Interview with DeFi's father Andre Cronje: I will most likely end up in prison

Original title: Andre Cronje:The rise and fall of a DeFi god

Original article by Paige Aarhus

原文编译：wesely， DeFi 之道

In an interview at his home in a gated community in Dubai, Andre Cronje (AC) cut to the chase:

"I will most likely end up in prison."

"Can you elaborate?"

"Unfortunately, no."

"Are you being sarcastic?"

"No, it's not sarcasm."

It's been a crazy year in crypto, and the fate that AC says has already befallen another developer -- Tornado Cash developer Alexey Pertsev, who has now spent four months in a Dutch jail awaiting charges.

39 岁的 AC 作为 DeFi 赛道的知名人士，是该领域是最早的构建者之一。2020 年 DeFi 之夏，AC 推出了首个收益聚合器 Yearn Finance，并在兴起的流动性挖矿中发挥了关键作用，根据 CoinGecko 的数据，其原生 Token YFI 从 2020 年 7 月的 32 美元跃升至两个月后的 4.3 万美元。

AC's subsequent projects also made many people rich, which brought him great fame, but it was also his fatal flaw. Millions of user funds were stolen later, his followers turned against him, and in less than two years, the father of the DeFi became known as rug-puller.

"That's the problem with being God, you're not allowed to change any more and you're not allowed to make any mistakes," he said.

He curled up on a dark gray couch in a spacious rented house so large it even had a single-family elevator. A few days later, he moved to a hotel because of the construction noise and has clearly made the city his home, though sadly he refuses to be photographed.

Conversations with AC and those close to him also reveal a story from the past. Years ago, as a young computer prodigy in the university town of Stellenbosch in South Africa's Western Cape province, he adopted stray animals but was bullied at school and dreamed of becoming a defence lawyer, hoping to argue cases.

In conversation, it's easy to get confused by the moral code that AC presents because it's often inconsistent. He feels sorry for the people who lost money in his projects, but suggests they have only themselves to blame. AC says he never bullied anyone:

"Not once, never," he said.

By turns sad, thoughtful, defensive and witty, he never takes the elevator at home. "I don't like risks," he deadpans.

But in recent hours, it was hard to tell whether he believed what he was saying. This is reminiscent of A 1970s TV show called M*A*S*H. M*A*S*H is an American war comedy television series. M*A*S*H is short for Mobile Army Surgical Hospital. There is a line from Colonel Flagg about the CIA: "No one can get the truth out of me because I don't even know what the truth is, and I will keep myself in a state of extreme confusion."

Now, AC seems to be making a comeback. He has once again joined the Fantom Foundation, which runs the public chain platform Fantom. AC's goal is to build a traditional bank, not for Crypto. But how will he handle the burden of his remaining followers looking to him to help them survive the crypto winter?

The changes that Yearn makes

Wind the clock back to early 2020, when DeFi was emerging and AC was winning over developers with iear.Finance, now called Yearn.

Yearn made a huge splash by automating DeFi farming to optimise earnings. In the past, users could make a lot of money by investing their cryptocurrencies in different DeFi protocols for lending or trading, which is fine in good market conditions, but chasing returns in this way, known as yield farming, is also tricky.

Nansen has found that most users who participate in liquidity mining abandon the agreement after two to three days, so timing is key, with top liquidity mining farmers knowing when to rush in, exit, and move on to the next deal. It can automate that task by pooling users' cryptoassets into smart contracts, called vaults, and rotating the assets in and out of various protocols, including dYdX, Aave and Compound.

2020 年 7 月推出 Yearn 的 Token YFI 后，Yearn 真正起飞。而 AC 因对 YFI 非常公平的分配而赢得不少人的赞誉，在 Token 上线时，任何人都可以将流动性存入 Curve yPool 或 YFI Balancer 池中获取 Token 奖励。

与一般项目的 Token 发行不同，AC 没有将任何 YFI Token 分配给自己的团队或知情的投资者。据 Fantom 基金会顾问和前首席营销官 Michael Chen 透露，在 YFI 推出之前，只有两个人知道它：Chen 和来自 LobsterDAO 的 Lvan，所以说即便 AC 最终是为了钱，至少在 YFI 的首次亮相中他没有表现出来。

That won support from developers and investors, and as it was in line with DeFi's ethos, so Yearn was considered by many to be truly decentralised. But, as others have pointed out, AC has the ability to be the one pulling the strings by controlling smart contracts.

In cryptocurrency wealth lore, it's hard to know how Yearn turned armchair traders into millionaires overnight, but YouTube is full of tutorials that help cement AC's stardom.

On July 16, 2020, the day before YFI launched to the public, Yearn locked up $8.1 million worth of cryptocurrency in smart contracts. By August, TVL had jumped to $1.5 billion. At its peak in December 2021, YFI's TVL was worth nearly $7 billion.

Token Brice, from DL News affiliate, said: "I've still found aggregators that are up to 1% Yearn."

Finding and criticizing weaknesses in code is a common practice in the DeFi industry, and AC is also an expert in this field, which is how he got into the industry (early AC published code evaluation articles for encryption projects on media platforms, gaining a lot of fans). Former colleagues call him a genius developer who can solve problems that plague the entire team in a matter of hours, and who can explain it all in a concise way.

"A lot of developers can't design systems and write clearly like AC," says Matt Visser, a friend of AC. "He can walk on both planes."

Yearn is not AC's first foray into encryption. At a conference held at the Shilla Hotel in Seoul in August 2018, AC joined the Fantom Foundation as a technical advisor and core developer, as a new public chain and open source smart contract platform that had been touted as comparable to Ethereum.

