Decentralized social media platform Farcaster has acknowledged its failure to find sustainable growth as a social network after grinding for over four years, announcing a pivot to focus on cryptocurrency wallet and trading features.
Dan Romero, cofounder of the company, which is valued at over $1 billion, said in a series of posts that the platform would prioritize wallet users and trading functionality going forward. “We tried social-first for 4.5 years. It didn’t work for us. Wallet has been growing, so we’re doubling down on that direction,” he wrote.
The admission is a public acknowledgment of failure in the cryptocurrency space and is a significant retreat from the company’s original vision of building a decentralized alternative to platforms like Twitter.
Farcaster was founded by Romero and Varun Srinivasan, both former Coinbase executives, and has raised $180 million in funding, with the first being a $30 million round led by Andreessen Horowitz (a16z) in 2022 and then a $150 million funding round led by Paradigm and other investors such as a16z and Variant in May 2024.
Farcaster Moves On From Struggling Social Network Business
Six days ago, Romero wrote in a Farcaster post that he and his co-founder, Varun, have been working on Farcaster for over five years, and they pursued a social-first strategy for the first four and a half years.
He stated, “We shipped a working version of the protocol that was sufficiently decentralized and allowed multiple independent teams to permissionlessly build on and integrate it. However, despite many different attempts (and a few short-lived spikes), we haven’t been able to find a sustainable growth mechanic for the Twitter-like social network, i.e., no product-market fit.”
Romero said in the midst of this, they launched their wallet, and it has been performing relatively well, calling it the “closest we’ve been to product-market fit in five years.”
However, he mentioned in that post that the wallet was going to work hand in hand with the social network, writing, “We believe the best way to grow the number of people using the protocol is a ‘come for the tool, stay for the network’ strategy. (The wallet is the tool, the protocol is the network.)”
However, his most recent post doesn’t mention the same strategy, as the new direction seems to ditch the social media product entirely.
Users Express Discontent with the Shift
The announcement has drawn criticism from longtime users and contributors.
Cassie Heart, founder and CEO of blockchain project Quilibrium and a former Farcaster collaborator, stated that she does not think people have issues with the wallet, as she believes “it’s genuinely best in class.”
However, she says what people are taking issue with is the cultural shift, among other things. “What people are taking issue with is being told we’re ‘traders’ now, not ‘users’, which feels like whiplash over the years of cozy corners and social legos,” she wrote.
Heart also called out what she described as dismissive treatment of early adopters, noting that one employee had condescendingly referred to critics as the “old guard.”
She questioned whether the protocol was sufficiently developed to support users who wished to remain on the platform while rejecting its new direction, and offered a solution to address the issues she had pointed out.
Romero acknowledged the communication misstep, clarifying that the product would focus on wallet and trading features while remaining open to users who choose not to engage with those functions. However, he stated that further protocol decentralization was not a near-term priority for driving user growth.
Romero wrote that users who are not pleased with the new direction can use another client, build another client, or consider another social network. He also pointed users to alternative clients built on the Farcaster protocol, including Uno, Recaster, DegenApp, Firefly, Cura, Zapper, Herocast, and Base.