After a $1 Billion Valuation and Five Years of Exploration, Why Did It "Give Up"?

After five years of existence, approximately $180 million in cumulative funding, and a valuation once approaching $1 billion, Farcaster has officially admitted: the path of Web3 social has not worked out.

Recently, Farcaster co-founder Dan Romero posted a series of announcements on the platform, stating that the team will abandon the “social-first” product strategy and instead fully focus on wallets. In his words, this is not a proactive upgrade, but a choice forced by reality after a long period of trial and error.

“We tried social-first for 4.5 years, but it didn’t work.”

This conclusion not only signals Farcaster’s transformation, but also once again puts the structural challenges of Web3 social under the spotlight.

The Gap Between Ideal and Reality: Why Didn’t Farcaster Become a “Decentralized Twitter”?

Farcaster was founded in 2020, during the rise of the Web3 narrative. It aimed to solve three core problems of Web2 social platforms:

• Platform monopoly and censorship
• Users do not own their own data
• Creators cannot monetize directly

Its design approach was highly idealistic:

• Decentralization at the protocol layer
• Clients can be freely built
• Social relationships are on-chain and portable

Among the many “decentralized social” projects, Farcaster was once seen as the product closest to PMF. Especially after Warpcast gained traction in 2023, with many KOLs from Crypto Twitter joining, it appeared to be a prototype of the next-generation social network.

But problems quickly emerged.

According to Dune Analytics data on Farcaster’s monthly active users (MAU), Farcaster’s user growth trajectory shows a very clear, yet not optimistic, pattern:

For most of 2023, Farcaster’s monthly active users were almost negligible; The real inflection point came in early 2024, when MAU rapidly jumped from a few thousand to about 40,000–50,000 in a short period, and at one point reached nearly 80,000 monthly actives in mid-2024.

This was Farcaster’s only real window of scaled growth since its launch. Notably, this growth did not occur during a bear market, but during a period when the Base ecosystem was highly active and SocialFi narratives were emerging in droves.

But this window did not last long. Starting from the second half of 2024, monthly actives began to decline significantly, and over the following year showed a volatile downward trend:

• MAUs rebounded several times, but each high was lower than the last
• By the second half of 2025, monthly actives had fallen to less than 20,000

In fact, Farcaster’s growth has never “broken out of the circle,” and its user base remains highly homogeneous:

• Crypto professionals
• VCs
• Builders
• Crypto native users

For ordinary users:

• High registration barriers
• Social content is highly insular
• User experience is no better than X/Instagram

This means Farcaster has never formed a true network effect.

DeFi KOL Ignas put it bluntly on X (@DeFiIgnas), saying Farcaster “just acknowledged what everyone has long felt”:

The network effect strength of X (formerly Twitter) is almost impossible to break head-on. This is not a problem of crypto narrative, but a structural barrier of social products. From a product perspective, Farcaster’s social issues are very typical:

• User growth is always locked within the crypto-native crowd
• Content is highly self-referential and hard to spill over
• No positive feedback loop between creator monetization and user retention

This is why Ignas summed up Farcaster’s new strategy in one sentence:

“It’s easier to add social to a wallet than to add a wallet to a social product.”

This essentially acknowledges that “social is not the first-principle demand of Web3.”

“The bubble is comfortable, but the numbers are cruel”

If MAU data answers “How is Farcaster doing?”, then another question is: how big is this market itself?

Crypto creator Wiimee posted a set of striking comparison data on X.

After unexpectedly “breaking out” of the crypto content silo, Wiimee created content for a general audience for four consecutive days. His analytics showed that in about 100 hours, he received 2.7 million impressions—more than double his total crypto content views for the entire year.

He remarked:

“Crypto Twitter is a bubble, and it’s a small one. Four years talking to insiders isn’t as good as four days talking to the public.”

This is not direct criticism of Farcaster, but reveals a deeper issue: Crypto social is a highly self-reinforcing but weakly outward-leaking ecosystem. When content, relationships, and attention are all confined to the same group of native users, no matter how refined the protocol design, it’s hard to break through the market size ceiling.

This leaves Farcaster facing not a “product not good enough” issue, but a “not enough people in the room” issue.

The Wallet, Surprisingly, Achieves PMF

What truly changed Farcaster’s internal judgment was not reflection on social, but the unexpected validation of the wallet.

Earlier in 2024, Farcaster launched an in-app wallet, originally just to supplement the social experience. But usage data showed the wallet’s growth slope, frequency, and retention were clearly different from the social module.

Dan Romero emphasized publicly:

“Every new and retained wallet user is a new user for the protocol.”

This statement already reveals the core logic behind the strategic shift. Wallets are not about “expressiveness,” but address real, rigid on-chain behavioral needs: transfers, trading, signing, and interacting with new apps.

In October, Farcaster acquired AI Agent-powered token issuance tool Clanker and began integrating it into the wallet system; this move is also seen as a clear bet by the team on the “wallet-first” path.

From a business perspective, this direction has obvious advantages:

• Higher usage frequency
• Clearer monetization path
• Tighter binding with the on-chain ecosystem

By comparison, social feels more like a nice-to-have than a growth engine.

Although the wallet strategy is supported by data, it has also sparked community controversy.

Many long-term users have clearly stated that they are not opposed to the wallet itself, but feel uncomfortable with the resulting cultural shift: users are being redefined as “traders,” and “co-builders” are being labeled as the “old guard.”

This exposes a real issue: when the product direction changes, community sentiment is often harder to migrate than the roadmap. Farcaster’s protocol layer is still decentralized, but the right to choose product direction remains concentrated in the team. This tension is amplified during a pivot.

Romero later admitted there were communication issues, but also made it clear that the team had made its choice.

This is not arrogance, but a common real-world decision for startups in the later stages of their lifecycle. In this sense, Farcaster is not abandoning the social ideal, but abandoning the fantasy of scaling it up.

Perhaps, as one observer put it:

“Let users stay for the tool first; only then does social have a place.”

Farcaster’s choice may not be the most romantic, but it might be the closest to reality. Deep integration of native financial tools (wallet, trading, issuance) may be the practical path to sustainable business value.

Author: Bootly