DeFi Builder Andre Cronje Isn't Going Anywhere (For Now): "Innovation Can't Stop Because of Fear"
DeFi Builder Andre Cronje Isn't Going Anywhere (For Now): "Innovation Can't Stop Because of Fear"
Andre talks to The Defiant about the road to building yearn and YFI, and how he never anticipated the project's wild success.
Hello Defiers! This week’s podcast episode is with Andre Cronje, the developer of the yearn platform and YFI token. There’s this sort of mysticism around Andre: The solo genius builder who relentlessly releases code —even if it hasn’t always been properly audited or tested. The DeFi wizard capable of turning a token which he himself claimed to be valueless to be worth thousands of dollars in a few days.
Andre created yearn initially to invest his family’s savings. The platform allocates stablecoins to lending protocols that are generating the most yield. Last month, he released YFI, a token which had no pre-sale, no offering, and could only be earned in the initial distribution by using the yearn platform. With traders lining up to get their hands on DeFi tokens, more than $300M flowed into yearn, while YFI surged past $1,000 in a day and now trades at over $4,000. This isn’t exactly how Andre thought things would play out; his napkin math for what YFI would be worth had put its value between $2 or $3. The inflow of capital was so huge and unexpected, that it overpowered his own share in the platform, leaving him with just over 1 YFI token —but he’s not complaining and says he’s returning donations he recently got.
He talks about the actual paralyzing fear that comes with building money protocol, the huge responsibility he feels, and how finger-pointing has caused him to quit the space before. But he says the drive to continue innovating has helped him overcome that fear and keep building. He recognizes innovation and user safety are at odds in DeFi, pulling in opposite directions, and he’s not sure what the right balance is. At least on his end, innovation will keep winning that tug of war. But it’s not like he has some grand vision for DeFi. He says what drives him is waking up in the morning and being really excited to code and “add new things to this ecosystem.” As long as that holds true, he says, he’s not going anywhere.
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CR: Andre Cronje, he's been leading the charge in innovation in DeFi recently. He's a longtime developer and the founder of yearn, previously iEarn, we'll get into all of that and the YFI token and all the craziness around it. But first, I really want to start and just get to know Andre better. Andre, welcome to The Defiant podcast. Thank you so much for taking the time to talk to me.
AC: It's a pleasure. Thanks for inviting me. Thanks for giving me a forum to talk about a lot of this stuff. I like to preface by people like saying I'm the founder or whatever, I just like to preface by saying that I'm not. A big reason why I'm trying to remove myself, like the thing I messed up the biggest, sorry, this is actually a point that's been annoying me for a while, so just a good forum to say it.
Irony of a DeFi Founder
The thing I messed up the biggest was not being anonymous. I realized one of the key things about building something decentralized is being able to walk away from it. And at this point, people associate protocols so much with me, that it's almost difficult to detach the two. That's actually in the current narrative really annoying me, because you can't be decentralized and the founder, those two just don't go hand in hand. But anyway, we can unpack that a little bit later. It just popped into my brain for whatever reason now and it's been a bit beef.
“The thing I messed up the biggest was not being anonymous.”
CR: What's the right way to call you? What's the title you refer then?
AC: I am a guy that deploys smart contracts on Ethereum. That's my claim to fame that I've deployed a few lines of code onto a very well-designed, cool blockchain.
CR: You're being a little bit humble, but I’ll go with it. Let's start with your background and then I'd love to begin to the topics you mentioned just now, which is this aim of DeFi founders to really detach themselves from their protocols. I think is super interesting. But before we get into that, let's get to know you a little bit better. I know you're based In South Africa and you have Crypto Briefing also, but I'd love to kind of learn how you got into crypto in the first place. What were you doing pre-crypto?
AC: Well, how far do you want to go back? I'm one of the older specimens in crypto, I think. We could go back 20-30 years if you like or we can keep it crypto recent, so I don't know how far back you want to dig.
CR: Whatever is relevant to understand your enthusiasm and activity in this space.
CS Lecturer
AC: Well, then I'll brush through the sort of before crypto very quickly. Started off doing my LLB, originally to become an advocate, took a year off in that year, helped a friend was doing computer science, got really interested in the courses they were doing, so I ended up doing them myself.
I managed to finish the courses quite a bit ahead of schedule. One of the lecturers had resigned at the time, so they not being able to find someone to replace to fill the rest of the semester, they ended up offering me the interim job to actually be a lecturer so I took that. From there, started getting heavily into computer science. First job was with Vodacom in Tanzania and Congo. Vodacom is a telecommunications company, Vodafone, holding their GGSN, all of those things.
Stuck in Fintech
After Vodacom got heavily into mobile security, but this is back in the days of like J2ME and Nokia, Symbian development, it’s like Android and iPhone didn't even exist yet. That was card switching payments, so just back in payment systems for traditional credit cards and those kinds of things. From there into big data, Spark cluster development, lots of scholar work, very high throughput stuff that we were doing with again the telecommunications companies. Got a little bit into ML, Machine Learning, just for building some, like regression models and things, because we started going into loans and insurance with Shoprite Group, which is a big retail company here. Stuck there in the fintech for probably the three, four years leading up that technology department.
