Farcaster nailed PMF for a core community of passionate crypto users. Should it attempt to scale to a broader audience or continue focusing on its niche? Lens Protocol, emphasizing creators monetization, might be better suited for broader outreach.

Farcaster has cultivated a devoted and engaged community of individuals who share common interests, namely crypto and Web3. This achievement can largely be attributed to the deliberate curation of its initial user base by co-founder Dan Romero, who spent time and effort personally selecting and admitting users.

Besides this, some factors have also played a crucial role in driving initial adoption:

• Like Lens Protocol, the architecture comprises one protocol, Farcaster, over which a limitless number of clients can be built in a permissionless manner. Warpcast, the first and largest among these clients, functions similarly to apps built on a shared blockchain protocol. This approach means users can benefit from various experiences and UIs while still being able to use one single account.

• The commitment to sufficient decentralization has been part of Farcaster's ethos from its inception. This approach emphasizes balancing on-chain innovative features with a smooth and high-quality user experience. Unlike Lens Protocol, the only on-chain component is the FarcasterID, which ensures the user’s identity is fully decentralized, secure, and interoperable while limiting spam. On the contrary, all profiles, casts, and social connections reside within a decentralised peer-to-peer Hub network.

• In June 2023, Warpcast introduced Channels, specialized sections tailored to specific topics akin to subreddits on Reddit. Many of these Channels have evolved into vibrant communities in their own right, adding depth and organization to Warpcast’s interactions.

• In January 2024, Warpcast unveiled Frames, an innovative feature empowering users to transform any cast into an interactive application directly within the platform. By leveraging Facebook's OpenGraph standard, Frames enable the creation of dynamic and authenticated experiences on Farcaster, including polls, live feeds, checkout payment gateways, and interactive galleries. This feature adds significant value for users and provides developers with a platform to experiment and iterate on minimum-viable products before scaling them into fully-fledged applications. Frames streamline user engagement by eliminating the need to navigate to external pages or applications. To date, over 200,000 frames have been created.

The confluence of these features, coupled with the hands-on and pragmatic approach of the Farcaster team and the meticulous selection of initial users, has proven immensely fruitful. In recent weeks, Farcaster has experienced a tenfold increase in user adoption, surpassing the 180,000 total users and 130,000 monthly active users in February.

Notably, most of Farcaster's user base originates from Crypto Twitter (CT), particularly from the non-degenerate subset. Predominantly composed of developers and researchers, this demographic contributes to the platform's exceptional atmosphere characterized by meaningful conversations, minimal spam, and a rapid proliferation of diverse use cases following the introduction of Frames. As Haseeb Qureshi aptly observes in a dedicated episode of the Chopping Block, it is uncommon for a consumer-oriented crypto application to foster such a vibrant community without explicit economic incentives, embodying a genuine sense of purpose.

This core user group found in Farcaster what Twitter (X) used to offer: a high-signal, low-noise environment for in-depth discussions on crypto and Web3-related topics. Dan Romero encapsulates this ethos, describing Farcaster as combining the user-friendly nature of a Twitter-like feed with the depth of Reddit threads.

Can Farcaster Scale?

Can Farcaster expand its user base beyond the Ethereum circle and the crypto industry? Co-founder Dan Romero acknowledges the necessity of articulating Farcaster's value proposition more intuitively to appeal to the broader user base, devoid of jargon such as decentralization or crypto. With over 180,000 total users and approximately 86,000 unique connected addresses—indicative of core users who have integrated one or more wallet addresses with their Farcaster IDs—the platform exhibits promising engagement metrics but still lags far behind Web2 incumbents. In 2023, Twitter boasted an all-time high of 550 million active users, with other estimates placing the average at around 400 million. A similar number for Reddit. Achieving this scale level presents a formidable challenge not only for Web3 or Web2.5 applications but also for Web2, as demonstrated by the experiences of Clubhouse, Threads, and BeReal.

Besides absolute numbers, looking at engagement across different user tiers is also useful. @ilemi created this fantastic Dune dashboard where he divides Farcasters users into five categories, measured weekly:

As it emerges from this visualization, almost all Farcasters users haven’t been quite silent and haven’t cast at all in the past 14 days. A similar trend can be found in Channels, 97% of which have five or fewer casts per week:

It’s clear that directly competing with web2 social media platforms will require very strong unique selling points and features, primitives that were not possible before and that Farcaster uniquely enables. Will Frames be enough?

The Paradox of Permissionless Composability

While Farcaster and Warpcast were used interchangeably, it’s crucial to remember that Farcaster is the underlying protocol, and Warpcast is just one of the numerous potential clients built atop it. This makes a big difference when it comes to scaling. Web3 openly aims to avert monopolies and walled ecosystems by fostering open-source and permissionlessly composable structures. Although monopolies may still emerge, as exemplified by Uniswap's dominance thanks to its strong branding and trust score, the decentralized nature of Web3 encourages competition and the proliferation of a myriad of applications, each catering to specific user subsets, making it challenging for applications to achieve widespread adoption. At the same time, distinguishing between the protocol and the application built atop is important when considering monetization. Unlike Web2 giants that thrive on ad monetization through data monopolies, Web3 applications must explore alternative revenue streams. For Farcaster as the protocol, there may be greater potential to accumulate value than individual clients. Currently, Farcaster charges its users $5 to sign up, partly covering storage fees to host the data generated by daily use ($5 per year covers 5,000 posts, 2,500 reactions, and 2,500 followers). Additionally, clients building on Farcaster can also charge their own fees. Finally, users can purchase Warpcast points called Warps. To date, Farcaster has generated over $600,000 in revenue, while Warpcast, as a client, hasn’t figured out a viable monetization strategy yet. While the protocol may be more likely to accrue fees and revenue, it's plausible that it could eventually distribute a share of that revenue to different clients based on their level of engagement, akin to the concept of public good funding in the OP Stack.

