Crypto apps and decentralized social

A presentation by Linda Xie at Devconnect on decentralized social media. Linda covers why users and creators benefit from open social graphs, how embedded wallets and mini apps create new experiences on Farcaster, the honest challenges facing adoption, and a Q&A with the audience.

This transcript is an accessible copy of the original video transcript (opens in a new tab) published by Ethereum Foundation. It has been lightly edited for readability.

The problem with centralized social (0:00)

I've been working in the crypto space for 11 years now and on the Farcaster team. Prior to that, I was building on top of Farcaster. So I'm really passionate about crypto and decentralized social and what it can do for society.

I think it's really helpful to first frame the issues with traditional social right now. I think we've all experienced a similar kind of problem where you start on one platform and then you end up having to create an account on another platform and completely start over from scratch. Your audience actually belongs to the platform itself in that scenario. And when you are kicked off a platform or the platform ends up getting banned by a country, you end up not having access to any of your audience distribution. It's really important for a user and a content creator to be able to have access to their audience.

And lastly, if an account and data is owned by the platform, that means once the company itself shuts down, you won't be able to have access to that information. We've seen that time and time again. In the US, we had TikTok potentially be banned and we've had a lot of creators be concerned by that. There are plenty of countries where many of these platforms ban themselves. So this is a problem that people actually experience day-to-day.

Open social graphs (1:30)

One of the benefits of decentralized social means that you can have access to the social graph at any point in time. There's no permission that you need in order to use this data. What's really great is you see at the bottom here there's an open social graph. All of this data can be pulled by any client, any developer, any platform, and you can use this data to build on top of this platform.

A great example — you've got the Farcaster app and then you also have the Base app built by Coinbase. You have a similar number of followers, with a slight discrepancy because each client has its own spam filtering. But I was able to build up a following on Farcaster, immediately start using the Base app, and I didn't have to start over from scratch. That's a really magical moment when you experience it. And it's going to be the same for all other Farcaster clients — Zapper, Uno, and a few others.

When you decide to use this platform, you no longer have to start from scratch. You're able to keep your own audience. You post once and then you're able to get distribution across multiple clients on the network. You can be a Farcaster user and still get more distribution through Base app as they're onboarding more users and creators. This is ultimately the best user experience. And clients are now competing for these users because the switching cost is really low — you don't have to start from scratch, you keep your audience, and so clients have to compete to build better user experiences.

Benefits for builders (3:13)

Then you also have the builder side, where builders are getting consistently kicked off platforms. We've seen that with Twitter — it's kicking off a lot of crypto apps and builders, and that's a single point of failure for their companies. Bankr recently on the same day was booted off Twitter and Telegram. Fortunately they were able to get reinstated a few days later, but it really goes to show there are these single points of failure. If you're a builder spending all your time and resources trying to build out your app, it's an extremely painful experience to just have your distribution cut off immediately.

We've also seen historically where apps like Reddit changed their API pricing and all of a sudden it becomes extremely expensive to operate your business. Many apps in the past have shut down because they can no longer afford to operate using Reddit's new API pricing. There was a huge uproar about that amongst the community. This just happens time and time again with these platforms. They can kick you off for arbitrary reasons. They don't have to say the exact reason they kicked you off. And if they just view you as a competitor, they can remove you from the platform. I've personally talked to several teams that have experienced that directly.

One thing that is really amazing about decentralized social is that in the same way that you as a user can post once on the network, you can also build on the network without permission. Developers are able to build permissionlessly without having to go to each platform and say, "Hey, am I allowed to build on your platform?" I was just at the Farcaster booth earlier today and people were asking how to whitelist themselves to build on top of Farcaster, and I was able to just say, it's permissionless — you can use any of this data, incorporate it into your app directly, and you don't need to talk to the team. That is the future of how things should be built.

You can see here — I posted a crossword puzzle called Miniword. Every single day people compete on this like a New York Times crossword puzzle. I posted once on Farcaster, it also goes on to Base app and all other clients. You're able to get that boost of distribution as a builder. If I tap to open the mini app, I can start interacting with it, and because the social data is permissionless to leverage, you can pull in all the times of different people on the network and people can compete for the best score. It becomes more of a social experience versus just doing a puzzle by yourself, and you can get more virality by leveraging the social graph.

Crypto and embedded wallets (6:30)

Decentralized social exists — we've seen it with Bluesky and they've done a great job of pulling in users as platforms get banned in different countries. However, the really special thing is when you combine crypto and decentralized social, because you're now creating experiences that you would never get on a traditional platform. That's something our team is really leaning into.

Every user on Farcaster has a crypto address by default. Within the Farcaster app, you have an embedded wallet where a user can easily send and receive funds to other people on the network. Obviously, it's crypto, so you can just paste in an address and send funds to people from anywhere in the world. That is what makes crypto so special and unique. By combining that with open social graphs, we feel like this is going to lead to the next wave of growth within the decentralized social space.

Users can also interact with mini apps onchain because they have their embedded wallet. You can see here there's an eSIM mini app built at ETH Global — in Argentina or any other country, you can purchase an eSIM, pay with USDC using your embedded wallet, and it's just a really seamless experience. You can now build apps that have just never existed before.

