Crypto-based social media platform Farcaster has experienced rapid growth, reaching 50,000 daily active users and a $1 billion valuation. This success has sparked discussions within the Web3 community about the drivers behind its popularity and the role of venture capital in its ascent.
Data from Dune Analytics, the on-chain data aggregation platform, revealed that Farcaster reached over 50,000 active users last Tuesday. The users generated just under 30,000 engagements on the platform for the day. However, the number of interactions represented an 83% decline from the platform’s peak about two months ago.
Farcaster’s high valuation has piqued interest among blockchain analysts, considering the platform’s stats are similar to what was observed on other social media platforms, like Discord.
CoinFund’s managing partner, Seth Ginn, attributes Farcaster’s growth to the capabilities of the project’s founder, Dan Romero. According to Ginn, there is a common pattern for Web3 social projects to come and go, generating “spurs of excitement” before fading. However, he believes Romero is the right person to change this narrative.
Meanwhile, tech founder Liron Shapira suggested on X (formerly Twitter) that Farcaster’s impressive growth could be attributed to venture capitalists. He noted VCs would earn an additional $20 to $30 million in management fees by investing $150 million in Farcaster instead of giving it back. Shapira thinks something isn’t right with the VCs, given that a $1 billion valuation before achieving 500,000 daily active users is unrealistic.
Following the social platform’s developments, one analyst predicted that Farcaster would launch a token soon. He thinks the token launch will incentivize investors to capture the project’s fully diluted value.