Because of scaling and monetization issues, Farcaster may be better positioned to scale to hundreds of millions of users, while it might be harder for Warpcast because it has to compete with potentially hundreds of other clients utilizing the same social graph and data layer.

Should Farcaster Scale?

In light of this core challenge, a more fundamental question is whether Farcaster should actively pursue mass scalability or focus on delivering a premium experience and continuously pushing the boundaries of Web3 social. Paul Graham, the co-founder of Y Combinator, famously wrote, “Do things that don’t scale”, elevating it to a mantra and one of the most pivotal pieces of advice at the accelerator. While the 2013 startup playbook, albeit cautious and methodical, still emphasized eventual scaling, new applications may interpret Graham's advice more literally. Drawing from Li Jin's "Love/Fame" framework, crypto-powered products can cater to niche communities rather than striving for universal appeal. Li Jin writes:

In contrast to web2, where the ad-based business model exerts pressure to trend towards social media and entertainment products, crypto uniquely makes it possible for love-based networks to thrive.

By focusing on a selected demographic, namely non-mercenary crypto enthusiasts, Farcaster may preserve its unique vibes, differentiating itself from mainstream social media platforms like Twitter, while crypto-unique-enabled monetization features could represent a viable path to financial sustainability.

The success of Patagonia, a brand renowned for its unwavering commitment to values and quality over scale and profit, is a testament to the potential benefits of niche-focused growth. Patagonia's adherence to sustainable practices and premium craftsmanship has cultivated a loyal following at the intersection between environmental advocates and outdoor enthusiasts. In Yvon Chouinard's memoir, "Let My People Go Surfing," he emphasizes the importance of focusing on core users (“We recognize that we make the most profit by selling to our loyal customers”) and prioritizing product excellence over profit maximization (“At Patagonia, making a profit is not the goal, because the Zen master would say profits happen ‘when you do everything else right.”)

Scaling, or scaling too fast, may obfuscate the core value proposition of Farcaster/Warpcast and dilute the vibes that initially made it so special in the current ecosystem. Recent developments, particularly the introduction of Frames, have seen an influx of financial speculation and involvement from the degenerate subset of crypto users. This trend is evident in the proliferation of Frames related to mints (especially the ‘recast-to-mint’ mechanic initiated by @jacopo.eth and streamlined a couple of days later by Manifold), airdrops and other similar speculative use cases. The list of trending words reveals this trend:

Looking at the most trending Channels also reveals a similar pattern, with Channels linked to airdrop farming and other speculative use cases driving a consistent share of the total activity:

While it would be a mistake to dismiss memecoins solely as speculative assets, as they often generate subcultures and robust communities driven by entertainment as well as financial incentives, the proliferation of this type of content may gradually erode Farcaster's original user base by deterring individuals seeking deeper content and interactions.

A Quick Comparison with Lens Protocol

Lens Protocol, often regarded as a competitor to Farcaster, may have a stronger appeal to broader audiences due to its focus on general categories of users like 'creators' and specific monetization features such as 'Collect' posts, giving anyone the opportunity to earn money by creating engaging content. Interestingly, Lens Protocol diverges from Farcaster in several key aspects:

1. It emphasizes on-chain components, aiming to incorporate as many features as possible into the blockchain, including accounts, content, and interactions.

2. Despite having been operational for nearly two years, Lens Protocol remains in a closed beta phase, meaning new users cannot create accounts in a permissionless manner and instead rely on invites from existing users.

3. Lens Protocol places greater emphasis on supporting creators and offering monetization features like Collect posts, as opposed to fostering in-depth discussions and threads like Farcaster.

4. Interestingly, in July 2023, Lens Protocol released Open Actions, a feature that resembles Farcaster's Frames but hasn't garnered the same reception level.

Despite being in closed beta, Lens Protocol has amassed over 125,000 total users, a figure comparable to Farcaster, and has generated over $7 million in revenue.

Crucially, the Lens users, not the protocol itself, primarily benefit from this revenue stream. The emphasis on making diverse monetization channels accessible to all users is arguably Lens Protocol's most innovative and exciting proposition, positioning it as a promising candidate for scaling beyond the crypto industry.

In conclusion, Farcaster might not need to measure its success against Web2 social media platforms, as the social media and consumer product landscape more broadly are shifting toward fragmentation and niche communities (a trend accelerated by AI-ubquoutous generated content). Thanks to new business models and monetization strategies, choosing not to scale is now a deliberate choice rather than a necessity for crypto applications. While unconventional, this approach could be preferable, allowing projects to conserve resources and preserve the unique vibes and engagement of their core communities and power users. This strategy mirrors the successful trajectory of brands like Patagonia. Farcaster, and especially Warpcast, may opt for this path, sustaining its momentum and focusing on cutting-edge features and experiences tailored to its ideal user base.

Perhaps, it could turn out being memecoins communities.