Merkle Manufactory, the company behind the social network Farcaster, is reportedly set to reach a valuation of $1 billion in its latest funding round, according to sources familiar with the matter as reported by Bloomberg. Leading the funding round is crypto investment firm Paradigm, which counts major crypto firms like Coinbase, Blur, dYdX, Compound, and Citadel Securities in its portfolio.
Co-founded in 2020 by former Coinbase executives Dan Romero and Varun Srinivasan, Merkle’s flagship product is the social media application Warpcast, which is built on the decentralized network for social media apps, Farcaster. Romero confirmed that Merkle is raising capital in a post on March 28, although Paradigm has not officially confirmed its involvement. Previously, Merkle raised $30 million from venture capital firm A16z Crypto in July 2022.
Since January, the Farcaster platform has experienced a significant increase in user activity following the introduction of Frames by Warpcast. Frames allow apps to run within posts on the platform, enabling users to mint nonfungible tokens (NFTs), perform transactions, access external blog posts, and respond to surveys directly within the app. This update has greatly enhanced user engagement, with the number of daily active users on the Farcaster network growing from around 5,000 on January 28 to over 249,000 on March 30, according to data from Dune Analytics.
Decentralized social media platforms are a new type of network that utilizes blockchain technology to give users ownership over their data, content, and interactions, moving away from the centralized control seen in traditional social media. These platforms offer features such as censorship resistance and content monetization without intermediaries. Popular names in this sector include Friend.tech, Minds, and Mastodon. However, user retention remains one of the biggest challenges faced by decentralized social media platforms, according to industry executives.