A recent funding round is poised to elevate the valuation of Merkle Manufactory, the parent company of the social network Farcaster, to $1 billion, as per a Bloomberg report citing insider sources. Leading this funding round is Paradigm, a crypto investment firm with a notable portfolio including major players like Coinbase, Blur, dYdX, Compound, and Citadel Securities.

Founded in 2020 by former Coinbase executives Dan Romero and Varun Srinivasan, Merkle's flagship product is the social media app Warpcast, which operates on the decentralized Farcaster network for social media applications. Romero confirmed the capital raise in a March 28 post, while Paradigm's involvement has not been officially confirmed. Merkle previously secured $30 million in funding from venture capital firm A16z Crypto in July 2022.

Since January, Farcaster has experienced a surge in user activity following the introduction of Frames, a feature allowing apps to run within posts on the platform. Frames enables users to create nonfungible tokens (NFTs), conduct transactions, access external blog posts, and respond to surveys directly within the app, leading to a significant uptick in user engagement. Daily active users on the Farcaster network rose from around 5,000 on Jan. 28 to over 249,000 on March 30, according to data from Dune Analytics.

Decentralized social media platforms, utilizing blockchain technology to grant users ownership of their data, content, and interactions, are emerging as alternatives to traditional centralized social media. These platforms offer features such as censorship resistance and direct content monetization. Notable names in this sector include Friend.tech, Minds, and Mastodon. User retention stands out as a major challenge for decentralized social media platforms, according to industry executives.