Then there was this tipping point where I was stagnating in that industry a little bit, there wasn't much more I could learn or do and I do get bored very easily.I don't manage to stay at companies long. I'm highly addicted while there's a puzzle, but when the puzzle has been solved, I very quickly get bored.
“I'm highly addicted while there's a puzzle, but when the puzzle has been solved, I very quickly get bored.”
Distributed Consensus
At this time, my one mate, Antonio, who I've been working with for the last decade plus, he's a phenomenal human being, but he got married and he went on honeymoon. And I was alone at the office and I was bored and this was December and I was looking for something new to do. And this was, I think, either in 2016 or in 2017, I don't remember and that probably in 2017, because that's when the initial big hype cycle on crypto started. And I had been doing mesh networks and distributed systems previously with my Vodacom stuff and my machine learning stuff.
I got very excited originally on the distributed consensus side. One of the projects we were busy with at the time was localized decentralized consensus that we wanted to do for self-driving cars. Because we had this research theory at the time where self-driving cars right now, they still use normal optics, so they'll use a stop sign and then they'll stop. But what we wanted to accomplish is if you have a bunch of cars coming to an intersection, there's no reason for them to use an archaic system like a stop sign if they can communicate to each other in a localized network at high frequency, arrive at the decision even though there might be malicious actors.
This idea of high throughput and this was that phase when everyone was promising 10,000 TPS and the next one at 100,000 and the next one at a bajillion and like it just kept scaling like that. Coming from a fairly traditional like research and technology background, I started getting very excited about this, because here was this field that were promising that solves all of these problems and then that was phenomenal to me. Because on that research side, we've been stuck for 20 years without breakthroughs and all of a sudden, you've got 19-year-olds fresh out of school saying that they came up with a solution and they solved it. And at the time, I was hooked, I loved the idea, so I started digging into it more.
CR: And at this time, this was with blockchains like Dfinity promising that that level of scalability right at this time, like 2017, I imagine is that what you were looking at and were hopeful about?
Writing Code Reviews
AC: Looking back at the reviews I did, I think it was probably like Wanchain. Dfinity, I think was a little bit off to that, maybe a few months after. It was still a little bit before that. But so to learn, I started digging through their code and I started documenting what I saw and what I learned from it and I wrote that on my Medium. And at the time, it was exploratory for me, I wanted to learn more, so I figured there's probably other people that are going through the same thing I'm going, so I'll write it down. And the code reviews blew up.
For whatever reason, it became wildly used and then Han from Crypto Briefing reached out to me and he had the idea of formalizing it with their reviews, which the guys there are awesome and I love them, so I was like, okay, let's do it. I started giving them the rights to, I say rights, all of my stuff is open, anyone can use it. There's no rights, but I mean, they were the first ones to publish it on their Crypto Briefing website, CryptoBriefing.com.
Image source: Crypto Briefings
What I didn't like is, I wrote for people to learn, but instead, people started using it as a measuring stick for ICO qualities and like as investment advice and that really pissed me off. I started pulling a little bit back on that, because while I was doing it and what people were using it for were two very different things. I pulled back from my reviews and this was especially during that mega high period and I mean, people were doing private sales off of my reviews and things like that. And it really annoyed me so I almost completely cold stopped that.
“What I didn't like is, I wrote for people to learn, but instead, people started using it as a measuring stick for ICO qualities and like as investment advice and that really pissed me off.”
Then I went back to my roots, which was on the research side. Now, at this time, it’s I think about a year, maybe a little bit more later and I've come to realize that these really difficult problems have not been solved yet. But what's fantastic about this space is that there's so much money being thrown at research. In the traditional space, you have to go through so many hoops to try and get $100 grant to do something. Here, you write the same idea on a piece of paper, call it a whitepaper and then all of a sudden, you can raise $40 million, which is insane. But it created the opportunity for a lot of good research to happen.
“In the traditional space, you have to go through so many hoops to try and get $100 grant to do something. Here, you write the same idea on a piece of paper, call it a whitepaper and then all of a sudden, you can raise $40 million, which is insane.”
I started digging in heavily on that side. I got very involved in the asynchronous BFT research space, did a few papers there with a few different guys in the space, also did some formalized VM stuff with the guys in Sydney. Got really excited about all of that stuff, helped launch one or two of these blockchains to test in a distributed capacity and the results were good, but not as high as theoretically possible. That was probably about the middle area of 2019.
At that time, what was happening parallel to this was I'm now that guy, I'm the one that's in crypto and I'm the one that's telling people about crypto, so I'm that annoying douche that no one likes. But the counter effect there is all of my friends, all of my family, they're a little bit scared of this crypto stuff, but they want to test the waters, they want to dip their toe, but they don't want to figure it out themselves. All of them started asking me to invest like 1,000 bucks or 500 bucks or whatever it is, never big money, into like BTC or ETH and just hold that stuff there.
Formalized Gambling
Now, during the 2019 volatility, I wasn't comfortable keeping their things in BTC or ETH or any of these other crypto assets that are a little bit more volatile, because I am not a trader, I don't understand the TA-FA side, I still think it's flipping a coin and guessing, I think it's formalized gambling. I wanted to get out of that as much as possible.
