $DEGEN became popular in the Degen channel on Warpcast, becoming the main driving force for Farcaster's breakthrough. At that time, Farcaster had just opened network registration for four months, with daily active users breaking 30,000. As the $DEGEN token developed and popular channel tokens like Higher emerged, Farcaster's daily active users reached a peak of 70,000.

The Farcaster team realized that channels are a carrier that can gather people, attention, and liquidity. Farcaster founder Dan believed this was a key difference from centralized social media like Twitter, allowing small communities to emerge within a larger social graph. Although it was just a feature of Warpcast, the plan was to fully decentralize and enhance user engagement by cultivating these small, concentrated communities, creating a more intimate social experience.

The team thus established channels as a core development focus, creating many concepts around them, including various rights for channel owners, channel ownership, and even derivative projects and clients centered on channel operations. Dan even called on users not to rush to register channel names to allow future sales to brands, referencing a previous incident where the Bankless podcast podcast clashed with users over a channel name.

However, this approach did not last long. In July 2024, network expansion bottlenecks of the Farcaster protocol emerged, and in a developer meeting, the team stated they would pause the decentralization of channels and rethink the implementation path.

In response to a user asking why they couldn't speak in certain topic channels, Dan stated that channels would not bring any additional distribution boost, that there had been attempts before but the effect was poor. He said, "Channels are suitable for community operations, but not for discussing a topic, and we will not recommend them to new users." Historical data shows that channels have limited impact on user growth, and given limited resources, the Farcaster team has no plans to add new features to channels in the short term.

Taking its place in product priorities are Mini Apps and Wallet, transforming Farcaster from a social protocol leaning towards content and social graphs to one focused on transactions, as the latter can attract more native users in Crypto.

Built-in Wallet Exacerbates Monopoly

In a podcast, Farcaster co-founder Dan shared his latest understanding of the concept of "users": users who simply register and engage in light interaction may increase surface-level activity, but the users who truly bring value to the network are wallet users who hold crypto assets and are willing to interact on-chain. This refined user perception directly influenced the team's product strategy for the wallet system.

In late November 2024, Farcaster began exploring the integration of a tradable wallet within the app to promote on-chain transactions. The goal is to enhance ecosystem stickiness and monetization potential by increasing on-chain interaction frequency. In fact, each Warpcast user already creates a "Farcaster Wallet" by default upon registration, which binds user identity and is used for logging into Warpcast and Frames, but since it's only stored locally on the phone, its functionality is still more oriented towards authentication and signing rather than fund movement.

In contrast, the newly launched "Warpcast Wallet" is a wallet for sending and receiving assets. Users can automatically generate it upon registration and use it for token deposits, exchanges, transfers, and on-chain interactions.

The timing of Farcaster's introduction of a tradable built-in wallet is hard not to associate with the emergence of Clanker.

Clanker is a token-issuing AI Agent on Warpcast where users can post and tag Clanker to publish a tradable token on Uniswap. Its official token $CLANKER surged 20-fold in November last year, making Base and Warpcast competitors to Solana in the AI concept track. Due to the wealth-creating effect of $CLANKER, Farcaster's daily active users broke through a new high since last summer.

Unlike $DEGEN, $CLANKER, another breakout token from Warpcast, has received attention and support from the team and core circle from the beginning. However, in this process, Agents, DEXs, and consumer-side wallets have all benefited from this asset issuance frenzy, while Warpcast has not gained any economic returns.

Clanker's success made the team realize that to encourage more on-chain interactions within the Farcaster ecosystem, open protocols and third-party integrations are not enough. They must control a native tradable wallet system, thus giving birth to the Warpcast Wallet.

From a product design perspective, Warpcast Wallet serves as a bridge connecting user social interactions and on-chain behaviors - users can complete transactions, tips, or claim airdrops by clicking on a Frame without switching or connecting external wallets. This "social equals finance" product logic makes Farcaster more like a "Singapore" in the crypto world - with a small user base, but high wallet activity and per-capita fund volume.

According to official documents, users pay a 0.85% fee when using Warpcast Wallet, with 0.15% going to the 0x protocol providing transaction routing, and 0.70% directly credited to Warpcast's revenue. Dune data shows that since its launch, Farcaster protocol's revenue curve has continued to grow, initially validating the feasibility of an embedded wallet as a monetization path.

However, it's worth noting that Warpcast's built-in wallet is not written into the protocol layer. Additionally, with plans to rename the Warpcast client to Farcaster, BlockBeats learned that some Farcaster developers believe the protocol is becoming increasingly centralized and monopolistic.

Its keen foresight and radical, bold investment style are particularly evident in its layout in the crypto field. Coinbase, invested in 2013, had a peak market value of $85.8 billion at its listing, making it one of the largest listed companies in tech history. After cashing out $4.4 billion, a16z still holds 7% of the company's shares. Well-known crypto projects like OpenSea, Uniswap, and dYdX are also a16z's representative works.

The crypto bull market since 2021 has caused venture capital portfolios to skyrocket in book value, with fund returns reaching 20 to 100 times, making crypto venture capital suddenly look like a money printing machine. LPs rushed in, eager to catch the next wave. Venture capital firms raised new funds 10 to 100 times larger than before, firmly believing they could replicate those excess returns.

Farcaster is undoubtedly a product of the peak of this liquidity wave. In July 2022, Farcaster announced a $30 million financing round led by a16z. Two years later, Farcaster completed a $150 million financing at a $1 billion valuation, led by Paradigm, with a16z crypto, Haun, USV, Variant, Standard Crypto, and other major VCs participating. With a valuation of $1 billion, it became the largest financing in the Web3 social track. At the time, Fortune magazine commented that this valuation was more a result of internal fund maneuvering than a true reflection of market demand.

As crypto investor Liron Shapira said: "If VCs still have LP capital available, by choosing to invest $150 million instead of returning it, they can collect an additional $20-30 million in management fees." This is not a market endorsement of Web3 social, but a self-contained capital operation loop. The Fortune magazine article also quoted an anonymous source, constrained by business agreements, who predicted that like most protocols, Farcaster will likely launch a token, with investors eager to capture its fully diluted value.

a16z partners once proposed that "technological waves often appear in combinations," using this to endorse the intersection of Web3, AI, and hardware. But they avoided a basic fact: each leap in mobile internet, whether smartphones or search engines, was built on real user pain points and technological breakthroughs, not structural bubbles under a capital narrative.

"Technology eating the world" was once a radical and precise judgment, but its premise is that technology has overwhelming advantages at the foundational level. AI exploded because it challenges individual intelligence—an insurmountable structural capability gap. Blockchain challenges "sovereign currency," a credit system unchanged for two thousand years. It won't explosively overturn social structures like the internet or AI, but will slowly evolve over long cycles, being absorbed and co-opted by existing interest systems, ultimately rewritten as part of the original order.

Therefore, the reality is that crypto systems truly accepted and creating value by users are almost without exception "mechanism-driven and liquidity-first." From Uniswap to Lido, from GMX to friend.tech, they rely on capital gravity, not 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 ideals are just this industry's illusory projection of the internet platform era, attempting to replace business models with consensus mechanisms, but ultimately only postponing structural issues to the asset monetization stage.

The biggest crisis in the crypto industry now is not regulation or technology, but strategic confusion and demand vacuum. Aside from "casino logic" and cross-border payments, almost no field has shown the ability to continuously create user value. The VC failure is essentially a directional aphasia in the absence of value: if the industry itself lacks real value, value discovery was impossible from the start.

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