From Crypto Social Underdog to "Wallet First": Farcaster's Misunderstood Pivot

Original Article Title: "Social Walletization, Wallet Socialization"

Original Author: 0xLuo, Senior Player at Farcaster

Recently, Farcaster co-founder Dan Romero's post regarding Farcaster's current shift in focus from "social-first" to "wallet-first" has sparked widespread attention and discussion. For active Farcaster users, the transition has been noticeable ever since the introduction of the in-app wallet feature in the Farcaster App back in February, with support for more chains and increasingly rich functionality. This announcement may seem like a recurring topic to many, serving as a summary of the team's direction throughout this year. However, for those less familiar with Farcaster, this declaration appears somewhat unexpected. Many couldn't help but express their surprise, as the "sole heir of crypto social," the "hope of SocialFi village," has actually "announced a failure," "abandoned social," "strayed from its initial mission," and expressed disappointment that the "social track has been disproven" and "Web3 social does not seem viable." Concerns have been raised about the community atmosphere sliding towards "gamification," with the team seemingly "sprinting in the wrong direction."

The divergence in opinions stems from different understandings of Farcaster's wallet positioning. In fact, Farcaster App's addition of the built-in wallet this year is not a sudden strategic pivot but a natural upgrade from the previous need to connect an external wallet to perform on-chain operations. As Frames gradually evolves into more feature-rich and interactively complex Mini Apps, user demand for seamless on-chain interaction has risen. The introduction of the in-app wallet is fundamentally designed to accommodate new scenarios, supplementing the fundamental capabilities on top of the social network without abandoning the existing social network.

A wallet is an increment, not a replacement; it drives socialization, not overtake it; it extends socialization, not abandons it; it goes with the flow, not forced into transformation.

The underlying open social protocol remains unchanged, and the diverse client-side ecosystem is still thriving. By switching clients, you can still experience pure socialization. The social functions of the official client, Farcaster App, remain intact, with the addition of an in-app wallet this year as an extension of the original functionality. It seamlessly integrates with Mini Apps, deeply embeds into the identity graph, and interacts smoothly with the social feed.

The team has simply adjusted the product focus, aiming to steer the entire network towards a growth path, no longer spending time onboarding users from various industries for network diversity, or optimizing the minimally effective Channels community feature. They have dedicated enough time to building a small and beautiful "cozy corner," but the "social-first" strategy did not achieve sufficient product-market fit, with tens of thousands of daily active users still being niche. Thus, they have very pragmatically returned to the first principles of crypto applications: serving the flow of value.

Building on this foundation, the integration of wallets and social features is not only a stronger product differentiation and a more realistic growth path, but also closer to the PMF tipping point of crypto social. In fact, the shift in focus of Farcaster's work this year is also a punctuation mark for the development direction of the entire crypto social app, where "social walletization, wallet socialization" is the natural convergence direction of consumer-grade crypto applications. Now, almost all products with some social aspect have wallet functionality, and wallet apps are now attempting to incorporate social elements. Not to mention, there are also many apps that have taken a social + wallet approach as their native positioning from the beginning.

Social App Walletization

If you want to stand out, all crypto apps actually have to answer what sets them apart from similar traditional off-chain apps, and of course, crypto social apps also have to answer where they differ from traditional social products. Product manager Yu Jun once proposed a famous formula to measure whether a new product is attractive enough to users:

Product Value = (New Experience − Old Experience) − Migration Cost

Some new products have very low migration costs, with Threads backed by Instagram's strong social graph able to reach one billion users in just 5 days. The luckiest thing is to encounter users who are migrating just for the sake of migration. Bluesky, just by focusing on "uncensored Twitter," has caught the elusive Twitter refugees like fish to water.

