Farcaster’s Funding Transforming Dev into Unicorn Status

Merkle Manufactory, the company responsible for the social network Farcaster, is expected to reach a valuation of $1 billion in a new funding round, as reported by Bloomberg. The leading investor in this round is Paradigm, a crypto investment firm that has previously invested in prominent crypto companies like Coinbase, Blur, dYdX, Compound, and Citadel Securities. Merkle Manufactory was founded in 2020 by former executives of Coinbase, Dan Romero, and Varun Srinivasan. Their flagship product is the social media app Warpcast, which operates on the decentralized network for social media apps Farcaster. Romero confirmed through a post on March 28 that Merkle is seeking new capital, but Paradigm has yet to confirm its involvement.

In July 2022, Merkle received $30 million in funding from the venture capital firm A16z Crypto. Since January, the Farcaster platform has experienced a significant increase in user activity after introducing a feature called Frames. Frames allow apps to run within posts on the platform, eliminating the need for users to leave the app. As a result, users can now mint nonfungible tokens (NFTs), conduct transactions, access external blog posts, and participate in surveys all within the app. This update has greatly enhanced user engagement, with the number of daily active users skyrocketing from around 5,000 on January 28 to over 249,000 on March 30, based on data from Dune Analytics.

Decentralized social media platforms are a new type of network that utilizes blockchain technology to empower users with ownership over their data, content, and interactions, breaking away from the centralized control commonly seen in traditional social media platforms. These platforms offer features like censorship resistance and direct content monetization without intermediaries. Some well-known decentralized social media platforms include Friend.tech, Minds, and Mastodon. User retention remains a major challenge for these platforms, according to two industry executives.

The involvement of Paradigm in the latest funding round for Merkle Manufactory adds to the growing list of successful investments made by the crypto investment firm in the blockchain and cryptocurrency ecosystem. Merkle’s previous funding from A16z Crypto demonstrates early investor confidence in the company. The surge in user activity on the Farcaster platform after the introduction of Frames underscores the demand for decentralized social media platforms that offer increased user control and engagement. As the decentralized social media space continues to evolve, overcoming hurdles like user retention will be crucial for long-term success.

Aron Wei

Aron Wei

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