GM, Aleks here.

Crypto’s most fervent proponents insist they’re not just building trading and gambling platforms, but the foundations of a new, more democratic internet, where an application’s users are also its owners. 

Yet, two of the industry’s buzziest businesses that operate outside the realm of betting and investing have failed to live up to the hype.

Farcaster was supposed to supplant X as the world’s decentralised town square. And EigenLayer was supposed to turbocharge staking yield while making it far easier to launch protocols that require cryptoeconomic security.

This month, both acknowledged they’ve failed to realise their visions.

“Despite many different attempts — and a few short-lived spikes — we haven’t been able to find a sustainable growth mechanic for the Twitter-like social network, i.e. no product-market fit,” Farcaster co-founder Dan Romero wrote on December 1. 

Instead, Farcaster will focus on the crypto wallet it launched earlier this year. 

To be sure, it’s too early to declare the death of decentralised social media. Farcaster has positioned its pivot as an attempt to save, rather than abandon, its social network by luring traders who will eventually begin using the social network itself. 

And it’s not the first company that has gone down this road — last year, Sherwood called the New York Times “a games company with a newspaper side hustle,” in reference to the fact the Times has more subscribers to its non-news products than it does news-only subscribers.

EigenLayer, meanwhile, was perhaps the highly anticipated protocol of 2024. It pioneered restaking, which makes it possible to use the same capital to simultaneously secure Ethereum and a variety of other protocols known as AVSs.

Parent company Eigen Labs raised more than $220 million along the way, and EigenLayer quickly became the third-largest protocol on Ethereum. 

“Anybody that has the word AVS or restaking is just getting money shoved down their throat,” Ether.Fi CEO Mike Silagadze told me in March 2024. “We had people reaching out to us, throwing money at us.”

But its growth has stalled since Ether deposited in EigenLayer peaked in June 2024.

Today, few prominent applications use the technology, and Eigen Labs announced lay-offs of its engineers in July amid a pivot to building a crypto-based AWS competitor dubbed EigenCloud. 

There were several reasons EigenLayer failed to take the world by storm, Eigen Labs researcher Kydo wrote in a lengthy post on X on December 2. It makes for eye-opening reading. 

The target market was too niche and the team “over-engineered” certain features, slowing their release. 

Restaking hype lured less capable and reputable AVS developers, and the threat of heavy-handed regulations forced the company to walk on eggshells when talking about its technology.

Going forward, Eigen Labs is betting that EigenCloud will become a key tool for verifying the actions taken by AI agents. 

“Restaking did not turn into the ‘everything layer’ some people, including myself, once hoped. It also did not vanish,” Kydo wrote. 

“We are still maintaining it. We still care about it. We are just refusing to be limited by that original narrative.” 

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