But the vast majority of crypto apps do not have such a background and luck. To attract users who are already using traditional similar products with more users and a more mature product, you can only start by enhancing the new experience. Crypto social apps initially approached from a technical perspective, focusing on how to integrate with blockchain at the foundational level to achieve decentralization. However, embedding encryption technology at the foundational level is imperceptible to the vast majority of users and does not bring a new experience. This lack of differentiation when competing with traditional social products, often leads to a more cumbersome onboarding process. For example, both Farcaster and Lens use blockchain at the core of their social protocols, with Farcaster storing identity data on the OP chain and Lens storing identities and social graphs on the Lens Chain, ensuring "not your private key, not your social account." But the vast majority of users are not concerned about the underlying technology; they care about what new experiences the product offers at the product level.

The Farcaster team certainly realized this early on, with their philosophy being "product-driven protocol development," hoping to drive the growth of the entire Farcaster network through a benchmark product. If they had just thought of creating a social protocol, then the team's mission would have been basically accomplished, having implemented many theories of decentralized social from the start, creating a protocol that is "sufficiently decentralized." In reality, they emphasize the openness, programmability, and composability of the protocol, allowing developers to build various applications based on an open social graph. However, if they were to allow the ecosystem to develop as freely as Nostr, ActivityPub, Lens, etc., users would not migrate just because your underlying technology is different. The ecosystem's unbridled growth brings about content noise that further reduces the user experience, and the end result is often that users do not want to come, and if they come, they won't stay. The Farcaster team's decision to develop a client of their own is aimed at attracting users at the product level.

A high-quality social circle is a new experience, unique alpha information is a new experience, and the combination of encryption and socialization is a new experience. In the early stages, Farcaster achieved the first point by onboarding a group of high-quality users, which is also a rare moat, but growth is limited. It is very difficult to attract the vast majority of users characterized as "early risers with no gains, empty-handed wolves." Interestingly, Farcaster was once criticized for being too pure. For a long time, discussing token price fluctuations on Farcaster was seen as deviant behavior, only able to hide in a corner of the /DEGEN Channel, where few and far between. So, it wasn't until the beginning of 2024 when Frames was launched, offering a slightly different encrypted native feature compared to traditional social apps, and the community grew the $DEGEN creator economy project, that Farcaster's daily active users saw a significant increase. By the end of January 2024, the daily active users had grown rapidly from around 2,000 to more than 10 times that number. This was partly due to product innovation and partly due to the already established high-quality community's ability to support this open social networking project.

Farcaster's early version mini-program, a transaction Frame

At that time, Farcaster had actually completed the transition from the "farming age" of a pure social network to the "craftsmanship age" of initial integration with encrypted features: Social Graph + Frames + External Wallet, for the first time truly connecting social content flow with on-chain operations. Solana also attempted to enable wallet and encrypted mini-app interactions in the Twitter feed through the Actions protocol via a browser plugin. Social Media × Crypto App × Wallet Interaction is a direction everyone wants to explore. Through Frames, users can mint NFTs and execute transactions in the social feed, which is indeed a new experience. However, there are at most four operational buttons, the screen transitions are like PowerPoint, and both the functionality and performance are very limited. Additionally, as soon as wallet authorization is involved, users must navigate to an external wallet, resulting in restricted functionality and a fragmented user experience, which is still not seamless enough. So, in reality, from the first day Frames was launched, the community was calling for full wallet functionality, but it took a year to materialize.

In the Farcaster Chinese community WeChat group, when Frames was first launched in early 2024, everyone started excitedly envisioning wallet functionality.

With the arrival of the memecoin supercycle last year, from the popularity of PumpFun to the homegrown Clanker from Farcaster, more asset issuance has brought about more trading demand. The importance of the entire path from discovery to transaction is increasingly highlighted, and wallets have naturally become an increasingly crucial entry point in this process.

