Web3 social protocol Farcaster is struggling as user activity and revenue have dropped to the lowest levels over the last four months. According to available data, the Ethereum-based platform recorded around $10,000 in fees in October.
According to crypto media personality Chris Jourdan, who spotlighted the decline of the SocialFi app, Farcaster’s recent performance is quite significant given that it completed a $150 million fundraise valued at $1 billion in May 2024. So far, the project has raised $180 million from investors.
However, its revenue since launch has been underwhelming. It has only made a cumulative amount of $2.34 million since it launched in September 2023. Interestingly, it reached the $2 million in revenue milestone on July 1, meaning that it has made less than $400,000 over the last four months.
Meanwhile, October looks to be a more challenging month for the protocol, with available data showing it has only generated more than $1k in daily revenue four times throughout the month. The decline in revenue also reflects a broader decline in other metrics, with overall activity declining on the platform.
Why Farcaster and SocialFi apps are struggling
With its struggles, Farcaster joins other SocialFi protocols that barely see any activity after enjoying significant attention from crypto users earlier in the year. With less than 700,000 total users and around 80,000 daily active users at its peak, it is clear that the project did not fully establish itself before declining.
Several people have their opinions on why it is struggling with one user, noting that it is hard to build an alternative social media platform with only marginal improvements and profit from it, mainly when an existing product already solves the same problem.
He said:
“People believe it is just like 𝕏, so why not just use 𝕏? I love web3 as much as anyone but devs over estimate people’s willingness to change.”
This appears to be one of the major reasons for its struggles, as other people also share the same sentiment.
Pseudonymous JustZ described X as the top of the food chain with all the important people there; therefore, it would be difficult for decentralized SocialFi apps to attract people away from X unless something catastrophic happens.
JustZ said:
“As much as I get the decentralized relays upside, censorship-resistant etc. I think the highest chance of succeeding for new social networks is to target new generations who have little to no online track record yet and see the upside of new fertile lands.”
Meanwhile, others believe that social media networks’ design makes it difficult for them to work as a decentralized platform. They noted that social media thrives only because of ad revenue, which decentralized protocols cannot provide. Thus, the only social media model that can work when decentralized is that of OnlyFans.
Some are still bullish on Farcaster
The decline in activity and revenue on Farcaster has also affected its reward token, DEGEN. DEGEN, which also serves as the native token for Layer-3 Degen Chain, is down 87% from its peak price of $0.0645 on March 31 to $0.00818.
Despite the decline, the token has had a relatively stable performance over the last few months, showing a positive 61% gain in the previous 30 days even though it is down 8.5% in seven days, according to CoinGecko.
This performance is likely due to Coinbase listing the token on its exchange, which attracted significant interest. However, that interest has relatively died down, with a trading volume of only $14.43 million in the last 24 hours.
Meanwhile, some people are still using Farcaster. One user noted that they still use it regularly and remain bullish, noting that the platform’s funding gives it sufficient time to turn things around and possibly succeed.
They highlighted several features of the platform that make it better than X. These include Frames, the ability to mint a post, play games, trade tokens, and token-gating DMs and channels. Others also pointed out its portable social graph as one of its great features.
Source: https://www.cryptopolitan.com/farcaster-sees-revenue-drop-to-10k/