Farcaster’s total revenue reached $600,000, showing that not only are crypto individuals interested in using the platform, but they are willing to pay for it.
The initial success of the decentralized social media platform is in some ways similar to that of FriendTech. When the latter was launched, it experienced several waves of interest, with fees rising significantly before interest faded and the project ultimately died out as it failed to find sustainability. Farcaster is the social platform of choice for the cryptocurrency community today, but questions remain as to whether it will find what FriendTech failed to find: longevity.
Farcaster’s first note of interest came in early December 2023, when there was a slight increase in users paying for storage on the platform. The second wave appears to have begun in late January and peaked in early February. This recent wave has been much larger and has seen massive increases in user sign-ups, daily users, and daily posts, largely due to the launch of Frames, an in-app engagement tool.
Frames helped drive demand by introducing native monetization features to the app. A common use for frames is to give other Farcaster users an NFT if they follow the original poster’s account and repost the frame. The lure of free NFTs and other potential airdrops has led many in the cryptocurrency community to expand from Twitter and Discord to Farcaster in greater numbers than ever before (with figureheads like Ethereum co-founder Vitalik Buterin turning to other social media platforms Even though). Including Farcaster a long time ago).
How does Farcaster make money?
However, unlike most social media platforms, Farcaster is not free to use. Farcaster charges users an ongoing storage fee to host data generated through everyday use. Storage costs $5 per year for 5,000 posts, 2,500 reactions, and 2,500 followers. Some of these fees go to the platform and some are used to pay transaction fees and process your credit card information.
Customers who build on Farcaster can also charge their own fees. Warpcast has a variety of compensation mechanisms that offer free posts, but the posting fee is $0.01 per post.
There are some reasoning for this. Most importantly, charging per post can help prevent spam. Another is that for the project to be sufficiently decentralized, the company would have to pay to store everyone’s data and work on its own systems without having to raise money through advertising. Instead, by letting users pay for storage themselves, platforms can escape the trap of centralized control.
That said, it’s clear that users are trying to keep fees to a minimum. For example, when transacting through Frames, users still have to pay blockchain transaction fees. This can be on a variety of blockchains, including, until recently, the Ethereum mainnet.
Over the past few weeks, most Farcaster users have switched to using the Coinbase-powered Base network for on-chain transactions. According to data from Dune Analytics, 83% of transactions reached the peak. This is likely mainly due to the network’s low fees. It may also have helped that Farcaster co-founder Dan Romero is a former Coinbase vice president, and current Coinbase protocol leader Jesse Pollak is one of the most popular users on the platform, the data shows.
Farcaster and FriendTech are very different platforms and have very different forms of monetization, but they share the experience of being a cryptocurrency community social app, mainly due to speculation about potential airdrops. But Farcaster was faced with the reality that unless he could find a flywheel effect (easier said than done), the community wouldn’t stick around for long.
Update: Clarified fees for Farcaster and clients.
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