Insights from Andre Cronje: A Summary

Andre's crypto journey

Cronje got into the crypto space to call out the 2017 ICO scams. He noticed that most ICOs made big claims of solving big data and distributed tech, but most were young teams lacking formal training, unlike him, who had 15 years of experience in traditional finance. To expose these scams, he wrote down his research while going through the projects' Github repositories. He found that 99% of the claims were garbage, but the remaining 1% is why he stayed in the industry. Two lessons he learned were that blockchain offers luxuries in custody, payments, and cross-border transactions not found in the traditional finance system, and tokens move much faster than tech, creating market expectations that do not match reality.

Crossroad with Fantom

While doing code reviews, Cronje created a blog. As word traveled, companies approached him to audit or help with their tech. Fantom was one of them. They had raised $40 million but couldn't deliver on their technical claims. Coincidentally, Cronje was planning a high-scalability blockchain at that time. Fantom had the money but not the tech. Cronje had the tech but not the money. An agreement was reached, and the rest is history.

Birth of Yearn

Fantom had a problem with treasury management; they had kept $40 million in ETH, which went down to $8 million, leaving them with a two-year runway at best. So Cronje started looking heavily into DeFi and moved capital between lending markets to chase the best yield. He realized there had to be a better way, so he taught himself Solidity to solve this issue. Then Yearn was developed, and the token was launched, which blew up in terms of popularity. Cronje later departed from Yearn.

Why Fantom over others?

Fantom launched in 2018 with fast speeds and true finality, gas monetization and subsidies, account abstraction, a focus on dev experience, and high throughput (100M txn/day). If Fantom had a bigger war chest to spend on marketing and sponsorship, they'd have better visibility like BSC. They should have also wasted fewer resources on different verticals like supply chain and CBDC before DeFi became prominent. Overall, Fantom has the tech and is making a comeback now.

State of DeFi

According to Cronje, DeFi is growing in metrics like interest rates and TVL (excluding the ICO mania phase). There's more access to capital when real-world assets (RWA) like stocks and ETFs are tokenized on-chain. Switzerland, UAE, and South Korea are already working on this. However, there's a missing on-chain infrastructure like perps, futures, options, insurance, and stablecoins for cross-border settlement. The only challenge is regulatory blockers hindering the tokenization of RWA. But Cronje expects this to be resolved in the next 2-5 years.

On Bootstrapping Community

Andre Cronje emphasized the importance of bootstrapping a strong community for any blockchain project to succeed. According to him, it is not about the token but the community of early contributors, developers, and users who will build and use the project. To incentivize the right people to engage in the project, he suggested two key strategies. First, do not make the token transferable at the start. Second, give a small subset of contributors multi-signatures, allowing them to decide whether to reward tokens to build the initial engagement. By doing so, the project can avoid mercenary capital, such as pump-and-dump traders, who do not contribute to the project's long-term growth.

In contrast, Andre believes that 99% of projects are playing the token game rather than the product game. They prioritize token issuance and listing on exchanges over building a strong community and delivering a useful product. He cautioned that such an approach would eventually lead to the project's failure, as the token price will eventually collapse due to lack of real-world adoption.

On Regulation

Regulation is a contentious issue in the crypto space, with some arguing that it stifles innovation while others believe that it brings much-needed clarity and legitimacy to the industry. Andre Cronje believes that there are two types of regulation: regulating crypto (decentralized) and regulated crypto (centralized).

For decentralized cryptocurrencies like Bitcoin, Andre believes that regulation is difficult, if not impossible. Since there is no single entity behind the protocol or network, regulators cannot regulate the technology directly. Instead, they turn to the developers behind decentralized applications (dApps), issuing subpoenas and threatening them with jail time. This creates stress for developers and friction for the protocols, which can harm the industry as a whole. Andre pointed out the recent case with Tornado Cash and Alexey Pertsev as a perfect example of such regulatory overreach.

On the other hand, centralized cryptocurrencies, such as those offered by registered entities that operate as a normal business dealing with crypto, are subject to regulatory scrutiny. While complying with regulations can be costly and time-consuming, Andre believes that it is necessary to ensure that such entities play by the rules. However, the SEC's recent crackdown on such entities, such as Kraken and its staking service, has pushed people into the anonymous culture, allowing bad actors to infiltrate more easily. Furthermore, it has pushed builders from the US to places with friendlier crypto regulations, such as the UAE.

On Bear Market

Finally, Andre Cronje believes that bear markets are a good thing for the crypto industry. While they may cause short-term pain, they encourage proper discussion and real development, separating the wheat from the chaff. During a bear market, projects that are genuinely committed to delivering a useful product will survive, while those that are merely riding the hype cycle will fade away. Andre believes that this is a healthy process, as it helps weed out bad actors and scams from the industry, leading to a stronger and more sustainable ecosystem in the long run.