Merkle Manufactory, the company behind crypto-oriented social media protocol Farcaster, plans to return $180 million in venture funding to investors.
Key points to remember:
- Merkle Manufactory plans to return $180 million in venture capital while Farcaster continues operations.
- Farcaster has been acquired by Neynar, who will take charge of development as the founding team steps down.
- The protocol is moving away from a social-focused model and toward infrastructure and developer-focused use cases.
The decision was disclosed Thursday evening by Dan Romero, co-founder of Merkle, in an article on X, following speculation about the future of the project.
Several investors, including former Coinbase executive Balaji Srinivasan, separately confirmed the plan to return capital.
Romero: Farcaster not closing as Merkle plans to repay $180 million
“Farcaster will not stop,” Romero wrote, fending off rumors about the platform’s status.
He said the protocol remains operational, citing around 250,000 monthly active users as of December and over 100,000 funded wallets.
Romero added that Merkle intends to repay the entire amount raised over the past five years, saying the company seeks to be a responsible steward of investors’ capital.
The announcement comes shortly after Neynar acquired Farcaster, a venture-backed startup that has a long history of building infrastructure within the Farcaster ecosystem.
As part of the deal, Neynar will take control of smart contracts, code repositories, mobile applications and Clanker, an AI-driven token launchpad.
Romero and fellow co-founder Varun Srinivasan, along with part of the Merkle team, will step back from day-to-day development.
“This was not an easy decision,” Romero wrote earlier this week. “But after five years, it is clear that Farcaster needs a new approach and new leadership to reach its full potential.”
Farcaster was launched with the ambition to decentralize social media by giving users control over their identity and data rather than relying on centralized platforms.
The project gained significant attention in 2024 when it raised $150 million from major cryptocurrency companies, including Paradigm and the crypto arm of Andreessen Horowitz.
Despite the initial enthusiasm, Romero acknowledged that the platform struggled to achieve sustainable growth as a social product.
In December, the team focused on in-app wallets and trading features in an effort to drive engagement, signaling a strategic shift away from competing directly with traditional social networks.
Neynar, which provides development tools and APIs for applications built on Farcaster, announced plans to take the protocol in a more builder-centric direction.
The company is expected to roll out a new roadmap focused on infrastructure and developer adoption rather than consumer-facing social features.
Offline Web3 email apps are gaining momentum
The controversy surrounding Farcaster comes as social media and Web3-style messaging tools gain ground as governments increasingly restrict Internet access during periods of political unrest.
Bitchat, an offline messaging app created by Twitter co-founder Jack Dorsey, has become a key communications channel in countries facing election-related shutdowns.
In Uganda, Bitchat rose to the top of the local app store rankings after authorities removed internet and mobile services on the eve of disputed elections.
Downloads in the country have almost quadrupled in recent months, with similar spikes reported in Iran as users seek ways to communicate during state-imposed shutdowns.
The app works without an internet or cellular connection, instead relying on Bluetooth mesh technology that allows messages to pass between nearby devices.
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