Building Farcaster is nuts. Imagine yourself in 2020, a founder looking for his $1 billion idea. Building a monster like Farcaster—a project that depends on a large # of improbable events to succeed—was one of the craziest moonshots anyone could have taken.

In retrospect, we can only thank the Merkle team. Without their striking irrationality back then, we would never have had a chance. And now, not only do we have a real shot at making Farcaster a thing, but what’s more, there’s a bunch of crazy people, including ultra high-quality builders (among the best of our industry) and ultra-low-quality investors (as myself), so confident in Farcaster’s success that they are willing to invest their precious time and dollars in it.

In this article, I want to cover the following points.

• Why I’m bullish on Farcaster

  • Building Unruggable Businesses

  • Open Social Graphs

• The Ugly Part: The Challenges Farcaster Will Need to Overcome

  • Onboarding and Daily Active Users (DAUs) Growth

  • Content Quality

  • Lack of VC funding

Humans spend one out of every three minutes online wasting their time browsing social media. How is it possible that we haven’t seen a single unicorn built on top of these platforms?

The answer is very straightforward - not one social network provides a hospitable environment for companies to thrive. Facebook squeezed massive fees from Zynga, Twitter acquired a competitor of Meerkat (Periscope) and then shut Meerkat down overnight, nerfed Substack links, and killed a bunch of third-party clients. Reddit killed Apollo, Google sent a cease-and-desist letter to YouTube client Vanced. Instagram and LinkedIn both changed their APIs, killing various apps in the process. Outcomes follow incentives - Initially, these networks benefited from having these apps on their platforms. But as soon as the apps started competing with the network or reducing potential ad revenue, they were simply shut down.

In Spanish we have a phrase that goes something like "He who gets burned by milk cries when he sees a cow”. There’s zero chance that entrepreneurs will build a company on top of a centralized platform. Just as extractive institutions lead to economic stagnation—would you invest your hard-earned capital in countries with no property rights?—extractive platforms will kill startups before they are even born.

The situation is entirely different when you build on Farcaster. Farcaster can’t shut you down, even if they wanted to, because it’s built onchain. This isn’t just a promise of "we won’t shut you down"; it’s a guarantee that they can’t.

And the results are already there—more than 100 companies are building on Farcaster. We’re seeing lots of new games, social primitives, consumer apps, and clients, all led by for-profit founders, some even backed by VCs. While centralized platforms have a limited # of devs on their core teams, we’re talking about potentially over 1,000 developers building on Farcaster today—in what might be the first crawls, not even the first baby steps, of Farcaster.

I’m excited about these emerging companies because Farcaster can only succeed by having interesting and engaging content that can (i) onboard a large # of users and (ii) retain a high percentage of them. A strong base of daily active users (DAUs) will incentivize devs to build great apps on Farcaster, which will, in turn, onboard even more users.

Initially, the low number of DAUs will mean that we won’t see many apps dedicating 100% of their focus to Farcaster. Instead, we’ll see apps that are tangential—allowing you to sign in with Farcaster, leveraging its social graph, surfacing what's happening on Farcaster alongside other platforms, and so on.

Centralized social media platforms are notoriously protective of their social graphs. If you want to export all the friends or followers of any user on Facebook, Instagram, or Twitter, you’re essentially doomed. The reason is straightforward—platforms don’t want apps competing with them. If a user spends time on an app, it means they’re spending less time on the platform. And that’s simply not something they are willing to tolerate. As a result, apps that want to suggest content from people you’re already connected with on other social media can’t do it, leaving these apps with a huge cold-start problem.

Farcaster takes a different, open-walls approach. Apps can freely use the protocol’s social graph. Drakula is a great example—once I log in, their feed algorithm can tailor the content I see based on people I already know. Zora is another—by leveraging Farcaster’s social graph, it can show you your friends on Farcaster, making it much easier to decide who you want to follow.

Some apps absolutely need access to the social graph; without it, they’d face an incredibly hard time bootstrapping a network of users, which would render the entire idea nearly impossible to execute. This open access will enable the creation of new social primitives—things we can’t even predict right now—that could never have been, and could never be, built on other social networks. Farcaster essentially offers a much richer form of “identity” than what social apps get when users sign in with their Apple or Google accounts. Plus, this identity includes a wallet, essentially giving every user global, top-notch payment rails.

Onboarding users to Farcaster is not easy. While the UX of Warpcast and other clients is really good, it’s still behind that of Twitter. Finding interesting, non-crypto content is tough, and the audience for such content is small. Channels are definitely a great improvement and help address this issue, but we will have to wait some time before we see interesting discussions on a wide range of topics. Additionally, if you have a large audience on Twitter, moving to Farcaster means taking on a huge sunk cost. This means Farcaster will need to attract people who would be great Twitter users, but aren’t actively participating there. That’s a much more limited user base.

The growth of Farcaster apps will be slow due to the lack of VC funding. While a bunch of Farcaster apps have raised money from various funds, investors are understandably reluctant to invest in apps targeting such a small user base. Additionally, the time horizon for these investments needs to be 5-10 years; otherwise, their bet might be too early. The Farcaster ecosystem needs this capital like water in the desert—without venture funding, building AAA+ apps will be challenging.

Time is a zero-sum game. For a user to spend time on Farcaster, they’ll have to sacrifice time spent on other social networks. This means Farcaster is competing with Twitter, Instagram, YouTube, Snapchat, Reddit, and many others. The content quality on Farcaster and its apps needs to be top-tier to steal market share from these giants. Dan Romero recently pointed out that “the biggest risk is people getting bored and losing interest”. We are definitely racing against time.

Farcaster is the crypto protocol with the highest chance of onboarding millions of users into crypto. If Farcaster gains traction, it could become one of the most world-changing platforms we've seen in the last few years, completely changing the way users interact with social media.

This is obviously not an easy quest. There are countless reasons why Farcaster could fail. At the end of the day, you need to be extremely risk-seeking if you want to do something that simultaneously competes with a bunch of unicorns.

We are extremely early. Farcaster feels like the first days of Facebook when a niche community had monopolized the network. For Facebook, it was college students; for Farcaster, it’s us, crypto people. But a few years from now, that will change as more non-crypto people are onboarded. Of course, for that to happen, we need to be patient, which is why I want to spend my next 10 years on Farcaster.

The views and opinions expressed in this article are my own and do not necessarily reflect those of any organizations or individuals I may be affiliated with. This article is for informational purposes only and does not constitute financial, investment, or legal advice. Please do your own research and consult with professionals before making any decisions related to the topics discussed. I may hold positions or have a personal interest in the projects mentioned in this article.