Can you make money running Farcaster nodes? Understanding Ferrule's "social re-staking" economy

Original author: austbot, David Shuttleworth, JJ Alicea

Original title: " Decentralizing Farcaster: Ferrule "

Translation: Joyce, BlockBeats

Editor's note:

The popularity of Farcaster has pushed the community to pay more attention to the creator economy track. The day before yesterday, the ANAGRAM development team launched the Farcaster-based protocol Ferrule, a protocol designed to decentralize the Farcaster Hub and enhance security. Ferrule enables anyone to build their own Farcaster client, ensuring user autonomy and ownership. Ferrule aims to build a scalable and sustainable network through Eigenlayer AVS, solving the inconsistent incentives and centralization issues of client applications in Farcaster's current architecture by incentivizing node operators and implementing data sharding.

ANAGRAM development team partner David Alexander explained his expectations for Ferrule, which began with his thinking about the incentive system of the Farcaster ecosystem, hoping to further promote innovation and decentralization of the Farcaster ecosystem. BlockBeats compiled the relevant content as follows:

One of the fundamental promises of blockchain is digital sovereignty and ownership. Traditional systems have been fundamentally broken for a long time. The emergence of cutting-edge technologies allows us to move beyond these systems and into new paradigms. Social media is one of the many systems that need to undergo a massive overhaul. This view is neither new nor unique. Since the days of Bitclout, developers, users, and investors have been advocating for decentralized social graphs, authentication layers, and everything that comes with them.

Many have tried before, but have failed. Now comes Farcaster, a fully decentralized social networking application built on Ethereum and powered by Optimism.

Ferrule launch background

Farcaster current status

Farcaster functions similarly to X (formerly Twitter) and Reddit. Users can quickly join the network, create a profile, post "casts" similar to tweets, and follow other users. Much of the technical heavy lifting is done by Warpcast, a Farcaster client that abstracts away technical complexity and makes the user experience seamless.

Unlike X and Reddit, Farcaster allows users to own their own accounts and the social graphs and relationships they create with other users. This is a significant upgrade to existing legacy systems. Each user can move freely between different Farcaster applications, ensuring user autonomy and ownership within the client.

Farcaster's architecture is as follows:

Hub: Similar to a blockchain node, Hubs store data and listen to specific information about users on Ethereum and Optimism.

Client Applications: Applications used on the Farcaster platform are essentially key pairs and data sets on the chain, which client application publishers can use to act on behalf of users, allowing them to publish, read data, and perform other operations.

Farcaster has built a "fully decentralized" system that enables users to have portable identities between different client applications. This is similar to using Google to log in to Facebook and X, but Farcaster goes a step further and makes data portable as well. Different client applications can create unique user experiences based on the same data. For example, Warpcast is similar to Twitter, while another application may feel more like Discord.

Client applications must connect to a Hub, but the Hub is not obligated to allow communication. Hubs are similar to web servers in Web2, and it is free for client applications to read or write data to the Hub. Typically, teams that develop client applications (such as Warpcast) also run the Hub nodes they connect to, making them "operators" of the Hub. Anyone can run a Hub, and if the initial configuration points to other Hubs, a network is created.

Users can have portable cryptocurrency balances, and client applications can create fiat currency wallets or additional client application-specific cryptocurrency balances. For example, Warpcast users pay "warps" fees, which are used for global Farcaster storage and Warpcast-specific functions.

This architecture is called "sufficiently decentralized" because it assumes that multiple client applications run independently, and anyone building a client or connecting application needs to run a node or purchase access to an entity running a node.

Looming Problems

Misaligned Network Incentives:

Farcaster runs through Hubs, which store data and facilitate communication between Ethereum and Optimism. Hubs host APIs that allow client applications to read and write data. Users must pay for storage by calling the "rent" function on the Optimism smart contract. This payment mechanism may reduce spam and bot accounts, but no part of the rent is distributed to node operators. As Farcaster grows, a single node may not be able to sustain the storage requirements. Horizontal scaling or incentivizing node operators could address this.

Centralization of Client Applications:

Warpcast is a core contributor and creator of Farcaster and is the most widely used client application. If only one client dominates, Farcaster has the potential to become another centralized social media platform. Client applications use a single key to act on behalf of the user, similar to how web3 wallets work, but with considerable power. Integrated smart wallet technology would allow users to use their Farcaster key account as their primary wallet.

Ferrule: Introducing Incentivized Nodes for Farcaster

Farcaster is not only noteworthy for its technical achievements, but also for the community it has fostered. However, Farcaster's final form has not yet been achieved. Now we are introducing Ferrule, a protocol built inside Farcaster that enables anyone to build their own client for Farcaster.

Importance of Ferrule

Currently, Farcaster’s economic model is limited. Specifically, there are no incentives for people to run the Farcaster Hub, resulting in Farcaster managing the entire network. While this is not fully centralized, it is not fully decentralized either, so Farcaster is marketed as “sufficiently decentralized”. The path to a more decentralized network will benefit greatly from Ferrule.

