I’m pleased to share here the analysis I wrote for Dune Analytics’ blog on May 20th, 2024.

Leveraging the power of Dune to access and interpret blockchain open data, this article explores the growth paths of Lens and Farcaster, two pioneering platforms in the decentralized social (DeSo) space. Farcaster has introduced many innovative web3 features while successfully maintaining a more traditional Web2 approach and catalyzing user engagement within one app. It streamlines the onboarding process without requiring a wallet, manages most interactions off-chain, and incorporates the well-known Facebook’s Open Graph to power Frames. In contrast, Lens is carving out a niche by more purposefully fostering a diverse ecosystem of applications built upon a shared social graph. Lens excels in nurturing the creator economy and enabling direct monetization strategies, paving a new path for platform growth in the decentralized web. While running on different rails, Lens and Farcaster share a common goal and vision and, interestingly, have been converging around some common elements.

A Common Vision

Unlike traditional platforms, which operate in isolation with their own unique social graphs, Lens and Farcaster embrace the web3 concept of composability. Each utilizes a unified protocol that stores identities and a shared social graph, allowing for the development of multiple, fully interoperable applications or clients. Another shared principle is the emphasis on data ownership, granting users complete control over their content and data. Ultimately, both platforms strive to cultivate new economic ecosystems around creator-centric communities.

Despite these commonalities in vision and objectives, the architectures and designs of Farcaster and Lens present some differences:

Decentralization

The most distinctive difference between Farcaster and Lens is the different approach to decentralization and the use of blockchain technology. Farcaster describes itself as a "sufficiently decentralized protocol," highlighting a strategic balance between decentralized elements and user experience. Farcaster aims to integrate on-chain elements selectively, ensuring that the core benefits of decentralization—such as user control over data and identity—are preserved while maintaining a smooth and accessible user experience and ensuring performance and scalability. On the other hand, Lens adopts a more blockchain-centric approach. By embedding more functionalities directly onto the blockchain, including the tokenization of interactions like posts and follows, Lens offers a fully decentralized environment where every action is transparent, verifiable, and inherently resistant to censorship.

Both Farcaster and Lens have integrated with Dune, meaning their data-rich ecosystems are available as intuitive databases, ready to be queried, visualized, and interpreted.

Activity and Ecosystem

Farcaster and Lens have each carved out their niches within the growing field of decentralized social (DeSo), forming robust communities with sustained activity levels.

These Dune counters show that the two apps have similar numbers of total active users.

The two apps have taken different approaches and each has met its own successes. While initially putting a strong emphasis on developer involvement to create a robust ecosystem of applications utilizing the shared protocol, Farcaster has eventually attracted a robust and lively community around its primary client, Warpcast, significantly bolstered by innovative features like Channels and Frames. These features have enhanced user engagement by expanding the functionality of the platform and propelled Farcaster to levels of activity and engagement previously unseen in web3 social, succeeding at winning the same game as web2 incumbents.

Since the beginning, Lens has had a focus on attracting a vibrant community of developers and creators focused on exploring new economic models within social media. While showing slightly less activity in terms of posts and reactions, Lens has excelled in fostering a broader ecosystem where a variety of applications coexist and thrive on a shared protocol layer. This approach has allowed Lens to not just cater to a wider audience but also to encourage a fertile environment for creativity and innovation. By enabling multiple apps to operate over a common infrastructure, Lens has effectively diversified the applications and experiences available to its users, underpinning a vibrant and dynamic network of decentralized social media applications. As a result, Lens has succeeded where many have failed, moving away from the more traditional monolithic approach of web2 social and embodying the ethos of web3 interoperability.

As the first Lens dashboard on Dune shows, Lens users use a variety of apps built on the shared protocol and social graph, with Hey, Phaver, and Orb capturing the majority of users. The second visualization shows how a majority of Lens users focus on one app, but almost 20% use two apps and almost another 20% use three or more apps. Combined, these two visualizations show signs of a healthy and balanced ecosystem growing on a shared protocol.

A Comparison of Open Actions in Lens and Frames in Farcaster

Lens’ Open Actions allow for a variety of interactions directly from a publication, such as tipping, minting, or swapping NFTs, collecting publications, and participating in on-chain activities like raffles and polls. These actions are executed through modular smart contracts that integrate with the Lens protocol, allowing developers to create diverse functionalities, and facilitating direct monetization and interaction between users.

