Merkle Manufactory, the company responsible for the social network Farcaster, is set to achieve a valuation of $1 billion in a new funding round, as reported by Bloomberg and sources familiar with the matter. Leading the round is Paradigm, a crypto investment firm that has invested in major crypto companies like Coinbase, Blur, dYdX, Compound, and Citadel Securities.
Merkle was founded in 2020 by former Coinbase executives Dan Romero and Varun Srinivasan. The company’s main product is the social media app Warpcast, which is built on the decentralized Farcaster network for social media apps.
On March 28, Romero confirmed in a post that Merkle is raising capital, although Paradigm has not yet confirmed its involvement. Previously, Merkle raised $30 million from venture capital firm A16z Crypto in July 2022.
Since January, Farcaster 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 NFTs, perform transactions, access external blog posts, and respond to surveys directly within the app. This update has greatly enhanced user engagement, with 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 of their data, content, and interactions, moving away from the centralized control seen in traditional social media. These platforms offer features like censorship resistance and content monetization without intermediaries. Other well-known decentralized social media platforms include Friend.tech, Minds, and Mastodon.
According to industry executives, one of the main challenges faced by decentralized social media platforms is user retention.