The benefits of a fully decentralized network are significant. Just like Ethereum and Solana, state growth is becoming increasingly problematic. As more and more users join and interact, the burden of data storage falls squarely on Farcaster. This is not only a problem of centralization and scalability, but also a problem of sustainable state growth. This problem will accelerate with mass adoption.

Farcaster’s growth has not slowed down and continues to gain momentum with over 60,000 unique users per day, up 66% month-over-month. With exponential growth, the user activity embedded in each unique account is also increasing. While anyone can run a Farcaster node, there are no incentives. Incentivizing node growth is essential for the optimal scaling of the system.

Ferrule is a new design for Farcaster Hubs that operates as an Eigenlayer Active Validation Service (AVS). It is able to leverage existing assets to secure and ensure the operation of the Hub and the correct functionality of the Farcaster protocol. Users re-collateralize their assets into the Ferrule contract, which dynamically delegates assets to Hubs based on network behavior. Some of the collateral proceeds are distributed as rewards to Hub operators, while also paying for a portion of storage account rental costs.

Currently, Farcaster Hubs have limited data integrity checks and no economic incentive to prevent spam or manipulation. Ferrule aims to solve this problem by ensuring Hubs are verifiable and secure. Ferrule nodes broadcast cryptographically verifiable proofs that they are operating correctly. Economic incentives encourage correct behavior, while inaction or malicious behavior is punished through stake reduction.

As Ferrule grows, it aims to solve the problems of state growth and client/Hub centralization. Incentivized Hubs can create a routing system that ensures they do not need to store all data and are rewarded for storing and providing access to data. Ferrule is designed to make centralization less feasible by rewarding correct Hub behavior.

Ferrule Roadmap

Re-pledge Mechanism:

Re-pledge: Users can re-pledge their existing assets (such as ETH or other compatible tokens) into the Ferrule contract. This staking process binds their assets to the security of Farcaster Hubs.

Dynamic Delegation: Staked assets are dynamically delegated to various Hubs based on the behavior and needs of the network. This ensures that the network can remain secure and responsive to changes in usage patterns.

Incentives:

Rewards for Hub Operators: A portion of the staking returns and the rental costs of storage accounts are allocated to Hub operators. This provides an economic incentive to maintain the integrity and performance of the network.

Economic Disincentives: Hubs are financially punished for inaction or malicious behavior through a staking mechanism. This ensures that Hubs have an incentive to operate correctly and securely.

Verifiable Operations:

Cryptographic Proofs: Ferrule nodes must broadcast cryptographically verifiable proofs of their correct operation. These proofs are used to ensure that the operations performed by the Hub are legal and comply with the rules of the network.

Consensus Mechanism: The AVS framework ensures that all Hubs operate in a verifiable manner, promoting a trustless environment where users can feel confident in the reliability of the network.

Data Sharding and Routing:

State Growth Management: To manage state growth, Ferrule combines data sharding and routing mechanisms. This approach ensures that no single Hub needs to store all the data, distributing the storage load across the network.

Data Access Incentives: Hubs are rewarded for storing data and providing access. Proofs of data storage are broadcast across the network, creating a map of data location and ensuring efficient data retrieval.

Ferrule MPC

MPC Framework:

Multi-Party Computation (MPC): Ferrule MPC leverages MPC technology to allow multiple parties to jointly compute functions while keeping the inputs private. This ensures that sensitive user data remains confidential during the collaborative process.

Client and Connected Applications: The MPC framework makes it possible to develop truly decentralized client or connected applications on Farcaster. These applications can run securely and independently, interacting with the network without compromising user privacy.

Authorization and Smart Wallet Integration:

Granular Authorization: Ferrule MPC supports the creation of an authorization system that allows users to delegate specific actions through their accounts. This is similar to an emerging pattern in blockchains, where users can authorize specific activities through their wallets.

Smart Wallet Technology: Integrated Smart Wallet technology allows users to use their Farcaster key account as a primary wallet. This integration provides a seamless user experience, enabling users to manage their crypto assets and social interactions from a single account.

API and Data Interfaces:

Standardized Data Access Points: Hubs provide standardized data access points, ensuring that client applications can interact with network data in a consistent manner. This standardization simplifies the development of new applications and enhances interoperability.

Extended Object Model: Client applications (such as Warpcast) can extend the Farcaster object model to include additional functionality, such as pre-computed social graphs and behavioral data. This flexibility enables the creation of diverse and innovative user experiences.

Ferrule MPC is a library and set of examples for teams to run decentralized clients or connected applications on Farcaster. If fully implemented, it will become a core part of Ferrule. While not yet fully ready for release, Ferrule MPC is intended to spark discussion within the Farcaster community about solving these pressing problems.

We hope that Ferrule MPC will be a useful tool moving forward.

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