Frames in Farcaster are essentially mini-applications or widgets that can run within the Farcaster network, offering a range of interactive features. They provide developers with the tools to create interactive and dynamic content directly within the Farcaster environment, enhancing the user experience with diverse applications. Popular frames include reading articles inline from Mirror or Paragraph, minting articles or NFTs, playing simple games like chess or text-adventure games and even purchasing physical goods like cookies. The ability to embed a checkout page within a social feed may be a game changer for e-commerce websites. Frames are designed to be highly flexible and scalable, operating both on-chain and off-chain to optimize performance and scalability. They are part of Farcaster's broader strategy to create a decentralized platform that supports a wide array of social media functions without central control.

While both Open Actions and Frames enhance the capability of their respective platforms by allowing for the integration of diverse functionalities directly into the user interface, they differ in their approach and integration level. Open Actions are deeply embedded into Lens's blockchain environment, leveraging the inherent properties of NFTs and blockchain transactions for interactions. In contrast, Farcaster’s Frames provides a broader range of application-like functionalities that may not necessarily involve blockchain transactions, focusing instead on enhancing the user experience and interaction within the network. Additionally, Open Actions enable users to interact with existing posts, whereas Frames are used to create new posts. Bridging these capabilities, Farcaster has recently introduced Cast Actions, an optional add-on for the Farcaster client. This feature, which users can add to their reaction bar, allows them to perform various activities such as tipping, translating, and upvoting, significantly enhancing user engagement.

Modular systems like Open Actions, Frames, and Cast Actions represent significant advances in how decentralized social networks can offer flexible, user-driven features that go beyond traditional social media functionalities, reflecting the flexible and expansive nature of DeSo.

Grassroot Development

One of the most fascinating aspects of Farcaster is its grassroots-driven development. While the protocol strives to balance decentralization with performance, its growth and innovation are often fueled by its community, which actively engages in shaping its use cases and features. For instance, the practice of tipping posts and contributions with $DEGEN, which was initially distributed to Farcaster users via an airdrop, emerged organically within the community. This has led $DEGEN to become Farcaster's unofficial token, in addition to the official point token, Warp, underscoring the platform’s ability to transform online interactions into tangible value.

This visualization shows how popular the token DEGEN has become within the Farcaster ecosystem, representing by far the most frequent word. It’s worth noting that Dune contains both quantitative and qualitative dashboards, thus helping users and builders gain a much deeper understanding of the context around numbers. For example, by looking at the top words in Farcaster casts, one can understand which topics are most trending and perhaps adapt one's strategy to maximize visibility and engagement.

The $DEGEN phenomenon highlights how user behaviours and interactions, alongside active choices from the core development team, contribute to shaping the platform's evolution. As another example, FarCon, a yearly conference to celebrate the Farcaster ecosystem, was also born from the enthusiasm of some power users, with the core team having no involvement in planning it.

While Lens has been more programmatic in its development, an approach emphasized by the decision to remain permission for almost two years, since going permissionless in February this year, it has experienced a considerable bottom-up development, not dissimilar to Farcaster. BONSAI is a great example, a memecoin that was airdropped to Lens users and quickly became the preferred currency for rewarding engagement and paying for open actions and content in the Lens ecosystem.

Monetization

Protocol monetization

Unlike established web2 social media platforms that racked hundreds of billions by owning data and selling them to advertisers, both Lens and Farcaster’s business models rely on sign-up fees. Joining Lens requires minting a handle, which currently costs $10 and can be paid either with a card or crypto. Farcaster requires creating a profile and renting storage units, each allowing users to store a certain amount of data for one year. Currently, users must pay a sign-up fee of $5, which includes $3 for one storage unit.

Farcaster’s address for Storage Registry currently shows a balance of 431 ETH, about $1.3M. This Dune visualization also shows total revenue north of $1M.

February saw momentum for both Farcaster and Lens in terms of sign-ups. Farcaster’s increase was mostly caused by the excitement for Frames, while Lens saw a sudden surge after becoming permissionless. Since both mostly rely on sign-up fees as revenue sources (since March, following LIP-16, Lens has also been taking a small fee from collections), this has also represented a significant increase in revenue.

