Core ideas: Farcaster is a decentralized social media protocol that provides an open and composable social layer for developers, creators and ordinary users.

For users, it focuses on privacy protection and independent control. For protocols, it focuses on open source and does not require permission. For products, it advocates “mini program” interactivity, with direct access to diverse services and applications in social media posts through Frames.

1. Decentralized architecture: does not rely on a central server and runs on the blockchain.
2. User control: Users have complete control over their data and social graph, and they still retain their identity even if applications are restricted.
3. Open source and permissionless: Anyone can plug into Farcaster’s APIs or applications to build new applications.
4. Composable: Provides a platform-level social layer that can be combined between applications and supports unified social identity access.
5. Hybrid architecture: Combining on-chain and off-chain systems improves the efficiency and response speed of the system.
6. Frames feature: allows users to embed small applications in posts to enhance interactivity and user experience.

Research Report

1/8 · Case Analysis

Currently, SocialFi has two main directions:

• Financialization - Friend tech
• Original Layer Transformation - Farcaster

Farcaster is essentially a transformation of the original layer and is closer to the concept of Fundamentally, Farcaster belongs to the transformation of the original layer, which is closer to the concept of “Layer,” making it possible to build financialized services based on “Layer” and derive more extensive application scenarios.

Farcaster achieves this through a hybrid architecture of on-chain and off-chain, where user identities and keys are handled on-chain, while content storage, validation, and propagation are handled off-chain. For example, Alice can create a message “Hello Bob” and sign it with her key. The message is stored on a server node called “Hub,” with each Hub storing a copy of the entire network, forming a new social consensus layer where users can publish a message to one Hub, and it will propagate to the entire network within seconds.

1. On-chain part

Farcaster’s on-chain elements mainly include smart contracts, which run on Ethereum’s Layer 2 (Optimism). These contracts handle some core functions, including:

• ID registration: Generate a key pair associated with their Ethereum address for new users to ensure the uniqueness and security of their identity.
• Storage registration: Manage the allocation of user data storage space and annual fee collection to ensure reliable storage of data.
• Key Registration: Manages users’ public and private keys, allowing users to authorize and revoke control of accounts for secure message signing and authentication.

Regarding storage registration, it’s akin to buying space to post. Farcaster accounts must pay rent to keep their messages on the Farcaster network. Rent collection aims to prevent users from sending spam messages to the network. In other words, the threshold for using Farcaster is an annual payment of $5-7, which might not be very user-friendly for ordinary users in the early stages, but it’s also a way to maintain efficiency and performance when the network isn’t robust enough.

1. Off-chain part

Farcaster’s off-chain elements include a set of servers called Hubs, which run on traditional hardware and are responsible for processing data operations that do not require on-chain confirmation to speed up response times and reduce transaction costs. Specific functions include:

• Message processing: Hubs receive, validate, and store Casts (user-posted content). They check if each message’s signature is valid and complies with the user’s on-chain registered identity information.
• Data synchronization and propagation: Once messages are validated, Hubs store them locally and synchronize with other Hubs in the network to ensure data consistency and reliability.
• Performance optimization: By handling a significant amount of data interaction off-chain, Hubs can significantly reduce the demand for on-chain transactions, thereby reducing latency and costs. This is particularly important for social network platforms as they need to handle a large volume of real-time interactions.

2/8 · Social optimization

The social relationships and interactions of users on Farcaster have been optimized through this hybrid architecture in several ways:

1. Autonomous identity and key management: On Farcaster, users create a unified identity on-chain (via ID registration contract), which is associated with their Ethereum address and generated key pair. Through key management, users can securely manage access and authorization to their accounts, independent of any third-party services, ensuring that only the user themselves can control the use of their identity. Therefore, situations like having your username revoked by the platform’s administrators, as seen in traditional social media, will never occur.
2. On-chain and off-chain data isolation: By handling core security functions (such as identity verification and authorization) on-chain and processing non-sensitive social interaction data (such as message delivery and social graph construction) off-chain, Farcaster can provide a fast application experience while maintaining user privacy.
3. Decentralized storage: Data storage in Farcaster is decentralized, meaning data is not stored on a single server but protected through a distributed network. This enhances data censorship resistance and resilience against attacks, establishing a new social consensus layer. As this consensus strengthens, storage becomes more decentralized, providing better underlying support for Farcaster as a whole. This is similar to how Chainlink builds a distributed oracle network, where the maturity of its nodes enhances the security and stability of the entire oracle.
4. Autonomous control over data access and sharing: Farcaster enables precise control over data access permissions through smart contracts. Users can determine who can see their social activities and personal data, with these settings embedded directly on-chain and enforced by smart contracts. This allows users to have complete control over the level of information sharing, with different applications accessing the user’s social graph data based on user authorization.
5. Cross-application interoperability and composability: With Farcaster providing APIs and developer tools, third-party developers can create applications compatible with Farcaster identities. Users can interact with different social media applications using the same identity. This level of embedded interactivity is akin to the mini-program ecosystem seen in WeChat, where using a unified identity across different applications is facilitated. Farcaster’s permissionless entry approach will further enrich the “mini-program” ecosystem.

