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For a long time, the social media niche of the crypto industry lagged behind areas such as gaming and decentralized finance (DeFi) in terms of growth and adoption by users. That all started to change last year, in 2023, when a host of innovative SocialFi projects, such as friend.tech, Steem and Pop Social, appeared on the horizon. Since early 2024, another key web3 social media platform — Farcaster — has experienced rapid growth, quickly changing the dynamics of competition in the field.
The Farcaster social media protocol has become home to several "channels" and apps, with active community engagement. Farcaster's flagship app, Warpcast, is a gateway that’s used for accessing an ecosystem whose users can broadcast digital content and communicate à la X (formerly Twitter).
By now, there are thousands of channels within the ecosystem, of which Degen is the most popular. Degen is a unique Farcaster community product that’s launched its own crypto token, DEGEN — which, interestingly, has functions well beyond memes and lighthearted fun. In addition to being a typical social media meme coin, DEGEN is also used to reward active user engagement on Farcaster. Various apps have also integrated the token for functions such as trading fee payments, and the allocation of grants to digital content creators.
Key Takeaways:
Degen (DEGEN) is an community channel on Farcaster’s decentralized social media protocol.
The channel’s native crypto, DEGEN, was launched to reward users for sharing digital content liked by others.
In late March 2024, the project introduced its own EVM-compatible Layer 3 blockchain, the Degen chain, which opens up new use cases for the DEGEN token.
Degen is a popular channel on the Farcaster protocol, a decentralized social media platform that uses an X-like format. Degen allows Farcaster users to "tip" other users for posting engaging content. Users who receive tips from other Farcaster community members are awarded points according to the level of engagement their publication generates. Based on the points accumulated, eligible users receive DEGEN tokens via airdrops.
The tokens will be distributed to users via three airdrops, with Airdrop 2 currently underway. To qualify for the current airdrop, a user must have held at least 10,000 DEGEN in a Farcaster-connected wallet for at least 48 hours and have made at least three casts (digital content postings). Eligible users receive a daily tip allowance in Degen points to tip other Farcaster users.
Degen is currently the most popular channel within the Farcaster ecosystem by total number of casts, as well as one of the top channels by reaction-to-cast ratio.
The DEGEN crypto was launched by Farcaster's Degen channel in January 2024 as a community token to reward active participation and quality content postings. Thanks to its innovative concept, it immediately livened up the channel and the entire Farcaster ecosystem.
Prior to the token's launch, Degen was a relatively minor social community, with little to separate it from the thousands of small channels on Farcaster. As DEGEN's popularity has surged since January, several applications have decided to use it as their native token for functions that go beyond simple social media tipping. For example, short video social app Drakula has adopted DEGEN to facilitate the payment of trading fees and award community grants to creators.
In late March 2024, the project launched its own Layer 3 Degen chain to accommodate decentralized apps (DApps) focused on social interaction, as well as areas beyond it. DEGEN is the chain's native cryptocurrency, used for paying gas fees, similar to the way in which Ether (ETH) is used on Ethereum’s blockchain.
The DEGEN token was launched with a total supply of just under 37 billion. This supply will stay fixed until 2028, with a 1% built-in inflation rate thereafter. Of this token supply, 60% is allocated for distribution via three airdrops. The first airdrop has been finalized, while Airdrop 2 is ongoing until the end of April 2024. Precise details for the third airdrop have yet to be announced.
Besides the airdrops, there are DEGEN supply allocations for a liquidity mining program, liquidity pools on several DeFi platforms, and community development and support.
Currently, Degen uses two external pools that liquidity providers can use to earn yields on Uniswap (UNI) and Aerodrome Finance (AERO).
The chart below shows the DEGEN token's supply allocation shares.
Farcaster’s protocol is designed to facilitate the launch of sufficiently decentralized social media apps. A “sufficiently decentralized” network is defined as one on which two users can interact with each other even if the rest of the network wants to prevent it. The protocol is based on Optimism (OP), a popular Layer 2 platform linked to the Ethereum blockchain.
Farcaster features a format quite similar to that of X, with users sharing digital content in the form of casts — rough equivalents of tweets on X or forum posts on Reddit.
A key element of the Farcaster protocol is its Warpcast wallet app, which lets you interact with the many channels — public interaction spaces dedicated to a specific topic or theme — within the Farcaster ecosystem.
A Frame is a type of content posting that features an interactive, full-fledged app embedded into the cast. Using Frames, you can utilize fairly advanced app functionality in your casts. Users have employed Frames for video content, interactive polls, live feeds and more. Thanks to their interactive nature, Frames have expanded Farcaster's popularity since their introduction in January 2024.
The Farcaster platform isn’t a newbie on the decentralized social media scene, having been founded in 2020, but it was only with the launch of the Frames functionality that the protocol finally took off.
Messages are the primary way that users on the platform interact with others and with their own accounts. Farcaster messages aren't limited to posting textual or other digital content to a channel, as the platform uses the message term to denote any user interaction with the network registered on the blockchain. This includes posting content via casts, liking other users' casts, following other users, uploading a profile picture and proving ownership of digital assets on the underlying blockchain, Ethereum.
