With a $1 billion valuation, why couldn't Farcaster pull off a "decentralized" Twitter?

By: blockbeats|2025/12/09 14:30:07

Original Article Title: "A 10 Billion Valuation and Five Years of Exploration, Why Did It 'Throw in the Towel'?"

Original Article Author: Bootly, via Bitpush News

After five years of establishment, raising approximately $180 million in total funding, and once reaching a valuation close to $10 billion, Farcaster has officially admitted that the path of Web3 social has not panned out.

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Recently, Farcaster co-founder Dan Romero posted consecutively on the platform, announcing that the team will abandon the "social-first" product strategy and instead fully focus on the wallet direction. In his statement, this was not seen as a proactive upgrade but rather a choice made after a long period of attempts, compelled by reality.

"We tried for 4.5 years to put social first, but it didn't work."

This assessment not only signifies Farcaster's transformation but also once again shines a spotlight on the structural challenges of Web3 social.

The Gap Between Ideal and Reality: Why Farcaster Couldn't Become "Decentralized Twitter"

Farcaster emerged in 2020, amidst the rising narrative of Web3. It attempted to address three core issues of Web2 social platforms:

· Platform Monopoly and Censorship

· User Data Not Owned by Oneself

· Creators Unable to Monetize Directly

Its design concept was quite idealistic:

· Protocol Layer Decentralization

· Clients Can Freely Build

· Social Relationships On-Chain and Migratable

Among the many "decentralized social" projects, Farcaster was once seen as the product closest to Product-Market Fit (PMF). Especially after the 2023 Warpcast, numerous Key Opinion Leaders (KOLs) joined Crypto Twitter, making it seem like the prototype of the next-generation social network.

However, problems soon surfaced.

According to Farcaster Monthly Active Users (MAU) data on Dune Analytics, Farcaster's user growth trajectory revealed a very clear but not optimistic pattern:

Throughout most of 2023, Farcaster's monthly active users (MAU) were almost negligible;

The true inflection point in growth occurred in early 2024, with MAU rapidly rising from low thousands to approximately 40,000–50,000 in a short period of time, peaking at nearly 80,000 MAU in mid-2024.

This was the only truly significant scaling window for Farcaster since its inception. Particularly noteworthy is that this growth did not occur during a bear market, but rather during a phase of high Base ecosystem activity and intense SocialFi narratives.

However, this window did not last long.

Starting in the latter half of 2024, MAU data showed a noticeable decline, presenting a fluctuating downward trend over the following year:

· MAU rebounded multiple times, but the peaks trended lower

· By the second half of 2025, MAU had dropped to less than 20,000

In reality, Farcaster's growth has always been unable to "break the circle," with its user base highly homogeneous:

· Crypto industry professionals

· VCs

· Builders

· Crypto-native users

For the average user:

· The registration threshold is high

· Social content is heavily "in-group"

· The user experience is not superior to X/Instagram

This has led Farcaster to consistently fail to generate true network effects.

DeFi KOL Ignas on X (@DeFiIgnas) bluntly stated that Farcaster "simply acknowledged what everyone had been feeling for a long time":

The network effect intensity of X (formerly Twitter) is almost impossible to be positively breached.

This is not an issue of crypto narratives but a structural barrier of social products. From a product perspective, the social aspect of Farcaster's issues is quite typical:

· User growth has always been locked within the crypto-native crowd

· Content is highly self-referential, making overflow difficult

· Creator Monetization and User Retention Did Not Form a Positive Feedback Loop

This is also why Ignas succinctly summarized 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 assessment fundamentally acknowledges that "social is not Web3's primary need."

"Bubbles Are Comfortable, but Numbers Are Harsh"

If MAU data answers "How is Farcaster doing," another question is: How big is this market itself?

Crypto creator Wiimee provided a set of impactful comparative data on X.

Following an "accidental breakout from the crypto content circle," Wiimee created content for the general audience for four consecutive days. The analysis data showed that within approximately 100 hours, he gained 2.7 million impressions, more than double the total views of all his crypto content in a year.

He remarked: "Crypto Twitter is a bubble, and it's small. Speaking to the general public for four days is more impactful than speaking to insiders for four years."

This is not a direct critique of Farcaster but reveals a more underlying issue: crypto social is inherently a highly self-referential ecosystem with weak external outreach capabilities. When content, relationships, and followers are all limited to the same group of native users, even the most sophisticated protocol design struggles to break through the market's size limit.

Thus, the challenge Farcaster faces is not "the product is not good enough" but rather "there are not enough people in the space."

Wallet, Unexpectedly Achieving PMF

What truly altered Farcaster's internal judgment was not a reflection on social but an unexpected validation of the wallet.

Earlier in 2024, Farcaster introduced a built-in wallet in the app, originally intended as a supplement to the social experience. However, from the usage data, the wallet's growth rate, usage frequency, and retention performance were notably different from the social module.

Dan Romero emphasized in a public response: "Every new wallet user and retained user is a new user for the protocol."

This sentence itself has revealed the core logic of the roadmap adjustment. The wallet is not facing "expressiveness," but the real, rigid on-chain operational needs: transfer, transaction, signature, and interaction with new applications.

In October, Farcaster acquired the AI Agent-driven token issuance tool Clanker and gradually integrated it into the wallet system. This move was also seen as the team's clear commitment to the "wallet-first" path.

From a business perspective, this direction has obvious advantages:

· Higher frequency of use

· Clearer monetization path

· Closer integration with on-chain ecosystem

In contrast, social features are more like icing on the cake rather than the growth-driving engine.

Although the wallet strategy is data-driven, community controversy has followed.

Several long-time users have made it clear that they are not against the wallet itself but feel uncomfortable with the accompanying cultural shift: from "users" being redefined as "traders," from "co-builders" being labeled as the "old guard."

This exposes a practical issue: when the product direction changes, community emotions are often harder to migrate than the roadmap. Farcaster's protocol layer remains decentralized, but the decision-making power regarding product direction still lies largely with the team. This tension is amplified during the transition.

Romero later admitted communication issues but also made it clear that the team has made a choice.

This is not arrogance but a common reality check for a late-stage startup project. In this sense, Farcaster has not abandoned the social ideal but has let go of the fantasy of scaling it.

Perhaps as an observer said, "First make users stay for the tool, then there is room for social interaction."

Farcaster's choice may not be the most romantic, but it may be the closest to reality, diving deep into integrating native financial tools (wallet, transaction, issuance), which is the practical path to transforming into sustainable business value.

Original Article Link

Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:

To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:

Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:

I. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.

The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.

A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.

（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.

Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.

II. Sound Work Mechanism

(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.

The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.

(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.

(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.

(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.

(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.

（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.

（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.

（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.

（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.

（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.

(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.

V. Strengthen Organizational Implementation

(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.

(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.

VI. Legal Responsibility

(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.

(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.

This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.

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