Neynar Acquires Farcaster and Refunds $180 Million to Investors

TLDR

• Neynar acquires Farcaster, managing its smart contracts and assets.
• Merkle Manufactory refunds $180 million raised from investors.
• Farcaster reported 250,000 monthly active users as of December.

Farcaster, a decentralized social protocol developed by Merkle Manufactory, is transitioning ownership to Neynar. As part of this transition, Merkle has announced plans to fully refund $180 million raised from its venture backers.

Farcaster will continue to operate under Neynar's management, with a new focus on serving developers. This move aligns with Neynar's history as an infrastructure provider and early customer of Farcaster.

Background on Merkle Manufactory’s Funding

Merkle Manufactory was founded in 2020 by Dan Romero and Varun Srinivasan, both former Coinbase employees. Over the years, Merkle raised significant funds for Farcaster.

In July 2022, the company raised $30 million from Andreessen Horowitz (a16z) followed by a $150 million Series A round led by Paradigm in May 2024. The Series A valued Farcaster at over $1 billion.

Neynar Acquires Farcaster

Neynar, the acquiring party, is a venture-backed infrastructure provider with ties to Farcaster. The company raised $14 million from notable investors including Haun Ventures and Union Square Ventures.

The acquisition allows Neynar to take control of various assets including the protocol’s smart contracts and code repositories. Farcaster's app, Warpcast, and Clanker, an AI-token platform, will also be managed by Neynar.

Impact on Investors and Future Direction

Dan Romero has stated that all funds raised, totaling $180 million, will be refunded to investors. This decision reflects Merkle’s commitment to being responsible stewards of investor capital.

Balaji Srinivasan, an investor in Farcaster, confirmed this refund and praised the team's accomplishment in developing the protocol. He noted that Farcaster's technology is functional but in need of broader application.

Current Metrics and Operational Status

Farcaster reported 250,000 monthly active users in December and currently has over 100,000 funded wallets. Daily active users numbered approximately 34,000 in January.

No assets such as ETH or BTC are specified as affected, and Farcaster does not possess a native governance token. The protocol enabled NFT conversions of posts, yet isn’t tied to any cryptocurrency.

"Developing protocols sometimes takes longer than the lifespan of a single company. Transferring management to Neynar could help Farcaster become a truly decentralized social protocol."

— Balaji Srinivasan

Community and Industry Reaction

No reactions from well-known figures like Arthur Hayes or Vitalik Buterin have been recorded regarding this development. The protocol’s transition and refund plan have sparked mixed reactions from the community.

Twitter discussions led by Romero and Srinivasan emphasize the continuity of the Farcaster protocol. View further discussions on Twitter.

Farcaster continues its journey as a decentralized social protocol under Neynar's new strategy, while Merkle focuses on returning investor capital and pursuing new ventures. Further updates and developments will be observed in the coming months.