What is degen? | A new kind of social currency

This post is all about a new kind of social currency called degen. Degen is interesting for a lot of reasons, especially as a new way to interact on social media.

What is degen? | A new kind of social currency
Degen is for social tipping.

Degen is a word with many meanings in crypto.

In the past few months, $degen the currency, has burst on the scene and quickly moved from the raft of memecoins to take up an interesting position in the Farcaster community.

What is Farcaster? The case for decentralized social media
Farcaster is a new protocol enabling easy to use decentralized social media. Warpcaster is one of the first and most popular Farcaster apps.

If you remember, Farcaster is a decentralized social media protocol that makes it easy for developers to build clients or apps on top of the protocol without having to start from scratch.

Farcaster solves a lot of problems for both users and builders. The two biggest are that it minimizes platform risk by making social graphs portable and it makes social media a more accessible ecosystem rather than a walled garden with a single gatekeeper.

This means new apps don’t have to build an entirely new social network just to add some kind of new or customized functionality.

From the users’ perspective, it also means you can move between clients and still keep the same following and data, and then access it in different ways depending on the scope of the app or client.

If anything, Farcaster gives builders a new kind of social/data infrastructure to build with. This will likely lead to all kinds of new functionality.

So far, one of the interesting things to quickly emerge from the Farcaster ecosystem is a new spin on social tipping as a crypto use case.

A screen shot from degen.tips that says "Turning content into currency."
Posting for money. SOURCE

What is degen?

Degen started like a lot of memecoins.

It had a catchy name and high hopes. But while other memecoins turn out to be little more than vaporware and never really grow into the full scope of their original aspirations (mostly, the aspirations of memecoins is number go up), degen quickly became a darling of the Farcaster community and found product market fit early.

For background, degen is a currency that is built on Base, a layer two created and controlled by Coinbase. Base is part of a collective of modular blockchain projects building out the Optimism-based Superchain.

One of the key innovations of Base and one of the reasons why a currency like degen can exist is because of the low transaction costs. This makes it almost free, to well, give away, which is exactly one of the key degen use cases.

Launched in January 2024, degen started airdropping tipping allowances to Farcaster users.

A chart from degen.tips that has a breakdown of how degen tokens are distributed. 70% of tokens are earmarked for social tipping.
A quick breakdown of degen's tokenomics SOURCE

The basic idea is that the first followers of the degen channel on Warpcast (a Farcaster client) started getting allotments of degen to tip to other users.

Tipping is easy, all you have to do is write the number of $degen you want to tip (<amount> $DEGEN) in a comment under the post and the creator of the post receives the tip once they connect their web3 wallet to degen.tips.

Maybe the coolest thing about the tipping component, besides the little hit of dopamine that makes social media additive in the first place, is that the tipping as distribution model makes the way the currency circulates feel egalitarian.

$degen: more than a memecoin

One of the most interesting things about degen is the social tipping aspects and how it is a lever for both the distribution of new currency and a means to build social media engagement both as a social media creator and consumer.

The incentives here are pretty simple to grasp. I mean, who doesn’t like to get paid to share their thoughts and experiences? In my limited experience, getting tipped in $degen, even if it was just a small amount, did feel different than just getting a random like on a post.

I think it’s the tipping component and the way that degen moved through the Farcaster system gave it a viral boost that helped with the early meme-style adoption.

But the tipping also gave degen a use case. It was quickly evident that an easy-to-use and low-cost social tipping token was in high demand.

A chart from coinmarketcap showing the movement of degen's price since it was created in early 2024.
Degen's price chart. SOURCE

Degen as a new media model

The question now, is what happens next? Is the fascination with degen just a fad? As it increases in value will people be less likely to tip, or be as generous with their tips? Or will another social tipping currency come along and take its place?

Or, does this new kind of social currency become more of a model or framework for the way that new currencies and new media platforms work together onchain.

After all, onchain media should facilitate the end of mass media and the need for attention-capture kind of advertising that feels like the dominant way of monetizing the internet today.

So maybe one way to think about all of the excitement around degen is that it feels like it represents a new way of doing things — and a way that feels more hands-on and bespoke.

No one knows how things will unfold with degen. Even if it fades away to nothing (which feels unlikely at this point), it has served as an interesting experiment in a new a fair way to launch a token, and it also helped generate buzz and extra user traction for Farcaster, which is also still in its early days.

Let me know what you think. The best place to reach me is @danielmcglynn on Twitter and Warpcast.