$DEGEN, the Unofficial Token of Farcaster, Surges Over 150,000%

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KEY TAKEAWAYS

  • Degen chain launched as a modular L3 chain that uses Base L2 for execution, and is used to pay gas fees on the Degen L3 chain.
  • Its native coin DEGEN has pumped by 150,000% since launch.
  • The Degen chain has amassed over 14 million transactions, over 770,000 active addresses, and over 25,000 deployed contracts within a week of its launch.
  • Farcaster users reward Degen tips to each other for posting quality content. Tips can be redeemed for DEGEN tokens at airdrop events.
  • Users can earn DEGEN airdrop points by accumulating tips and by contributing to DEGEN/WETH liquidity pools on Uniswap v3 and Aerodrome.

DEGEN is arguably the hottest cryptocurrency of the Ethereum ecosystem at the moment, having earned the title of the “unofficial token” of Farcaster — a popular decentralized social platform.

In late March 2024, the project surprised its community by launching its own Layer 3 (L3) chain. These positive developments have helped the token gain a whopping 150,000% since its January 2024 launch, CoinGecko data showed.

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Why DEGEN Matters

Degen chain (DEGEN) is a community-focused L3 chain that rewards DEGEN tokens to Farcaster users on their engagement. The token is considered the unofficial token of Farcaster.

Farcaster

On Farcaster, users can reward each other with “Degen tips” for posting quality content. The Degen chain has a points system that tracks these tips. Farcaster members who have accumulated tips can claim DEGEN tokens at future airdrop events.

The project launched as an ERC-20 token on January 8, 2024. In late March 2024, Degen launched an L3 chain built using Arbitrum Orbit with DEGEN as its native gas token.

A Modular Architecture and Native Gas Token

Degen L3 chain is designed as a modular blockchain.

Degen L3 uses Base L2 chain for settlement, while data availability is outsourced to the Arbitrum AnyTrust chain. Meanwhile, Degen L3 acts as an application layer where developers can deploy applications and where end-users interact with these applications and with each other.

The project used Arbitrum’s (ARB) blockchain solution called Arbitrum Orbit to launch its custom blockchain. As reported by Blockworks, Degen chain founder Jacek Trocinsk chose not to use the Optimism Stack to build the Degen chain as it did not offer native gas tokens.

DEGEN Tokenomics

DEGEN was first airdropped on January 8, 2024 to top users of a Farcaster channel called ‘degen.’ The inaugural DEGEN airdrop was distributed on the basis of a points system that measured a user’s engagement and followers.

Founder Trocinski ‘casted’ on Farcaster:

“The goal is to add value and offer a fair way for users to cash in on their Farcaster reputation.”

According to Degen’s website, the DEGEN token has a total supply of roughly 37 billion tokens. An inflation rate of 1% is scheduled to start in 2028.

Here is the breakdown of token allocation:

Allocation % of total supply  In circulation – measured at % of total supply – as of April 5, 2024
Airdrop 1 15% 15%
Airdrop 2 20% 3.95%
Airdrop 3 25%
Liquidity mining 10% 2.75%
Liquidity pool 15% 15%
Ecosystem 15% 10.87% (10.71% vested)

How to Earn Points for the Next DEGEN Airdrop

There are two ways to become eligible for the upcoming DEGEN airdrop.

1. Earning Tips

Farcaster users can earn points for the upcoming DEGEN airdrop by receiving tips from other users.

2. Liquidity Mining

Token holders can earn DEGEN airdrop points by contributing liquidity to the DEGEN/WETH pool on Uniswap v3 and on Aerodrome DEX.

In order to contribute to a liquidity pool, users will have to deposit an equal dollar amount of a pair. For example, if you want to contribute $100 worth of tokens to the DEGEN/WETH pool on Uniswap v3, you will have to deposit $50 worth of DEGEN and $50 worth of WETH.

According to Degen’s website, users will earn DEGEN airdrop points based on the amount of liquidity provided and its alignment with the current price range.

How to Degen Tip on Farcaster

Users have a daily tip allowance, which is determined by several factors “with a primary focus on recent reactions to your original casts [posts].”

In order to qualify for a tip allowance, Farcaster users need to connect their account to a compatible crypto wallet. The wallet must contain a minimum of 10,000 DEGEN tokens. Furthermore, the user should have posted at least three times.

Note that giving tips to fellow Farcaster users does not reduce your DEGEN balance.

To leave a tip, users have to comment under a cast (post) with “amount $DEGEN”. For example, “100 $DEGEN”.

DEGEN Price Analysis

CoinGecko data showed DEGEN trading at about $0.00002275 on January 15, 2024, a week after its token generation event.

Since then, the DEGEN token has surged over 150,000% to about $0.035, as of April 5, 2024.

Initially, the crypto market saw DEGEN as a meme coin on Base L2. Public perception about the token changed as the project grew in popularity on Farcaster and people saw the value in its tipping system to incentivize high-quality social interactions.

A pseudonymous Farcaster user named 0xen wrote:

“Three months ago there were very few tokens to buy that felt new and fresh — now there’s a whole new world of social coins with burgeoning ecosystems being built around them.

 

“The distribution models have changed, community driven, some art driven; incredibly exciting. $degen changed the game.”

Anil Lulla, co-founder of crypto research firm Delphi Digital, in conversation with Degen founder Trocinski said:

“My thesis for owning DEGEN was: one, it has really cool distribution built into it, and, two – I am bullish on Farcaster and its growth…

 

“I expect more and more apps to launch and integrate DEGEN. Then, out of nowhere, last week, you guys not only announced but launched the L3.”

The launch of the Degen L3 chain and its token listing on centralized exchange ByBit has helped DEGEN jump about 280% over the last two weeks, as of April 5, 2024.

DEGEN’s all-time high stands at $$0.06454, on March 31, 2024.

The Bottom Line

The Degen chain has amassed over 14 million transactions, over 770,000 active addresses and over 25,000 deployed contracts within a week of its launch.

The project has not only showcased the growing popularity of decentralized socials but also put a spotlight on an upcoming blockchain trend — L3s.

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