As of recent (May 2024), Farcaster has reached a new high in daily active users.

3/8 · Frames

Frames are essentially small applications embedded within Farcaster posts. They allow posts to become more than just displays of static content, and instead become interactive platforms. Users can access various features and services directly within social media interactions without leaving the Farcaster platform.

For example:

• NFT interaction: Users can mint, display or trade non-fungible tokens (NFT) through Frames. For example, an artist could display an NFT of their artwork directly in a post and provide the option to buy or bid on it.
• Game: Developers can embed simple games directly into posts, and users can play the game while browsing social media.
• Content subscription: Allows users to subscribe to newsletters or other media content. Content creators can provide dedicated subscribe buttons through Frames.

4/8 · Asset issuance

From a certain perspective, a new asset issuance method born on Farcaster breaks through the traditional concept of SocialFi. The Fi in SocialFi usually designs an economic model for the social project itself to encourage the participation of creators and users. Taking Friend tech as an example, it creates revenue for creators by tokenizing themselves + tokenizing content.

Farcaster’s “Layer” attribute not only completes the underlying transformation of Social, but also provides a new asset issuance method, completely changing the attribute of “Fi” in the traditional SocialFi concept. It does not design complex financial solutions for itself, but provides this openness to the community and developers, becoming the launchpad of community tokens, community culture, and community ecology.

At the same time, although Farcaster’s user threshold is not conducive to user expansion, it has achieved a very high user purity. More than 90% of daily activity comes from native Crypto users.

In the end, Farcaster has provided a favourable environment for asset issuance, relying on the maintenance of its own highly engaged user base, which has laid a solid foundation for the project’s subsequent operations, promotion, and community building.

5/8 · Ecological Economy - $THE DOUGH Token

$THE DOUGH It is a very special token in the Farcaster ecosystem. It is not officially issued, but a community-driven memecoin. It has now become the first token in the Farcaster community and is building peripheral applications and ecology around DEGEN.

• Share and reward: DEGEN can be used to reward content creators in the community, promoting content sharing and community participation.
• Minting NFTs: On platforms such as Zora and Highlight, users can use DEGEN to mint NFTs, thereby increasing their liquidity in the art and collectibles markets.
• Trade: DEGEN is used for various apps and in-game transactions, such as Drakula and Bracket game.
• Community Building: DEGEN is also used to support and fund community projects, such as the development and operation of Degen L3.

Drakula: an onchain short video application similar to TikTok. Users can use DEGEN to reward and interact with content.

Clubcast: An onchain platform similar to Patreon that allows content creators to provide exclusive content through token-gated channels.

ConsenSys: When ConsenSys faced a warning from the SEC, its founder Joseph Lubin solicited DEGEN in Farcaster and stated that any DEGEN tips received would be used to defend the Ethereum ecosystem. A large number of members of the crypto community participated in the tipping to express their support.

6/8 · Ecological Economy - Warps Points

Within the Farcaster ecosystem, Warps Points are an important component designed to incentivize and reward users for social interaction and engagement. As an internal points system, Warps points not only increase the interactivity of the platform but also provide an incentive mechanism to encourage users to actively participate in community activities.

1. How to obtain points

• Active Engagement: Users’ active interactions on Farcaster, such as posting content, commenting, sharing, etc., can earn them Warps points. This design encourages users to use the platform more frequently and share valuable content.
• Task Completion: Farcaster may set specific social tasks or challenges, and users who complete these tasks can earn Warps points.
• Community Contribution: Users who contribute to the community, such as content creators or technical supporters, can earn Warps points through community recognition or direct rewards.

