Today was an auspicious day for Farcaster users: Degen claim day.

Over 22,000 address were eligible to claim roughly $21M, and over 65% was claimed within 20 minutes of the unlock.

In less than 3 months, Degen rocketed to over $1B in FDV (at time of airdrop, now closer to ~$1.5B ). It's important not to underestimate this 0-to-1 moment because this wasn't just any other token launch — it was the Farcaster ecosystem's first breakout token.

Before Degen, we had Points and other small experiments, but each fizzled out for their own reasons. Degen on the other hand grew big enough to hit escape velocity and start sucking in liquidity from outside Farcaster, including from influencers (or KOLs) on Crypto Twitter (CT).

This is equivalent to a country starting to receive foreign direct investment (FDI) into its economy, which often signals three things:

1. It means that an ecosystem is mature enough to give external investors confidence in its local economy, and thereby confidence to hold its assets.

2. It taps vast pools of capital that were inaccessible before.

3. It creates a wealth effect amongst local residents who previously held those assets when prices were lower.

While the first two are certainly important and reflect a watershed moment in how the public views the Farcaster ecosystem, the latter is the more interesting outcome.

The Degen wealth effect means that more projects that are aligned with the Farcaster community's values will now be incentivized. Put simply — Farcaster citizens will be more confident in launching new tokens because they've seen a home-grown token break through.

What's Next?

It's a fool's errand to predict which specific projects and tokens will succeed. Things live or die due to idiosyncratic reasons, but categories as a whole are easier to reason about.

I suspect we'll see a few categories of tokens and projects in general that will flourish as a result of Degen's wealth effect:

• Degen L3: We'll see more Degen-adjacent tokens launched on the Degen L3, as it's the most straightforward next step for the Degen community, with the path being explicitly paved by Jacek, Degen's core dev.

  I'm personally less confident that an L3 token will do well, because the Degen L3's construction has security properties that don't support store of value asset plays as well as Base. While this may serve a memecoin audience, in order for a token to have longevity, it needs to attract more conservative capital. Historically that's meant more attention paid to security properties of the underlying chain where token provenance occurs.

  That all said, there are a few experiments here worth monitoring, including DEPE, CENEZ, and DINU. If any of these start breaking away, then there's a chance of the Degen-lineage spawning more offspring.

• Base-ism with Farcaster Characteristics: The Base narrative has felt a bit forced, with tokens like NORMIE, BRETT, TYBG posited as the breakthrough meme tokens on Base. None have captured the Farcaster community's attention, nor were authentically championed by CT influencers.

  Much like Socialism with Chinese Characteristics, I expect we'll continue to see Base as the favored chain for launching Farcaster-related tokens. The key difference from the above set though is that these will be incubated and led by Farcaster natives and OGs. The best example of this is HIGHER, which has Farcaster staples like Six, LGHT, Martin and Woj leading the pack, and constructing a narrative that will resonate long-term with Farcaster citizens. Another example is Bracket.game which launched on Base, but was founded by Tim (another Farcaster native) and received a grant from Degen DAO. If Bracket ever launches a token, we would likely see strong inflows from the Farcaster community.

  I'm most bullish on this category of projects, as they are still focused on launching tokens, but have values that are aligned with Farcaster. HIGHER will likely have more longevity than your shallow memecoin and evolve into being brandcoins, or tokens that inspire apparel, events, and generally, the culture. There is significant room to explore here for other token creators who are more plugged into the Farcaster "meta".

  

• Kindred projects and public goods: This is the area where things could get most dynamic. Farcaster citizens have a deep affinity for longer-standing projects like Nouns, but beyond being spiritually aligned, have not contributed a significant amount of home-grown capital back to them (please correct me if I'm wrong here and there are examples).

  With this newfound wealth, one of the best outcomes will be a contribution back to projects that share Farcaster's values and which aren't predicated on a token. To take a philosophical tangent — one the best ways to steward wealth is to allocate it to shaping the world in the way you see fit, without purely focusing on profit.

  For specific examples, I would love to see more engagement with and contribution to:

  • Purple, which aims to support builders in the Farcaster ecosystem

  • Hypersub, a subscription platform to empower creators — newfound Degen wealth could enable a ton of artists and writers to have more runway in their content creation plans

  • Running infra and tooling for Farcaster. Running hubs, supporting specific tools like Searchcaster, and funding developers who are doing open source work are all examples.

  There may be tokens spawned out of this set, but given the more lateral nature of these projects, this is a bet on community support and tooling that lays the framework for future wealth effects to be generated

Of course, reality is always more complex and confusing than simple predictions can permit. The above examples are just a few ways this newfound capital in the Farcaster ecosystem might be allocated in the coming weeks and months. My sincerest hope is that we focus on longevity and create a flywheel for more Degens to be created and bring value-aligned capital into Farcaster.