Farcaster: Protocol First
By LJW and Cameron Armstrong
Last week, I had the pleasure of writing with Cameron who is the founder of VF Protocol. We decided to write about Farcaster, a relatively new and fledging decentralized social network. I met Cameron on Farcaster, then we connected over a Zoom call. Over this past week, I met him in person at an HBS conference where we had a long conversation exploring the “why” to Farcaster and Web3 social. He drops some serious wisdom. 🧠 🌩
Today we explore what a Web3 protocol like Farcaster, if successful, enables for the world.
Special thanks to my good friend Tayyab for reading, editing and contributing thoughts to our piece. (Excited to write with him in the future 👀 )
Contributing Writer: Cameron Armstrong
Cameron is the founder of VF Protocol - a zero fee payments network built with crypto infrastructure. VFP's first product is a decentralized NFT escrow and private sale protocol. Prior to VF Protocol, he cofounded and sold an e-commerce software startup, worked at Amazon Finance, and served as an Infantry Officer in the U.S. Army where he deployed to Kuwait & Afghanistan as a platoon leader. He also taught leadership at the U.S. Army Officer Candidate School. He has an MBA with Distinction from the Harvard Business School and was Valedictorian of his class at the Virginia Military Institute.
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Whenever “decentralized social (media)” or Web3 social is mentioned as an alternative to Web2 social media, skeptics jump right to how Web3 tech and user experience are not on par with their Web2 counterparts.
They are right.
Web2 companies have optimized their platforms over many years, with moats powered by network effects. On the other hand, Web3 social is very early in its lifecycle. The critique is often that Web3 UI/UX is inferior for the user — leading some to believe Web3 social is dead on arrival.
But this reasoning follows a “because it doesn’t work today, it will never work” mentality.
Hardware: computers used to be large and bulky, now they are mobile (even smaller if you count wearables)
Infrastructure: Companies used to buy and manage in-house servers, now it's all on the cloud
Software: Databases used to be slow and required specialized engineers, now AI helps write code
Tokens: Tokens used to only be fungible, now we’ve gotten past NFTs and exploring Soulbound NFTs
The more interesting question is: when (not if) Web3 tech catches up, why does Web3 Social even matter?
Today we explore Web3 social through Farcaster, particularly focusing on, if Farcaster’s vision came to fruition, what do we unlock?
(Note: there are other projects like Lens and DeSo working on Web3 social. The point of this essay is not to compare Farcaster with them. All three projects are building toward decentralized social, albeit with different approaches).
What is Farcaster doing?
As described by Dan Romero (Cofounder of Farcaster):
“Farcaster is a sufficiently decentralized social network…
Compared to other Web3 social protocols, Farcaster’s architecture is minimally on-chain. Only a user’s identity is on-chain; everything else—posts, likes, follows, profiles—are stored off-chain in specialized servers called Farcaster Hubs (similar to Ethereum nodes for the Ethereum network).”
Farcaster is building an open protocol for social media.
With an open protocol, other developers can build their own clients (apps) on top. The Farcaster team is (deliberately) building the first client app (a social network similar to Twitter, but leans heavily toward crypto conversations) on top of the Farcaster protocol.
Others have also started to build on top of the Farcaster protocol and contribute to its fledgling ecosystem (Some highlights: ~30 apps, multiple code contributors and groups of writers like us, writing about it).
💻 Protocol vs Client
There are two critical concepts to understand with decentralized (social) application architecture:
Protocol: Code that determines how things work + State (history of user data and interactions).
Client: Front end / “application” that sits on top and leverages the code and state of the protocol.
This is similar to how Email works:
The Farcaster Protocol is akin to the Email Protocol
Farcaster Clients are akin to Gmail / Yahoo Clients (there could be any number of email clients built on top of the email protocol by different companies).
🧱 Protocol Key Components
Farcaster (the Protocol) has two key components:
The Name Registry that is stored on the blockchain.
Acquiring your username or handle is similar to other Web2 social apps, except on Farcaster, you own it. To get your Farcaster ID (unique ID number), you will have to register it on the Ethereum blockchain (and pay gas fees). To get a Username (unique alphanumeric name), you will have to pay an incremental fee.
In Web3, you truly own your username versus in Web2, the platform technically owns your username. Owning your username (identity online) becomes important, if you believe:
your username is a key part of your online identity and;
you will spend an increasing amount of time online
Having a credibility neutral username / digital identity that you own is a net new thing enabled by blockchains.
The ownership is complemented by Farcaster Hubs, which are independent nodes that intake data and user interactions such as posts, likes, comments, follows, etc. Hubs create the data layer for Farcaster. 🤝
Hubs distribute the state or user data / history of the network out to the edges. This means Farcaster apps (or anyone else) can't rewrite your casts. They can refuse to display them, but they will live on chain and always reflect your ideas.
A network of Hubs enables decentralization and prevents a single server / entity from having too much power.
These components enable Farcaster’s open protocol thesis and allow other developers to permissionlessly build on top of the protocol and state.
See the Further Reading section below for more details on Farcaster.
🧬 How is Farcaster different from Web2 Social?
Web2 social is both a closed database (protocol) and a proprietary application (client). For example, Twitter owns the underlying closed database of all your tweets, likes, messages, user interactions, etc. and it owns the user facing Twitter app (client).
The Twitter ecosystem creates value through network effects: users on the platform create data and user interactions, which allows Twitter to optimize the platform (sell ads, serve you additional content, etc.) to entice new users to join, who in turn generate more data and user interactions, so on and so forth. 🕸
But in a closed ecosystem, the value enabled by network effects accrues mostly to the company and not to the users and stakeholders who help create that value. 🔒
At heart, Farcaster is experimenting with: can an open ecosystem built with Web3 tech and values enable more collective value capture for all the stakeholders who are involved in the value creation? 🫂
Here are some thoughts on why Farcaster’s Web3 version of social creates value.