1. How to use points

• Pay a fee: Users can use Warps Points to perform specific activities on Farcaster, such as participating in certain social events or purchasing social features.
• Start new channels: Users can use points to create new social channels, which may be organized around specific topics or interests.
• Gift Points: Users can gift points to other users as rewards for their content or interactions.

1. Points management and issuance

The Warps points system is centrally managed by the Farcaster team, which means that the issuance, distribution and rules of points are set and controlled by the platform administrators. Therefore, Warps are not equivalent to tokens, but are functional points within the Farcaster ecosystem.

7/8 · Open and composable

Farcaster is essentially a large-scale ecosystem database that operates both on-chain and off-chain. Based on this “data,” any form of frontend can be constructed to provide users with different user experiences. This has several benefits:

• Decentralization: Even if one frontend is restricted, it does not affect users’ access to other frontends.
• Ecological Diversity: Developers can focus on developing frontends for users in specific areas, such as article content platforms, live streaming platforms, social networking platforms, etc. The combinability between applications also provides limitless possibilities for the ceiling of Farcaster’s ecosystem.

Currently, Warpcast is the most popular and widely used frontend, offering a user experience similar to Twitter. However, other frontends are also becoming increasingly popular, such as

• Bountycaster: Serves as a job board where users can post or complete tasks in exchange for bounties or monetary rewards.
• Unlonely: Focus on live broadcasting and provide users with a platform for real-time interaction and content sharing.
• Kiosk: A new Farcaster client, which recently received US$10 million in financing from a16z and Electric.

8/8 · Advantages and challenges

The challenge in the SocialFi track lies in the inability to answer the question “why should users stay,” because compared to platforms like Twitter and WeChat, Social in the Web3 world inherently faces disadvantages in terms of user experience and accessibility.

Therefore, previous solutions often used “Fi” as a way to incentivize users, initially attracting creators to join the platform by essentially tokenizing their value to help them monetize. However, the problem with this approach is that it shifts the burden of product thresholds, user experience, and traffic to the creators, essentially saying, “because you can make money, you need to attract your fans to interact on the platform.”

Farcaster, on the other hand, resembles more of a Social Layer, where various applications such as Fi, NFTs, music, games, and any other developable apps can exist. This part is completed by developers, making it an ecosystem led by developers, co-built by the community, and participated in by creators.

Where does Farcaster excel?

To be honest, the concept of Farcaster is not novel, but its advantage lies in having already achieved initial user engagement and retaining a large number of native Crypto users. These users are truly engaged, and this month’s user activity data has also reached a new high. Currently, Farcaster has not issued its own token, but it has managed to find common ground and attract creators, developers, and ordinary users, rather than solely relying on “Fi” to retain users.

What challenges does Farcaster face?

From the perspective of the Chinese market, one challenge is that the “entry fee” for registration and storage currently requires payment via credit card and does not support native crypto payment methods. This serves as a barrier for Chinese users, and expanding the user base would be more advantageous if direct cryptocurrency payments were supported. In the long term, the growth in user numbers tests the capacity of Hubs and the social consensus of the Hub network. From an ecological perspective, forming a positive content cycle is crucial because Social products primarily rely on visual elements, and any content (good or garbage) will be intuitively presented to users. Therefore, garbage information in Social platforms can have a more severe impact on users than garbage code on smart contract networks, potentially leading to the demise of Web3 Social products that become inundated with pornography and scams. However, the decentralized nature often means not intervening in content production manually. Thus, balancing this seemingly contradictory point and forming sustainable development is also a future challenge. Long-term sustainability of a positive cycle is key to changing user habits.

How can Farcaster become widely known?

Regarding the question of “becoming widely known,” Farcaster’s current task is to attract and retain Web3 users from Twitter. For creators, the increasing emphasis on autonomous control of accounts is crucial, especially for those who have experienced account suspensions on Twitter. They can better understand the significance of decentralization and autonomous control. At present, Farcaster is not a product like NFT Summer that can attract and consume outsiders. Its target audience is within the circle of Web3 users. For users within this circle, its openness, developability, and composability perfectly align with the spirit of crypto. Bringing circle users onto the Web3 Social Layer is Farcaster’s way of “becoming widely known.”

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