Therefore, it is not difficult to understand that in order to allow users to interact more naturally with crypto applications within a social media environment, it is necessary to:

1. Have a more flexible and higher-performing underlying framework to support more powerful mini applications

2. Shift from connecting external wallets to using built-in wallets to make on-chain interaction truly seamless

This point has also been validated on the instant messaging social app Telegram, where its Mini Apps ecosystem and built-in TON wallet have sparked a trend. Therefore, this year's Farcaster naturally completed the following upgrades:

1. Frames → Mini Apps

2. External Wallets → Built-in Wallets

What web pages can achieve, Mini Apps can achieve. Anyone can build permissionless and cross-client universal mini apps, greatly expanding the functional boundaries within social media applications. Interaction with built-in wallets also does not require transitioning to external wallets, moving from the "handcraft era" of having basic crypto functions to a more feature-rich "industrial era." This is not a deviation but a natural extension along the trend, not a forced pivot but an inevitable evolution in response to market demand.

Integrating a built-in wallet is not the death knell of encrypted social media but the industrial revolution of encrypted social media.

Crypto Apps and Decentralized Social by Linda Xie

With the presence of built-in wallets, there are naturally transaction signals based on the social graph. Asset issuance, propagation, discovery, trading, and community building can all be completed within the same application in a closed loop. It is also convenient to interact with Mini Apps, enabling almost all crypto application functionalities, including games, videos, live streaming, voice Spaces, podcasts, prediction markets, DeFi, and more. The rich ecosystem of Mini Apps and built-in wallets are driving side by side, integrating on-chain interaction into users' daily social behaviors. Applications like Noice, Bracky, QR, Harmonybot have given rise to a series of new encrypted social interaction scenes due to the existence of social graph + Mini Apps + built-in wallets, each having its moment in the spotlight. Farcaster's daily active users also hit a new high at the end of October against this backdrop.

Trending Mini Apps of Different Categories

These are all experiences that users can perceive, use, and unlock new scenarios, and they are truly the differentiation from traditional social products. Even if only because the wallet provides a more convenient entry point, lower fees, and a more seamless cross-chain experience, users who initially only use the transaction function still have the opportunity to achieve the goal of "coming for the tool, staying for the network." This is a step forward compared to the past, where the focus was solely on attracting attention from Twitter based on the attraction of social networks.

Coincidentally, some instant messaging applications have also proactively added wallet functionality on top of social features. For example, chat apps in the Farcaster ecosystem like frens and apps like DeBox allow users to simply send a CA in the chat group to trigger transactions using the built-in wallet. More and more developers have also realized that they should not avoid mainstream crypto users; the essence of crypto social interaction is not to stay away from wallets but to embrace them. The value layer should not be fragmented but integrated. A crypto social platform without a built-in wallet has taken a detour.

frens screenshots

Socializing Wallet Applications

Likewise, crypto wallet applications are also attempting to incorporate social elements. Evolving from mere asset containers and transaction gateways, they are now aiming to include social signals and interactions based on social graphs, responding to the increasingly diverse user needs and on-chain activities.

Both Zapper and Base App, originally wallet applications, have now integrated content from the Farcaster social protocol and social graph, effectively becoming clients of the Farcaster protocol. This also demonstrates the value of Farcaster as an open, programmable, and composable social protocol. The protocol is open, the interfaces are clear, and developers are free to build a client or an app based on Farcaster. Whether it's a wallet or another application, without the need for permission, they can directly integrate the Farcaster social layer into their product.

Zapper integrates Farcaster Network content on top of the wallet, along with on-chain dynamics and transaction signals based on the Farcaster social graph. This allows users to directly discover trading opportunities from the on-chain behavior of followed users and swiftly execute trades with a single click.

The Base App, on the other hand, enhances the existing wallet by incorporating Farcaster as a social information feed, Zora as a tool to tokenize creator content, and XMTP as an underlying protocol for real-time communication and community chat. This enables the Base App to facilitate content creation, asset issuance, social discovery, token trading, app interaction, community chat, and interaction with agents, forming a closed loop where content, relationships, and value coexist in the same space.

Zerion has also integrated a social graph to enable social discovery. Building upon its robust feature of tracking watched wallet addresses, Zerion has now included Twitter, Farcaster, and Lens social identities to better discover interesting users and top traders' transaction signals.