🫂 Shared Network Effects through Community Goods
The Farcaster ecosystem still works on network effects, where more user data and interactions on the Farcaster protocol entice the next developer to build on the Farcaster protocol (versus a competing protocol). And more apps entice more users to onboard onto the Farcaster ecosystem. 🔃
But because the Farcaster protocol and related infrastructure is open and accessible for others to build on top of, it is akin to a public / community good – one that creates shared network effects. This unlocks value for users, creators, developers and the broader community in a way not possible before Web3.
In closed networks, scale and network effects create power dynamics between the platform and its users/partners. When a platform becomes too big to fail, they can become too complacent to innovate [see Innovator's Dilemma].
All this leads to platforms extracting value vs creating value. 😭
In open networks like Farcaster, scale and network effects accrue at the protocol (infrastructure) level — a community good. Accessibility to data that underpins the network effects promotes experimentation and innovation in applications. With open protocols, innovation becomes cheaper (the cost to build a new client / application) because the network effects are shared (i.e. a builder doesn’t have to build from scratch).
Since the protocol is permissionless, if you don’t like the version the Farcaster team is building, you can build your own, but you don’t have to start from scratch. Instead you build on top of the existing state and history and user base. 🕸3️⃣
🏆 Higher quality niche communities
Farcaster enables many niche communities to exist with the implicit goal that quality is more important than quantity — quality framework versus quantity framework.
Niche communities might be smaller, but they are more focused and more engaged (i.e. higher quality). With a few clearly defined user segments, builders can design clients and applications to serve the specific needs of a niche community. (Without an open protocol, the cost to build applications for niche communities are not feasible for many builders).
For example if you have a client / application that caters to:
🕸3️⃣ A Crypto Community: you can have a GM button, because that’s what the users want. For non-crypto communities, a GM button doesn’t make sense.
🎨 A Designer Community: you might build in embedded design tools, native portfolio hosting, etc. For non-designers, these features don’t make sense.
🎮 A Gaming Community: you can implement a chat and pseudo-Discord experience with a character items marketplace. For non-gamers, these features may not make sense.
🖋 A Writer Community: You can implement a long form messaging / posting feature. For non-writers, a long form posting feature might not make sense.
This is what the first Farcaster client (application) is experimenting with today. The founders want Farcaster (the client) to be the best place to have crypto conversations.
If there are only x-people in the world who care about the “best place to have crypto conversations,” whatever “x” is, is fine, as long as the quality and engagement is high. Quantity of users matter less. After all, there is a ceiling to how many relationships and conversations we can manage at once. A bigger community is not better if it sacrifices quality (see: Dunbar’s Number).
Every niche community has their own vibe, conversational liquidity and engagement canvas.
With Farcaster, you can build applications to satisfy all of these niche communities and not at the expense of other communities, user segments and preferences, because they can exist on different clients.
Everyone finds their own corner of the Internet. 🚀
Closed platforms in Web2 are not incentivized to cater to user segments in this way. Niche communities don’t accrue enough value to make it ROI positive for large platforms to cater to.
For example, closed platforms will likely not build designer-centric features because not all users on a platform are designers, similar arguments for crypto-centric features, etc. etc.
Instead closed platforms build for the average user and no user segments get what they truly want. 😢
🧪 Enabling Open Innovation
In Web2, the user doesn’t have a choice and switching costs are high, so the power dynamics are in favor of the platform.
If the platform wants to make a policy change and the user disagrees with the change, the user’s decision is
🪨 Either leave the platform (and leave their social network and data behind)
🪨 Or just accept the policy change (begrudgingly)
On top of that, since all the content creators created their content and following in a closed ecosystem, it’s also hard for them to sacrifice their distribution moat and start over on a new platform.
🤔 But if the users and content creators are dissatisfied, can’t they just start their own platform and design it from the ground up to meet their specific need?
Theoretically yes, but practically impossible given incumbent network effects.
The cost required to build a Twitter clone is very high: you have to start from scratch. For example on Twitter, there are ~500M tweets per day with hundreds of millions of users. If you paid $1 to entice each user to move to a new application, you still have to account for software development and go-to-market costs… And of course it will take more than $1 to acquire users. The cost to compete is a non-starter for many builders.
😳 This begs the question: is a closed network limiting the value the ecosystem can create?
The grand experiment / thesis here is that an open and permissionless social network might unlock trapped value in the closed ecosystem.
Said another way, there are different ways to capture value:
(Web2) Capture most of the value of a smaller pie; OR 🍰
(Web3) Capture a smaller slice of value of a bigger pie 🥧
Farcaster is trying to bake a bigger pie by giving builders the tools to build apps that optimize for their user-segment’s preferences.
The Challenge Ahead
The challenge ahead for Farcaster is overcoming Web2 closed network effects with Web3 open network effects.
Web3 social is trying to unbundle Web2 social. While unbundling is not a new concept, each unbundling looks different and is enabled by different technology. [See: Next Great Unbundling]
Luckily in an open ecosystem, Farcaster doesn’t have to go at it alone (actually its entire model hinges on not going at it alone). 🏃🏽♀️🏃🏽🏃♂️
🧐 So… Why does Web3 social (and Farcaster) even matter?
It matters because it enables niche communities and sub-cultures to propagate and co-exist. Everyone finds their own corner of the Internet.
🤔 So what?
Well … there is an infinite number of niche communities and sub-cultures on the Internet.
♾ 🤝 🦄
📝 Further Readings
BTW, We’ve probably missed some links, don’t take this as an exhaustive list 😜