What Is Degen and How Does it Work?

Degen is a utility-based meme coin that rewards active users on the decentralized Farcaster network and operates on its proprietary Layer 3 blockchain, Degen Chain.

Written by: Anatol Antonovici   |  Updated May 6, 2024

Reviewed by: Mike Martin

Fact checked by: Ryan Grace

Degen is one of the few meme coins with utility and a proprietary chain. In this article, you’ll learn how Degen works and why it is trending.

Table of Contents

🍒 tasty takeaways

  • Degen is a meme coin launched in January 2024 as an ERC-20 token on Base.

  • The token rewards active users on Farcaster, a decentralized social network.

  • In March 2024, Degen launched its proprietary Layer 3 chain.

Degen Summary

Description
What Is Degen? Degen is a utility-based meme coin operating on its Layer 3 blockchain, rewarding Farcaster users for content creation.
History of Degen Launching in January 2024, Degen garnered hype through community-driven discussions and the recent introduction of Degen Chain.
Community Branding Degen’s identity, including terms like "Degentlemen" and the purple hat logo, has evolved through community engagement.
What Is Farcaster? Farcaster, an Ethereum-based network, fosters censorship-resistant social interactions with apps like Warpcast.
Farcaster Adoption Farcaster's popularity surged in 2024, catalyzed by the Degen phenomenon, leading to record activity levels and revenue.
How Does Degen Work? Degen incentivizes user participation through airdrops, liquidity mining, and a thriving ecosystem on Base, anticipating growth with Degen Chain.
What Is Degen Chain? Introduced in March 2024, Degen Chain offers reduced gas fees and supports community-centric applications, marking a significant milestone for the project.

What Is Degen?

Degen is a meme coin that launched at the beginning of 2024. It has been one of the best-performing crypto assets. While meme coins generally lack real utility, Degen is one of the few tokens with some functionality.

Specifically, Degen is associated with a decentralized social network called Farcaster. It’s used to reward platform users who generate quality content.

Degen’s name derives from ‘degenerate.’ The crypto community uses this slang to describe traders who engage in highly speculative trades.

History of Degen

Although Degen has only been around for a few months, it has created a lot of hype.

It all started with a post on Warpcast, an X-like app within the Facaster ecosystem, which announced the token’s launch. Degen became an ERC-20 token on Base, a fast-growing Layer 2 network.

The Warpcast team launched the /degen channel, which quickly became very popular among Farcaster users. This is where the community discussed Degen’s details and functionalities.

The token started the distribution process with Airdrop 1 to reward Farcaster users who post on the channel.

While growing in popularity, several dapps within the Farcaster ecosystem, such as the social app Drakula, decided to make it their native token for various functions.

The next major step was the recent launch of Degen Chain, a Layer 3 (L3) network.

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Community Branding

IDegen launched with no branding, and the community has shaped the token’s mission and vibe.

For example, active Degen community participants helped define and promote critical terms, such as:

  • Degentlemen — the name for DEGEN holders.

  • Degenerational wealth — the goal of the DEGEN community.

  • Top hat — this is the symbol and emoji that can be added to messages to symbolize the Farcaster elite or believers.

Source: Warpcast

DEGEN also offered the first bounties for logo creation, with the purple hat eventually becoming the face of the token.

What Is Farcaster?

Farcaster is an Ethereum-based social network ecosystem that creates censorship-resistant social apps where people can hang out and discuss various topics.

The platform was launched in 2020 by Dan Romero and Varun Srinivasan, who previously worked at Coinbase.

The most popular app on Farcaster is Warpcast, which resembles Twitter. It enables users to write “casts,” follow other users, and like or “recast” posts.

Farcaster offers the frames feature that enables users to create social media apps.

Farcaster Adoption

Activity on Farcaster has exploded in 2024, with the Degen hype acting as one of the main drivers. As it stands, April was a record month for the network.

The number of casts and reactions reached new highs in April.

Source: Dune Analytics

At the beginning of April, Farcaster’s cumulative revenue exceeded the $1 million mark.

Source: Dune Analytics

How Does Degen Work?

The DEGEN token launched with a total supply of 37 billion. The supply will be fixed until 2028, after which it will implement an inflation rate of 1%. As of today, the circulating supply is 38%.

Following the launch, the token has been distributed in multiple phases. According to its tokenomics, 60% of the supply is allocated for public distribution via three airdrops, the first of which has been finalized. As of this writing, Airdrop 2 is ongoing until the end of May.

Source: Degen.tips

Users are encouraged to be active on Farcaster and hold a certain amount of DEGEN to become eligible for token rewards. Once eligible, users are awarded a daily tip balance based on how many points they have. Tokens are then distributed at the end of the month. 

In addition to the three airdrops, 25% of the token supply is allocated to a liquidity mining program and liquidity pools on several DeFi platforms. Currently, Degen supports two external pools on Uniswap and Aerodrome that liquidity providers can use to generate yield.

Degen Performance on Base

Degen is migrating to its proprietary L3 network, Degen Chain, but it has thrived on Base, a Layer 2 (L2) chain backed by Coinbase.

The DEGEN price, currently near $0.017, reached an all-time high of over six cents on March 31, with its market cap hitting $780 million. At the time, it was the largest meme coin on Base, stimulating an entire subculture on the L2 chain.

The token’s 24-hour trading volume ranges between $20 million and $100 million.

DEGEN has outperformed large-cap cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL).

Source: TradingView

What Is Degen Chain?

At the end of March, Degen launched its proprietary blockchain network, Degen Chain. It represents an L3 network leveraging Arbitrum’s Orbit framework with settlement on Base. Thus, Degen has become one of the few community coins with proprietary chains.

Jacek Trociński, who became active in the degen channel, envisioned the Degen Chain. Syndicate.io, which specializes in blockchain APIs and L3s, developed the network.

Degen Chain aims to offer lower gas fees than Base and focus on community use cases.

Degen Chain Adoption

The new L3 has experienced significant success in its first month of existence. It has handled over 50 million transactions across over 9 million accounts.

Degen Chain hosts over 20,000 meme and social tokens, many of which may be scams.

The DEGEN token can grow in value if the L3 network becomes a meme chain adopted by more apps and games. 

FAQs

What is Degen crypto?

Degen is a meme coin launched in early 2024. It is associated with the decentralized social network Farcaster and rewards users for generating quality content.

Farcaster is an Ethereum-based social network ecosystem that supports censorship-resistant social apps. It is known for its popular app Warpcast, which resembles Twitter.

Degen Chain is Degen’s proprietary Layer 3 network built on top of Base and leveraging Arbitrum’s Orbit framework. It was launched at the end of March 2024.