Zapper, Base App, Zerion

Centralized exchanges can also be considered wallets, and they are actively exploring integration with social elements. Since 2022, Binance has introduced Binance Feed, which evolved into Binance Square in 2023. Leveraging the world's largest gateway for crypto trading volume, Binance has established a transaction-focused comprehensive community platform. Users can now not only trade but also follow trader dynamics, access in-depth content information, engage in strategy discussions, and participate in diversified social interactions such as voice and live streaming. This enables users to spend more time within the same application.

Similarly, the centralized exchange platform Robinhood, which has expanded into cryptocurrency and prediction markets, recently announced its foray into social features. It now allows users to interact on the platform, share strategies, discover signals, and copycat trades.

However, self-built social features by centralized exchange platforms tend to create closed ecosystems where users' relationship networks, content, and identities remain within the platform's control. Unfortunately, ordinary developers cannot freely build new applications based on their social graph. All features rely on single-point iteration by the exchange platform team. Nonetheless, as the saying goes, users don't care about that; they only care if your product is useful and user-friendly.

Robinhood is exploring social

For wallets, social interaction is not just a decorative feature but a key step in transforming the wallet from a "tool" to a "network." Social interaction provides context to asset behavior, the source of transaction decisions, and a track record for content distribution. By incorporating social features, wallets can better leverage network effects, transitioning from a tool to an ecosystem.

Social + Wallet: Transaction, Discovery, Creation

Social applications are becoming more wallet-centric, while wallets are becoming more social, and the convergence of the two is increasingly aligned. This is actually the natural convergence direction of consumer-grade crypto applications. For crypto social networks, failure to actively integrate with wallets is a passive choice that goes against mainstream crypto users; not doing so will cause falling behind and inevitably be replaced by more complete product forms. Social applications need wallets to complete the puzzle of on-chain interactions. The core capabilities that constitute the differentiated experience of crypto socializing, such as the crypto app ecosystem and creator economy, all rely on comprehensive wallet functionality to be realized. Adding a value layer on top of the social layer provides leverage for the growth of social networks.

For wallets, integrating social features is like icing on the cake. Users no longer just "use and go"; instead, they stay because of relationships, content, and communities. Wallets transform from tools to networks, from entry points to scenarios, from asset managers to interactive spaces, naturally expanding into more application scenarios and network effects.

Of course, some applications have targeted the "Social + Wallet" path from the beginning, realizing early on that the two naturally complement each other and can form a value loop of content, relationships, and assets.

· interface.social: Supports the discovery of popular tokens, tracks users' on-chain activities, allows for transaction mirroring, and enables users to post transaction insights (Takes).

· 0xppl.com: Supports the discovery of popular tokens, tracks multi-chain wallet behaviors, enables transaction mirroring, and offers profit monitoring.

· Firefly.social: Firefly itself is an aggregation client for multiple social networks, including X, Farcaster, Lens, Bluesky, supporting cross-platform one-click posting, mining transaction opportunities from aggregated friend transaction dynamics.

· fomo.family: Provides real-time tracking of friends and top traders' on-chain transactions, quickly discovers new assets through built-in transaction analysis and profit/loss tracking.

· Share.xyz: Allows users to share any transaction, follow any wallet, receive real-time transaction notifications, supports copying transactions with the copier receiving a profit share.

· gmgn.ai: Supports fast discovery of popular assets, tracks smart money and user holdings and transactions, performs subsecond on-chain transactions, and provides integrated on-chain intelligence and trading tools with automatic mirroring, risk control checks, and real-time alerts.

· Vector.fun: Supports on-chain user transaction dynamics and asset discovery. Acquired by Coinbase and currently suspended.

Interface, 0xPPL, FOMO, Share

From start to finish, you will find that they are similar in many features and interfaces. "Transaction, Discovery, Creation" is Farcaster's new slogan. Applying this phrase to other "Social + Wallet" applications doesn't seem out of place either. Basically, they all focus on discovering transaction signals, quickly copying trades, and sharing trading strategies.

