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

Farcaster’s choice may not be the most romantic, but it could be the closest to reality yet: deeply integrating native financial tools (wallets, trading, issuance) is the practical path to converting into sustainable business value.

Author: Bootly

Source: Bitpush

After five years in existence, raising about $180 million, and reaching a valuation close to $1 billion, Farcaster has officially admitted: the Web3 social path has not worked out.

Recently, Farcaster co-founder Dan Romero posted a series of messages on the platform, announcing the team will abandon its “social-first” product strategy and instead fully pivot to focus on wallets. According to him, this is not an active upgrade, but a choice forced by reality after a long period of experimentation.

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

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

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

Platform monopoly and censorship

User data not belonging to users

Creators unable to monetize directly

Its design was quite idealistic:

Decentralization at the protocol layer

Clients can be built freely

Social relationships are on-chain and portable

Among numerous “decentralized social” projects, Farcaster was once seen as the closest product to achieving PMF. Especially after Warpcast went viral in 2023, with many KOLs from Crypto Twitter joining, it looked like the prototype of the next-generation social network.

But problems quickly emerged.

According to Dune Analytics’ monthly active user (MAU) stats for Farcaster, the user growth trajectory is very clear, but not optimistic:

For most of 2023, Farcaster’s monthly actives were negligible;

The real growth inflection point came at the start of 2024, when MAU quickly jumped from a few thousand to around 40,000–50,000 in a short time, and even approached 80,000 monthly actives at one point in mid-2024.

This was Farcaster’s only truly large-scale growth window since its inception. Notably, this growth didn’t occur in a bear market, but during a period of high activity in the Base ecosystem and a surge in SocialFi narratives.

However, this window did not last long.

From the second half of 2024, monthly active data showed a clear decline, followed by a year of fluctuating downward trends:

MAU rebounded several times, but the peaks kept getting lower

By the second half of 2025, monthly actives had dropped 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

The user experience is not superior to X/Instagram

This has kept Farcaster from forming real network effects.

DeFi KOL Ignas on X (@DeFiIgnas) bluntly stated that Farcaster “just admitted what everyone has felt for a long time”:

The network effect strength of X (formerly Twitter) is almost impossible to break directly.

This is not a problem of crypto narratives, but a structural barrier of social products. From a product perspective, Farcaster’s challenges on the social side are typical:

User growth is always locked within the crypto-native crowd

Content is highly self-referential and hard to spread outward

Creator monetization and user retention have not formed a positive feedback loop

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

“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 Web3’s first-principle demand.”

If MAU data answers “how is Farcaster doing,” the next question is: how big is this market itself?

Crypto creator Wiimee provided a striking comparison on X.

After “accidentally breaking out of the crypto content bubble,” Wiimee created content for a general audience for four consecutive days. Analysis showed that in about 100 hours, he received 2.7 million impressions—more than twice the total views of all his crypto content in one year.

He noted:

“Crypto Twitter is a bubble, and it’s very small. Four years speaking to insiders isn’t worth four days speaking to the public.”

This is not a direct criticism of Farcaster, but reveals a deeper issue:

Crypto social is a highly self-referential ecosystem with very weak spillover effects. When content, relationships, and attention are confined to the same group of native users, no matter how refined the protocol design, it’s hard to break through the market ceiling.

This means Farcaster’s problem is not “the product isn’t good enough,” but “there aren’t enough people in the room.”

What truly changed Farcaster’s internal thinking wasn’t a reflection on social, but an unexpected validation of wallets.

Earlier in 2024, Farcaster launched a built-in wallet in its app, initially just as a supplement to the social experience. But usage data showed the wallet’s growth rate, frequency of use, and retention were clearly different from the social module.

Dan Romero emphasized in a public response:

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

This statement reveals the core logic behind the strategy shift. Wallets are not about “wanting to express,” but about real, rigid on-chain behavioral needs: transfers, trading, signing, interacting with new apps.

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

From a business perspective, this direction has clear advantages:

Higher usage frequency

Clearer monetization paths

Tighter integration with the on-chain ecosystem

By contrast, social is more like a nice-to-have, not the engine of growth.

Although the wallet strategy is supported by data, it has sparked debate in the community.

Many long-term users made it clear they’re not opposed to wallets per se, but are uncomfortable with the accompanying cultural shift: from “users” being redefined as “traders,” from “co-builders” being labeled as the “old guard.”

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

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

This isn’t arrogance, but a common real-world decision for startups in the later stages of their lifecycle. In this sense, Farcaster hasn’t abandoned the social ideal, but has given up on the fantasy of scaling it.

As one observer put it:

“Let users stay for the tools first, and then social has a space to exist.”

Farcaster’s choice may not be the most romantic, but it could be the closest to reality yet: deeply integrating native financial tools (wallets, trading, issuance) is the practical path to converting into sustainable business value.