User monetization

As far as users’ monetization is concerned, Lens has addressed this more directly and in a top-down fashion compared to Farcaster. In Lens, by protocol design, users can profit from a simple action like Follow by setting a mint price for others to follow them (aka, minting their profile NFT). Also, users can set a price for their publications to be collected as NFTs. Native Tipping is an additional monetization venue, separate from Open Actions, that Hey introduced in April this year.

As these counters by Sealunch show, Lens flipped the meaning of the classic metric ARPU (Average Revenue Per User). While in web2 apps, this metric shows how much each user contributed to the application’s revenue, in Lens it indicates how much users earned for themselves by engaging on the application.

On top of the official monetization features, in March 2024, the MadFi team launched a memecoin called BONSAI. After the first airdrop was distributed to Lens users based on their activity, in a short span, it quickly became the default currency on Lens, overtaking wMATIC as the currency of choice for monetizable content.

Although Farcaster initially lacked built-in monetization features and only recently introduced a more formal tipping mechanism through Cast Actions, users have been able to earn from grassroots tipping practices using $DEGEN, the unofficial token of Farcaster. $DEGEN, initially distributed through airdrops based on user activity, has been used widely within the community for tipping on casts, comments, and other contributions, effectively creating a user-driven economy on the platform.

This mechanism incentivizes high-quality content creation, decentralized curation, and engagement, fostering a vibrant community. Interestingly enough, $DEGEN is one of the first cases where a token is distributed to the community by the community in a truly decentralized and peer-to-peer fashion. This is not dissimilar to Optimism, which allocates grants to projects and contributors based on decisions made through community governance.

Unlike many memecoins that rely solely on hype and speculation, both DEGEN and BONSAI have managed to create utility, becoming an important instrument for content creators to monetize their work and engage with their communities.

Dune can play a crucial role in this value unlock. Facilitating access to blockchain data, allows for detailed insights into not just basic metrics like transactions or Total Value Locked (TVL) but also more granular behaviors. This depth of data is invaluable for projects planning strategic initiatives such as airdrops.

For example, this query from @ilemi shows all Farcaster’s active users, their followers, cast activity, engagement, the channels they are most active, and their associated wallet address.

Overall, it’s great to see intentional, built-in monetization features in Lens. Similarly, it’s great to see spontaneous and grassroots monetization opportunities arising in Farcaster and, recently, Lens. While different in approach, both achieve something that has never been done by web2 social media platforms: recognize all users’ contributions and engagement and reward them seamlessly.

Conclusion

Farcaster and Lens, each taking unique approaches to blockchain and decentralization, have achieved success in different arenas: Lens by cultivating a diverse ecosystem of applications and Farcaster by generating high activity levels within a single client. Their strategies towards monetization also differ, with Farcaster adopting a more grassroots approach and Lens pursuing a more intentional strategy. Despite these differences, their developments reveal a convergence of several key elements. They both operate as a single protocol that supports many independent clients or apps, emphasizes data ownership, and implements add-ons that make posts and interactions richer and more flexible while offering mechanisms for users to actively participate in and shape the apps they use. Additionally, they utilize sign-up fees for protocol monetization and encourage grassroots user monetization through memcoins like DEGEN and BONSAI.

Unlike Web2 social media platforms, where data are locked within company servers, Web3 applications are, by design, open-source and permissionless. This transparency allows users, analysts, and investors to easily access and analyze data, something nearly impossible with legacy platforms where, at best, users can download their personal content and profile information. Dune accelerates this shift, offering an accessible interface that simplifies complex data sets for users regardless of their technical expertise. It enables stakeholders to seamlessly explore user interactions, monetization strategies, and overall dynamics, thereby fostering a deeper understanding of how applications work and how to build on these decentralized protocols. This shift to open-source data is not just a feature of web3—it represents a fundamental change in how digital interactions and economies can be understood and developed.

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This analysis was created by Dune community Wizard, Filippo Armani. The views and opinions expressed in this article are solely those of the author(s) and do not necessarily reflect the official position of Dune.