Author: Albiverse Source: mirror Translation: Shan Opa, Jinse Finance
In this article, I aim to shed light on the events leading up to Farcaster's recent developments, emphasizing the interplay between:
Memecoin speculation - represents financial capital
Product innovation – means productive capital
The dance between money and product innovation in tech
As economist Carlota Perez points out in her book on the subject, the dance between productive and financial capital is at the heart of “technological revolutions.” As new technologies emerge, entrepreneurs envision new possibilities and are supported by investors who provide the necessary resources to realize these visions.
A recurring pattern emerged: Bubbles occur when financial capital overshadows productive capital, thereby inflating the value of underdeveloped productive assets. This is especially true when retail investors join en masse in excitement about new technologies and speculative financial activity.
However, actual product innovation is inherently slower. That is, building tangible technology cannot keep up with the speed of speculation or imagination of what the technology might achieve.
Consider the dot-com bubble, using the Nasdaq as an example. It demonstrates the decoupling of financial capital and productive capital, and it took Nasdaq 20 years to reach the heights it reached in the late 1990s.
This was the Dow Jones crash of the 1930s. It took the market 25 years to recover.
Farcaster’s Mini Technology Revolution
This bubble phenomenon also occurs in cryptocurrencies at any scale and at any time, multiple times a week or even a few days. Each cycle provides funding for infrastructure and product experimentation, although bubble dynamics may wane over time as markets mature and investors later recognize their investments in these technologies and products during the deployment phase of true value.
Recently, Farcaster's growth has been driven by a number of factors:
Product Innovation: The launch of Frame applets opens up new avenues for developers and entrepreneurs.
Financial assets used for speculation: including $DEGEN, $FRAMES, Frame NFT and Farcats. Allows the Farcaster community to “tweak the bank” as the network evolves
After a period of growth and exploration of Frame's technical capabilities, excitement is recalibrating to the realities of Farcaster's development status, despite significant progress.
Surprisingly, the $DEGEN memecoin chart now closely resembles a typical cryptocurrency bubble chart.
A series of events that led to the growth of FC
It's wrong to suggest that Farcaster's daily active user (DAU) growth is entirely attributable to product innovation or speculation. In fact, these two factors are closely linked. A timeline of key events shows how Farcaster's growth was driven:
The Farcaster team spent more than 3 years developing the protocol, network and Warpcast client, and gradually established a community.
In the summer of 2023, Warpcast launched "Channels," similar to Reddit sub-features.
By October 2023, Warpcast launched an off-chain points system and an in-game currency called Warps, making it non-transferable and intentionally preventing speculation.
But soon, as meme coins became increasingly popular in the Solana ecosystem, the Farcaster community began to express interest in creating their own meme coins.
The launch of the Rainbow Wallet off-chain points system prompted the Farcaster community to launch $points. In just 24 hours, $points’ price action resulted in re-engagement from leading crypto Twitter (CT) personalities and influencers on Farcaster.
Several other memecoins followed, including $WOWOW, $SPAM, and others.
Among various memecoins, $DEGEN stands out as the top memecoin on Farcaster with its stronger design and team.
On the product side, the Mod team's embedded mini-app demo inspired the Farcaster team to develop the Frames feature, turning Warpcast into a platform and a potential super-app where users can interact with third-party apps directly within the Warpcast feed and settings The stage of explosive growth.
The price of $DEGEN rises simultaneously as speculators view it as the top token on Farcaster (Warps are off-chain, centralized and non-tradable).
The price increase has attracted more influencers, developers, and users to try out this exciting new Frames feature, participate in the excitement of FC, and bet on $DEGEN, $FRAME, and other speculative assets issued by Frames.
As Jacob points out, memecoins are like beacons amidst crypto noise, drawing attention to themselves through their price charts and sparking conversations around projects. Influencers and enthusiasts from crypto Twitter (CT) and the tech community quickly joined the platform, eager to be part of the trend.
Finally, according to Spindl’s Frame analysis, about half of the Frames retweeted and liked so far are related to meme coins and airdrops. The other half is created by a range of projects such as Layer3, Seam, Coinbase, PartyDAO, Perl, Base, Syndicate, and individual developers.
Financial speculation is a key component of cryptocurrency growth, and this is nothing new. I feel like the relationship between Deggans and the builder is worth highlighting given the discussion I've seen about Farcaster's recent growth, and I've enjoyed applying Carlota Perez's research to the crypto space, especially since I first wrote Since my master's thesis on this topic.
