Farcaster Founders Return $180M to Investors; Neynar Acquires Protocol Assets
Merkle Manufactory abandons its social ambitions, refunding $180M to VCs as infrastructure partner Neynar takes over the protocol’s code and assets.
Farcaster co-founders Dan Romero and Varun Srinivasan are exiting the decentralized social protocol, returning approximately $180 million in capital to investors as the project abandons its consumer-facing social strategy. Infrastructure provider Neynar has acquired the protocol’s smart contracts, brand assets, and the Warpcast client, signaling a hard pivot toward developer tooling.
The Surrender of the Social Graph
The capital return, likely the entirety of the funds raised, including the $150 million Series A led by Paradigm in May 2024. This marks a rare admission of defeat for a unicorn-status crypto project. Despite reaching a valuation of $1 billion and backing from a16z, Farcaster failed to sustain its mid-2024 momentum, with Daily Active Users (DAUs) bleeding from a peak of 100,000 to under 60,000 by late 2025.
Romero, a former Coinbase executive, confirmed the move in a Warpcast post, stating the team would step back from day-to-day operations. The decision effectively dissolves Merkle Manufactory’s ambition to compete with X (formerly Twitter) as a consumer app, handing the reins to Neynar to operate Farcaster purely as backend infrastructure.
The $40M Secondary Controversy
The exit is marred by community friction. While the $180M refund protects institutional LPs, reports of founders selling $40 million in secondary shares prior to the wind-down have sparked accusations of a “soft rug” among retail users who cannot access similar liquidity. Romero publicly denied misappropriating project funds, clarifying that personal asset purchases were funded by Coinbase IPO proceeds, but sentiment remains fractured.
The value of Farcaster is not just the products, but the people who experiment, share knowledge, and build in public. Neynar Official Statement
Market Reaction: DEGEN on Life Support
DEGEN, the community token that served as the de facto currency of the Farcaster ecosystem, effectively collapsed on the news. The token is trading at $0.0011, down over 98% from its 2024 highs, as the speculative premium allocated to Farcaster’s “social layer” evaporated.
Neynar’s acquisition includes Clanker, the AI token launchpad, suggesting the new roadmap will lean heavily into automated asset issuance rather than human social engagement. The deal is expected to close in the coming weeks.