You can also have agents interacting in the feed. If you really believe in this agentic future where there's a lot of agents interacting with each other, crypto is the natural source they're using for sending funds to and from each other. You don't have to coordinate addresses or how someone's getting paid — you automatically know a user's address, you have all the information, it doesn't matter where they live in the world. You're able to interact with them directly. I really believe that crypto and agents and open social graphs are going to be playing a much larger role.

Micro-tipping (8:36)

One of my favorite examples of what's really unique about open social graphs in crypto is micro-tipping. In the really early days of crypto, people were always talking about how it'd be amazing to do micro-tipping — if you're a creator posting really great content, being able to send a really small amount of funds to the creator. I would use these early Bitcoin tipping apps. But the problem in the early days was it was actually quite slow and expensive to send really small amounts of funds.

Now you have the ability to send transactions that are one cent or even lower because of L2s and how cheap and fast it is. There are apps like Tipin and Noise that enable you to automatically tip for every interaction — a follow, a recast, liking a post, replying. You're able to set an allowance for the amount you want to give. In my case, I've set up one cent for every time I like someone's post, and in the background it's automatically happening. Every time I'm liking content on the network, I'm sending one cent automatically to the user.

You can see my wallet activity history — I'm sending funds to other users on the network and I'm also receiving funds from other users that have set these allowances. There are even below-one-cent transactions, which is a pretty wild concept. These are people that live all over the world. If you're brand new to crypto and you join Farcaster, you have a wallet by default. Once you start posting high-quality content, people can just start automatically tipping you and you can build up a balance without ever having to purchase crypto. I've talked to so many users who said this was actually the first crypto they've earned for creating content or interacting with mini apps.

Mini apps and creative tools (11:01)

One of my favorite mini apps that showcases using the embedded wallet, crypto transactions, and the open social graph really well is Emerge, built by Atown and the team. It enables creators to put together a prompt that transforms your profile picture into some version of the prompt. Here's an example — Peachy, a very popular creator on the network, wrote a prompt to transform profile pictures into tarot cards. I was able to generate an image using my profile picture and share the mini app so others who are interested can generate their own. There are leaderboards of which prompts have done really well. If you're a creative person, you can create your own prompts and start earning — I paid 25 cents for this prompt transaction, and 418 other users also generated it, so Peachy is earning for creating this content, and it can go viral in the feed.

The Warplet phenomenon (12:41)

We actually had one of our highest daily active user days on Farcaster because of virality that happened recently. First, we have this unofficial mascot of Farcaster called Warplet. Dan, the co-founder of Farcaster, had created it. The team — including me — maybe didn't think it was the cutest to be the official mascot, so he released it into the community and said people can do whatever they want with it.

A developer named Angel took that and decided to build a mini app where you can mint a version of this Warplet creature mixed with the DNA of your own profile picture. NishProf shared her custom Warplet from her profile picture — and 49,000+ accounts generated their Warplet. It went completely viral. Angel was able to make almost $100,000 from creating this mini app in just a few days. It really goes to show that when you have an embedded wallet where anyone can easily make a transaction, you can earn as a builder for building apps that go viral within the social feed.

What was also really cool to see was different remix culture. Builders were saying, "Okay, you each have your Warplets now, so let's build games and fun experiences on top." There was ranking of "what's the ugliest Warplet?" and "what would a baby Warplet look like if you combine these two?" All these fun games were created on the network, which goes to show that when you leverage the social graph, you can make for a much more engaging experience as an app developer.

Mini apps for social good (15:02)

Here is an example of a mini app — actually Horsefax built this on the team. I think this is really important — you can support Roman Storm's legal defense fund. We used Daimo Pay, and you can pay with any token and contribute to the legal defense fund. Because it's an embedded wallet, you're never getting kicked out to use another app. You can immediately share that within your feed telling your followers you contributed. They can then discover this app and continue to donate as well. This is a mechanism to further share apps within the follower and audience that everyone has built themselves.

Here's another similar example — a crowdfund built by Nicholas at Seed Club, like a GoFundMe or Kickstarter platform. You can see the different users that have contributed. You can tap in your embedded wallet and contribute funds directly through the Farcaster app. You never have to get kicked out. The creator was able to raise well past their goal, and you can share that in your feed so all your followers can discover the mini app as well.

Challenges of decentralized social (16:41)

All of this is really awesome, and decentralized social sounds great, but I want to be really honest about the challenges. One thing to note is that it's small — very small relative to all these major traditional social platforms with users in the billions and hundreds of millions.

However, I really want to emphasize — I've been working in the crypto space for 11 years now, since the early days of Bitcoin. You can compare something like gold — look at how far Bitcoin has come. You can also look at DeFi and all the TVL and swap volume and look how much that has grown. All of it is very possible by the community, the builders, and the users. I very strongly believe social is going to go through another growth phase within the crypto space, because it just makes sense. It's a better experience for users, a better experience for builders, and you can now create things that just didn't exist before. As crypto becomes more mainstream, we're hopefully going to grow with it.