The difference may lie in the way each product chooses its focus. Different applications make trade-offs in terms of functionality, emphasis, depth, and breadth. Some emphasize content creation, allowing users to explain "what to buy and why"; some almost do not create content but instead focus resources on trade execution, data insights, and trade-copying efficiency. These trade-offs ultimately shape different product strengths and create significantly different user experiences.

Who can stand out? It may depend on who can specialize and delve deep into a specific aspect.

For example, 0xPPL has become increasingly specialized in on-chain graphing and is very useful for quickly identifying on-chain addresses' identities, especially during new token issuance. GMGN, on the other hand, has made transactions highly efficient from discovery to analysis to execution. In terms of multi-chain support, Zapper and Zerion as professional wallets cover a wide range of chains. As for the actual cross-chain experience, Farcaster Wallet is very smooth and has very minimal friction.

The "Takes," "Comments," or "Shares" of Interface, FOMO, and Share are the points of differentiation, allowing users to write their own transaction logic. They hope their applications can have accumulated content creation, although the centralization of content results in a slight lack of network effects. Of course, other applications can directly integrate the Farcaster protocol to achieve content creation, enabling the produced content to spread across a larger social network.

Furthermore, applications based on the Farcaster protocol have another advantage: they can reuse the hundreds or even thousands of Farcaster Mini Apps with various features, embedding mini-programs directly into social flows to easily expand the boundaries of application functionality without reinventing the wheel.

Full Landscape of "Social + Wallet" Crypto Applications

Dan Romero once said, "Adding a wallet to a social network is much easier than adding a social network to a wallet." From a product perspective, Farcaster's extension of wallet capabilities on an existing social network may be slightly easier. However, other applications can also directly integrate into existing social networks unless they are confident in their own user base.

From the "Social + Wallet" encrypted app landscape, it can also be seen that currently, if you want to create a "social + wallet" app, Farcaster and X are the most chosen in terms of selecting a social graph. Slightly different, because of the varying degrees of openness, when integrating the X social graph, many times only the wallet address is associated with the X account; but when integrating the Farcaster social graph, in addition to identity association, existing social relationships and even content produced on the social network can be easily imported, thus instantly obtaining a ready-made social network, rather than starting from scratch to accumulate social content and build a relationship graph.

As more and more applications adopt Farcaster as their social infrastructure, the value of the entire network will be inversely amplified, thereby enhancing the network effect of the entire protocol. Looking back over the past four years, the Farcaster team has built a "small but refined" social graph along a restrained development path, although growth has been limited, the accumulated social relationships, content, and culture are becoming the underlying assets and infrastructure of the open encrypted social ecosystem. In the future, this network will continue to be enriched, extended, and adopted.

Conclusion

Farcaster is not dead yet, encrypted social networking is not dead yet, and Farcaster as an encrypted social network is not dead yet. True encrypted social networking is not limited to just building a social network, but is about integrating social interaction with value transfer. Therefore, this year, the Farcaster App has successfully upgraded from an inconvenient external wallet connection to a fully functional built-in wallet, filling in a critical missing capability.

This is not abandoning social networking but driving social networking forward, giving social networking a new growth engine.

The recent "ridicule" encountered by Farcaster precisely illustrates that Farcaster's social graph is still too small, and the number of daily active users is still too limited, causing some information gaps and misinterpretations among bystanders. At the same time, in the trend of "social walletization and wallet socialization," the Farcaster App also faces ongoing competition, which are current real challenges. It needs to continue relying on Farcaster's "wallet-first" on the product side and the continuously emerging Mini Apps in the ecosystem to jointly drive growth, with the product-layer value transfer capability continuing to complement the protocol-layer composability of the ecosystem.

What will happen next? No one can guarantee the answer. But perhaps expanding wallet functionality on top of existing social media, true encrypted socialization will begin, allowing value to flow, and the encrypted social network will become more active.

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