Why Are We Investing in Farcaster

Original Title: 《 Investing in Farcaster 》

Authors: Jesse Walden  Alana Levin

Translated by: TechFlow

The Farcaster community is a microcosm of the early crypto communities I (Jesse) joined a decade ago: optimistic, technical, ambitious, collaborative, and always online.

For the average everyday user, Farcaster is an emerging but rapidly growing protocol aimed at building a "fully decentralized social network." Compared to traditional social media, one notable feature is the high-quality and low-noise community atmosphere. This is a direct result of the core team's meticulous curation of the social graph, one by one, and the efforts of early enthusiasts over the years.

For technologists, Farcaster's promise is a new distribution channel with permissionless building blocks that can realize the crypto potential many of us came here to pursue: permissionless identity, currency, and data.

• Identity: Every identity in the network is associated with a crypto wallet. Every post, message, and click on the network is signed and tagged with the relevant FID. This is powerful because it means all interactions are authenticated in a self-sovereign manner. For users, history can be verified. Developers can also interact directly with users and build a holistic view of their profiles without permission, not just on Farcaster but even on-chain.

• Currency: Since every Farcaster account is linked to a wallet, the ability to receive and send payments is a native feature of the network itself, unlocking functionalities like tipping, minting, crowdfunding, and asset creation. The result is a significant reduction in transaction friction.

• Data: All social data on Farcaster is stored in a distributed central network. The goal of the Farcaster protocol is to incentivize decentralized data storage, giving users and developers confidence that their data will not be removed by the platform. This impact is twofold: trust attracts high-quality developers to the ecosystem, and the enduring openness means businesses built around the network can create richer experiences than their Web2 counterparts.

A notable example is community currency, which leverages the network's open social graph and connected wallets, allowing users to tip and earn income.

Frames is another noteworthy example. These interactive mini-apps exist as posts within social dynamics but can also be displayed in any app with an embedded wallet, enabling developers to meet users where their wallets are. Frames verify the identity of interacting users, facilitate payments, and leverage users' on-chain and social data to unlock additional features. We've seen various interesting Frames, such as embedded stores, minting platforms, mini-games, and payment interfaces. We even built a Frame to help the community learn about another investment project, Botto, which has relied on Frames as a distribution channel and conducted large auctions through the network.

To date, approximately 400,000 users have joined the network, primarily through Warpcast—the first client on the protocol for testing. The development of channels as a feature of Warpcast has created a unique, subreddit-like feel, allowing users to find deeper communities within the network.

At the protocol level, significant developments have evolved the network from permissioned to permissionless. The core functionalities of the network—including Frames, cast actions, and the upcoming channels—continue to decentralize gradually, fostering the emergence of an early additional client ecosystem.

Our team is thrilled to participate in this network as both users and builders. Various members of our team manage channels like 0to1, soundscapes, countrymusic, and Frames Hackathon. The Frames hackathon we hosted in our office was filled with the kind of fervent energy that usually only appears in the most exciting new scenes. We also support teams like Nook, Kiosk, and Farworld Labs, which are helping to scale the user base and enrich the diversity of clients on the network. Supporting early teams and supporting Farcaster go hand in hand: the protocol succeeds when third-party businesses can sustainably build on top of it. The more teams dedicated to onboarding new users, the better.

This brings us to the Merkle team, the company behind Warpcast and a core contributor to the Farcaster protocol. Building and maintaining an excellent product and a complex decentralized protocol simultaneously is not easy, but doing both is often the best way to launch. Dan and Varun have built one of the most efficient and highest-quality technical teams in the crypto space, and they continue to grow.

For the above reasons, Variant, along with other new investors Paradigm, USV, and Haun, invested in Farcaster's Series A funding round. While we focus on the early crypto space, we occasionally adjust our rules when the value is compelling. In the case of Farcaster, its core team, early developer ecosystem, and user base represent the best of crypto in terms of capability, attitude, and ambition. We are excited to be involved and continue contributing to the network's development.