With Farcaster specifically, we found that people really resonated with the embedded wallet, so we're really leaning into those features. Onboarding non-crypto participants is something any crypto app is experiencing — if you're a complete newcomer, having to understand what a wallet is and how to keep things secure. We've improved a lot since the early days but still have a lot to improve upon compared to traditional consumer experiences.

Spam is also an issue. This exists on centralized social platforms too — you can probably experience on Twitter how hard it is to tell what's a genuine account. At the Farcaster level, you can either have spam services that help clients do filtering at the protocol level, or a client can do its own spam filtering.

And then moderation — also a problem and challenge within traditional social platforms of making sure users are having a good experience and discovering content they're actually interested in. These are things we're always continuing to work on.

Why now? (19:48)

Decentralized social has existed for a while, but why now? I think it's all these primitives coming together. First, you have open social graphs that anyone can use and leverage. I'm talking to teams all the time that I didn't even know before — they were just building Farcaster mini apps because they're able to leverage the data without us.

L2s are a critical piece of this, making transactions really cheap and fast — you can see experiences like the micro-tipping we shared earlier. Embedded wallets are also key — I really want to emphasize how much of a better experience they are when using consumer apps. So many of us have experienced getting kicked out to a wallet, having to be brought back in, and sometimes it doesn't work. With embedded wallets, you're staying within the app experience and there's far less drop-off.

New building blocks like mini apps and agents are completely new things you're able to use that we haven't necessarily seen at scale before. And a big meta happening outside of just crypto is how much better AI has gotten — you can now create apps using prompts. That's really lowering the cost and barrier for people to actually build. We have services like Neynar that enable you to create Farcaster mini apps without being a developer.

Where this all plays out — I think email is a really good analogy. When you send emails, you don't have to make an AOL account to talk to someone with an AOL email. You can use Gmail, Yahoo, Outlook, whatever you want, and you're all able to communicate with each other at the protocol level. That is the way I think decentralized social should play out — all this network data, all this social graph at the protocol level, and each client can build on top with features specific to their user base. They could have different algorithms, different features based on what their users actually like.

Farcaster is increasingly spending more time on trading features; if you're not interested in that, Base app and Uno are really great about showcasing social features. That is the way social is supposed to be in the long run. We have a long way to go, but I really think this is the future of where social should be headed.

Q&A (23:47)

Moderator: Thank you so much, Linda. We have some questions from the audience. I think what's really cool is in the real world, I can go outside in my neighborhood and there's so many things I can do freely. Digital neighborhoods aren't always the same, which is why the decentralized social thesis is very compelling, especially as more of our lives come online. There's a current shift where people on centralized social media platforms need to move to decentralized social media platforms. From your experience, how can we ease the migration?

Linda Xie: It's a good question. I think it's on us to create experiences that are better than existing traditional experiences. Crypto is going to enable things that you literally can't even do on traditional social platforms. You come to start earning crypto, you experience all these crypto apps built on crypto social rails. So that's the way we attract — if you're a really great builder and you want distribution, crypto is going to be the way you can earn, and social is going to be the way your app gets distributed. As a user, you're able to receive a ton of tips for posting good content, which you're not receiving on traditional platforms. I just think you create a better experience.

Moderator: Farcaster recently acquired Clanker, and that provides an alternate revenue stream. How do you view ads within a decentralized social network such as Farcaster?

Linda Xie: Each client is able to do what they want with how they're monetizing. You can actually be a client and decide to use ads, but then other clients can decide that's not the route they want to go and monetize in a different way. For Farcaster app specifically, we have Farcaster Pro — people can pay $120 for a year to get access to additional features. But any client could lean fully into ads. Base app even has some ad formats, especially with Spindle acquisition. The beauty of it is each client can do what they want, but we don't have ads built into the protocol level — clients can decide to turn it on.

Moderator: A key term we throw around in the EF a lot now is reflexivity — how we react to feedback from end users. Farcaster has the most reflexivity because you have literally everyday social media participants, wallet-transacting users, and builders. What are tenets you live by when it comes to sourcing feedback from your community?

Linda Xie: Sourcing feedback is probably one of the easier things within the community because people are very vocal and they're able to post what they want to see. We also DM people directly. One thing that is amazing about Farcaster is that people are really nice on the network and always willing to help out and give feedback. We have DMs within the app itself, so not only can we see feedback that people are posting, we can also DM people directly. Our team ships like crazy — we're shipping pretty much daily — and we really want to implement the features people care about.

Moderator: As someone who's been around in crypto for a really long time — what keeps you going? Do you have any advice for someone just beginning to explore right now?

Linda Xie: I think taking a step back and realizing how incredible this technology is. I'm able to own my own money. I'm able to send to anyone else in the world, and I don't have to ask for permission. No centralized platform takes some extreme fee and cut of that. All of these technologies extend to DeFi and social — think about how life-changing this kind of stuff is. The fact that we can be part of this forefront of working on this technology drives me every day. It's filled with craziness and ups and downs, but ultimately, what an amazing moment in time that we can spend working on this. I wish I had been part of the early days of the internet, but I was very lucky to be able to do crypto.

Moderator: Thank you so much, Linda.