All messages are stored on a peer-to-peer network of nodes, which facilitates the scaling of Farcaster to millions of users. To prevent network spamming, users are charged rent for storing their messages on the network.
Below are the five primary message types that users can publish to the Farcaster network.
Channels are public interaction spaces where users can communicate, share content via casts and tip other community participants' casts. Users can create a channel host by paying a fee with Warpcast to grow their own audience. Farcaster channels are typically structured around a particular topic or theme, and are thus similar to communities on X or subreddits on Reddit.
In late March 2024, the Degen project launched its own EVM-compatibleLayer 3 (L3) platform, the Degen chain. It sits atop the Layer 2 (L2) network, Base, which, in turn, is linked to the underlying Ethereum Layer 1 (L1) blockchain. The Degen chain was built using Arbitrum Orbit, an Arbitrum technology that facilitates the launch of highly customizable blockchains, including L2 networks that settle directly on Ethereum or L3 networks that settle on any Ethereum L2 chains.
The Degen chain purports to have minimal transaction costs, which will undoubtedly encourage more active DApp development and adoption on the newly created platform. DEGEN is designated as the chain's native gas token.
By launching its own network, Degen is moving beyond being just another Farcaster channel and into something more ambitious: a full-fledged decentralized community with a variety of DApps utilizing the DEGEN token in their functional models. This should further expand the token’s applications and use cases.
The Degen chain has so far proved to be popular among crypto enthusiasts, particularly meme coin aficionados. After just four days of operation, the chain reached nearly $100 million in daily transaction volumes, with more than 2,000 custom tokens having been launched on it. At this early stage, the majority of these tokens are believed to be related to various scams, and investors are warned to treat these assets with caution. However, as the chain matures and its functionally useful DApps gain recognition, the new L3 network has a great chance of becoming a major social media hub.
Layer 3 blockchains are highly customizable networks deployed for specific use cases, sometimes even for a single application. They sit on top of an L2 chain, and have the potential to extend its functionality to better fit the project’s needs. In the case of the Degen chain, which uses Base L2, the primary use cases revolve around social network apps, as well as other projects that might want to use DEGEN as their native crypto.
The advantage of having a dedicated Layer 3 is a greater ability to customize the key components of a network. For example, while the Degen chain employs Base for transaction settlement, it uses Arbitrum’s AnyTrust technology for another key functional module, the data availability layer, which is used by decentralized platforms to store data and metadata required for transaction validity checking.
The DEGEN token is still in the early stages of its market presence. So far, the token has benefited massively from its unique concept and the announcement of the Degen L3 chain. DEGEN was introduced in mid-January 2024, trading at tiny fractions of a cent, $0.000023 to be precise. By the time the Degen chain was launched in late March 2024, the DEGEN’s price had risen above $0.02, roughly a 100,000% appreciation.
As of early April 2024, wild ups and downs for the token remain usual, although this volatility might subside in the future. Nevertheless, any investor considering DEGEN should take into account its current highly volatile nature. Risky, volatile coins carry the potential for extremely high returns. Naturally, you might consider investing in this token for this precise reason if you don't mind high-risk/high-return trading strategies.
Besides the opportunity to earn high returns at this early stage, DEGEN might be considered for longer-term investment purposes, based on the following:
The token isn’t simply another meme coin. It has highly functional use cases, particularly those revolving around building and fostering decentralized social communities. As the blockchain social media niche gains traction, DEGEN is likely to benefit.
The arrival of the Degen chain might open up new use cases for the token within DApps hosted by the network. If any of these DApps achieve significant success on the market, DEGEN will receive an additional boost.
The DEGEN token can be bought on Bybit via Spot market and perpetual contract. If you don’t have a Bybit account, you can easily register for one and trade hundreds of crypto assets and products in its Spot and derivatives markets.
From June 4 – June 18, 2024, 9AM UTC, you can earn from two DEGEN Token Splash events with a total prize pool of 5,000,000 DEGEN. The first is a Deposit to Earn event exclusive to new users with 2,000,000 DEGEN up for grabs. The second is a 3,000,000 DEGEN Trade to Earn event where you can earn more DEGEN with greater volume of trade, up to a cap of 150,000 DEGEN per account.
Having originated as a meme coin in the social media space, DEGEN and the Degen project are moving toward bigger goals, and Degen is no longer just a channel on Farcaster. With the launch of the Degen L3 chain, Degen’s ecosystem and its native token will support more use cases and innovative projects.
DEGEN will likely still be viewed primarily as a social media token, at least in the short term. However, this new crypto may open up opportunities for projects to integrate social network and community-building functions into finance, gaming, NFT trading and other applications. A lot of this potential hinges on Degen's ability to position its token as a truly functional crypto asset, not just a meme coin.
At this early stage of the platform, it looks like Degen is starting to successfully build that image. If the Degen project keeps up the pace it’s gathered, we’ll soon be talking about the DEGEN crypto as a universal, multipurpose asset for a wide variety of use cases and applications.
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