I started moving all of that stuff to stablecoins. Now, I've got this stack of stablecoins and I'm like, okay, but I still want to show them there's value here. It's not a 5X, but you can still make more than you're going to make by putting that money in a savings account that's going to give you maybe 1-4% if you're lucky, depending on your lockups here in South Africa.
“I started moving all of that stuff to stablecoins. Now, I've got this stack of stablecoins and I'm like, okay, but I still want to show them there's value here.”
At that time, I started doing a lot of sort of initial research, DeFi protocol work, but not yet on Ethereum. The one problem I still had a little bit on the Ethereum ecosystem was that there was this fight for liquidity and it's still happening, it's Uniswap is trying to capture it or Bancor trying to capture it or the DEXs are trying to capture it, but everyone wants the liquidity.
I had formalized this additional base layer DeFi protocol where the liquidity is shared between your AMMs and your lenders and these kinds of things and started building that a little bit off to the side. But the more I built it, the more I realized the power of DeFi isn't the tooling, it's not the lenders, it's not the DEXs; it's the assets. The thing that was huge for Ethereum during that time was that it had launched so much financial value in ERC20s, in these underlying assets, and it's the chain that has all of these assets that has the value. It's all about the AUM.
“The power of DeFi isn't the tooling, it's not the lenders, it's not the DEXs; it's the assets.”
I think it was around December 2019 or Jan, this year, I started shifting all of the theoretical stuff I was doing in terms of shared liquidities and AMMs and lending providers, all this stuff onto the Ethereum ecosystem, but I didn't have to do most of it, because we already had lenders there was dYdX, there was Compound, all these wonderful things. AMMs weren't that big, we basically had Uniswap at the time.
What I started to do —now, my belief system when it comes to coding is never code something you can't do yourself. You as a human need to be able to do steps and accomplish something and then I can code it, because that's the only way I can teach the program to do something. It has to do what I can do.
“… my belief system when it comes to coding, is never code something you can't do yourself.”
Now this is where the two stories tie in. I started using the stablecoin portfolio from friends and family and I started moving it between lenders to make sure that it gets the highest APR rates. But this is time-consuming and takes a lot of gas. I'm a coder. We'll spend a month trying to figure out how to do something to automate it that actually only takes us five minutes a day to do. But in our brains, it makes logical sense and we want to do it.
All APRs in One Place
I started designing my on-chain oracles. Originally, it was just so that I have a single place where I can see all of the APRs on-chain. That came with its own nightmares, because the one reports APY, the other one reports current utilization, so there's a lot of normalization and things you have to do there, but that's a different story.
But after trying to get this APR going, I'm like, “okay, but now I want smart contracts to automate this for me.” They can move my funds around without me needing to do it. I ended up deploying sort of the V1 iEarn system that the strategies that would check what the APR is and it could move the thing.
The thing about blockchain is it only does something when you interact with it. I can’t say in 10 blocks, do something, because it doesn't have that concept. What I realized is I need more people to interact with the protocol. Because the more people that interact with the protocol, the more often it checks where the highest APR is, which means the more often it's going to move, which means that increases its frequency of return.
That's why I opened it up so that people can use it, because the more people that interact, it doesn't subtract anything from me and it means the protocol itself becomes more efficient. Because every time someone deposits, now it checks hey, where is the highest rates? Oh, no, it actually changed, I should move my funds; versus if it was just me, I was maybe once or twice a day clicking on the rebalance button so that it checks and then moves. That's originally why I opened it up.
[ … ]
Paid subscribers have access to the full transcript, including sections on:
Integration with Curve Finance
“This yCurve token to me is a new kind of stable, integrated, savings account. In traditional financial account, you need a savings account to put money in. This is money that has those properties inherently, which is something I was very excited about.”
How DeFi is Different
“In the DeFi space, you had the switch of, it is my money. I'm the one that decides where it sits at any given time. I can see where it sits. I'm the only one that chooses where I want it to go. To me, it's a beautiful concept, but it comes with certain responsibilities. It means you need to understand what you're doing with your money.”
DeFi Community
“We as a community shout wolf very quick. If something even looks mildly off and everyone starts screaming at the top of their lungs, which having been at the receiving end of that, often when something was not wrong, has definitely driven me away from this community a few times.”
Fear of Building Money Protocols
“I released those vaults and within half an hour, there was half a million dollars in there. And that terrified me to the point where I was second-guessing if I should release more products.”
YFI Token Holders
“Short of not having the I participate in governance, at least give me I actually have funds in the system. But if you're that third case that just has it because for speculative reasons and you don't care about the protocol or governance, no offense, but you shouldn't have this thing.”
Drive to Keep Building
“All I know is I wake up in the morning and I'm really excited to code and try and figure out new stuff to add new things to this ecosystem. As long as that holds true, I'm going to keep doing.”
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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the editor: Camila Russo, is the author of The Infinite Machine, the first book on the history of Ethereum. She was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. She has extensively covered crypto and finance, and is now diving into DeFi, the intersection of the two.