Unicorn company Farcaster forced to pivot—is Web3 social a false proposition?

Author: zhou, ChainCatcher

Farcaster co-founder Dan Romero (dwr) recently announced a major strategic shift for the platform, officially abandoning the “social-first” approach it had adhered to for 4.5 years, and pivoting to a growth model driven by a “wallet-centric” strategy.

Reportedly, Farcaster was originally positioned as a decentralized social network where developers could build novel social networks. It is an open protocol that can support many clients, similar to email. Users would always be free to move their social identities between applications, and developers would always be free to build new feature-rich apps on the network.

Dan Romero stated that under the social-first strategy, the platform released a fully functional protocol version that was sufficiently decentralized and allowed multiple independent teams to build and integrate on top of it. However, the data showed that despite tremendous efforts, the social-first strategy ultimately proved unsustainable.

At the start of 2024, thanks to the Frames feature and the DEGEN airdrop, daily active users (DAU) surged from around 2,000 to 100,000, registered users exceeded 350,000, and monthly growth once surpassed 400%.

But the peak lasted less than three months. Starting in September 2024, the numbers plummeted: DAU fell back to around 60,000, monthly active users dropped 40% month-on-month, and new daily registrations crashed from a peak of 15,000 to just a few hundred.

Entering 2025, the situation continued to deteriorate, with social-side DAU dropping by nearly another 40%, until a USDC deposit promotion offering a 10% reward was launched in October, which managed to bring overall DAU back to the 50,000–60,000 range by leveraging wallet functionality.

At the same time, protocol revenue also plummeted: by October 2025, monthly revenue had dropped to around $10,000, the lowest in four months and down about 99% from the peak.

Facing this harsh reality, Dan Romero admitted that they had failed to find a sustainable growth mechanism for a Twitter-like social network.

Therefore, Farcaster’s transformation decided to take a pragmatic approach, no longer pursuing a purely social narrative, but instead betting resources on the strongly growing wallet functionality: use tools (wallet) first, then build out the network (protocol).

The team observed that the wallet feature, launched in the app earlier this year, expanded rapidly and was the closest they’d come to product-market fit in five years. The new user flow was redesigned: user registration — wallet top-up — wallet usage, with wallet funding and tool usage as activation points.

Dan Romero summarized that every new, retained wallet user is a new user of the protocol. As users have commented, SocialFi is the combination of social and finance, and integrating the wallet is the real starting point.

On the product level, Farcaster’s official app Warpcast shifted its core objective to building an excellent wallet, focusing on expanding the intersection of wallet and social features. DWR believes that it is easier to add a wallet to a social network than to add social networking to a wallet. This integration is realized through Farcaster Mini App, lightweight web applications based on the Farcaster protocol that can be seamlessly integrated into clients like Warpcast.

At the same time, Farcaster is also actively deploying financial infrastructure:

• Asset Issuance: By acquiring token issuance platform Clanker, Farcaster has equipped its wallet-centric strategy with asset issuance capabilities and currently holds 1.8% of Clanker’s total supply.
• Financial Incentives: In October, a USDC deposit campaign was launched offering a 10% extra reward, directly accelerating the conversion of users into on-chain asset holders through direct financial incentives.

On the content side, Frames (interactive mini-apps) are the form in which Mini Apps are presented in the feed, serving as a key hub for the “content-as-transaction” mechanism. Users can directly mint, trade, and make payments within the feed, with each interaction directly driving usage of the built-in wallet. This model transforms Farcaster from an information consumption venue into a value transfer platform, accelerating the ecosystem’s financialization process.

Of course, this strategic pivot is built on Farcaster’s deep resources and elite team background. The platform has attracted top-tier institutions including Paradigm, a16z, and Union Square Ventures, raising $150 million in a Series A round in 2024 at a $1 billion valuation. Core team members include co-founder Dan Romero (former Coinbase VP of Operations), Varun Srinivasan, and developer ecosystem lead Linda Xie (early Coinbase employee), all with deep Coinbase backgrounds, and Coinbase Ventures also participated in Farcaster’s early seed round.

However, this transformation has also sparked industry skepticism about “maximal decentralization.” Well-known crypto researcher CM argued that Farcaster’s shift to a wallet-centric route and abandonment of the social-first strategy means the last dream of SocialFi has ended, and the whole crypto space seems to have returned to the 2017 ICO era, where everything revolves around trading and issuance.

Other commentators pointed out that Farcaster’s early products suffered from low usability and slow login on Android, and criticized some of its pragmatic decisions on decentralization and user experience as unpopular with decentralization maximalists.

Dan Romero made it clear in his post that this does not mean the protocol has become a casino. The Farcaster protocol is still an open system, and developers are free to use whichever parts they find most useful. The official app (Warpcast) has simply chosen to focus on the “intersection of wallet and social,” while other clients like Uno, Recaster, Cura, etc., are taking different approaches.

In other words, if users disagree with this direction, they can choose to use other clients, build their own, or consider another social network. CM also added that, in theory, it’s possible to build other clients, but he suspects few would try at this point.

Additionally, some have noted that the wallet space is already highly competitive, with apps like Base App actively developing, so Farcaster still faces significant challenges. Moreover, the winner in the wallet space must answer one key question: what wallet features do people truly want? Overloading features could lead to bloat and an unwieldy product.

Overall, Farcaster’s transformation is driven by brutal market data and pragmatic execution. It reveals the true nature of the SocialFi track and sets a key tone: pure Web3 social may be difficult to sustain—it requires high-value, high-frequency financial tools as the entry point, and a content-driven financialization mechanism as the core for network stickiness and value capture.