AC said he identified problems with Fantom early on, including the project's lack of development talent and its lightning-per-second transaction speed.

By 2019, the multiple pressures of operational overruns, exorbitant overhead and crypto winter had left little of the $40 million the foundation had raised during the 2018 ICO, but Cronje insisted on the project's development.

"I'm not 100% sure why I continued to help," he says.

On the Oh Hey Matty podcast in March 2019, when AC was asked why so few of the developers listed on Fantom's website were able to code, Cronje told the host that those developers had actually left and said the project was in good shape. A few months later, he turned to Yearn.

YFI made AC famous, as his Twitter followers ballooned from less than 5,000 in July 2020 to more than 110,000 in February 2021. Then there's The deification of AC. In July last year, Mr. Yearn published a quirky tome, 'The Blue Pill,' a 104-page e-book that opens with a assured version in the voice of God, a benevolent savior whose protagonist happens to be AC himself: "Yearn, which no one designs, comes from AC's gift to all YFIs," it reads.

The book gets weirder from here, but it also captures the DeFi culture: a conflation of social, political and financial interests and a community of preachers who tend to gravitate towards Messianic figures.

AC became one of them, Visser said. "He played savior to a lot of people."

In response to The Blue Pill's portrayal of AC as a wise philosopher and fans' portrayal of him as God and the all-powerful Marvel villain Thanos, AC said he was unprepared and "miserable".

"I'm no longer allowed to be flawed, and one of the things I've always liked is that I speak my mind no matter what," but that habit has suddenly become a burden.

Initial beginning

AC grew up in a nuclear family with his parents, sister and pets. He describes his upbringing as "cookie-cutter and a white-picket-fence."

His father was a science teacher, his mother a librarian, and his sister Tanja was five years older than him. Andre Cronje was a "sweet little brother" who loved animals and the outdoors, Tanja recalls, but because of the threats made to AC's family by critics, Tanja asked that her current last name not be used.

According to Tanja, Andre Cronje was creative and intelligent, he didn't have to study much to get good grades, and as he got older, he became more solitary, playing video games with only a close-knit group of friends.

AC offers a more blunt assessment of himself: "I went to a regular school for athletic athletes, where I was bullied a lot as a very pale, fat nerd kid."

In adolescence, he began writing small video games like Hangman in a programming language called Pascal, and in his first ninth-grade computer science class, he encountered what would become a recurring problem: Few people could keep up with him, even fighting with his teacher.

AC said he dreamed of becoming a court lawyer and arguing cases. He studied law at Stellenbosch University, but soon lost interest. "The only thing that kept me going was when we were doing simulations, and it was less than 2 percent of what we were actually doing." .

He still dreams of being a worthy debater who can fight without breaking down. But the courtroom is a controlled environment, the DeFi and the Internet are a place of free competition, and the ugly side of online celebrity is hard for him to accept.

Prior to YFI's release, AC had struggled with a growing fan base and the critics that came with it, leading him to talk about quitting the industry altogether, even before YFI launched, and "the community was hostile," AC wrote in a Medium post in February of that year. The source text has been deleted by AC and is retained as network copy.

He didn't really quit this time, but his project began to come under attack.

The beginning of the endgame

In September 2020, AC tweeted information about a new project called Eminence, which he described as an integrated platform for online game developers, contributors, and players. Although Eminence was still in development at the time, and the contract was untested, eager users, wanting to take advantage of potential opportunities similar to YFI, began flooding Eminence.

在 AC 发布推文数小时后，一名攻击者盗走了 1500 万美元的资产，AC 说当时他还正在睡觉。AC 就这个问题出现的原因，归因于他偏爱在生产环境（test in prod）进行测试，这就类似于在出海时堵住船上的孔一样，经验丰富的开发人员可以利用它来获利。事件中，黑客通过「闪电贷」推高 Eminence 原生 Token 的价格，然后在价格暴跌前迅速卖出，而且攻击者随后还向 AC 控制的钱包发送了 800 万美元，使其看起来像是 AC 的监守自盗。AC 说他没有偷走用户的钱，即便没有，但他也因此名誉扫地。

The feature of DeFi is also its flaw, no one can control, no one can be blamed, the user takes the risk, if you don't like it, just put your money in the bank, and that is DeFi. "Product testing is just a statement," he says. "If you don't check your blind spots carefully, you could lose all your assets."

"We didn't even disclose these contracts," AC said. "I didn't tell anyone to use them, and you know what, if somebody loses money, f * * k u."

AC said the hack of Eminence had exposed a new "duality" in which "people are losing money because of me, but it's not something I can reconcile".

Then came C.R.E.A.M. Finance, a name that paid homage to Wu-Tang Clan songs. Cream is a loan agreement where users use cryptocurrency as collateral to borrow money. In 2020, while AC was working on crave, he announced in a Medium post that crave would "collaborate" with Cream to update the agreement. He told DL News that he became an adviser to Cream after the company was plagued by hacks and breaches, but that $38 million was stolen from C.R.E.A.M. Finance in February 2021. In August 2021, $19 million was stolen. Another $130 million was stolen in October 2021.

CREAM Finance TVL (January 2021 - November 2021)

Things got worse in 2022 when AC joined forces with Daniele Sestagalli, who goes by the pseudonym Dani, and planned to start a project called Solidly. But partner Sestagalli revealed in January that he was also working with Omar Dhanani, known online as Sifu.

Dhanani pleaded guilty in 2005 to conspiracy to commit fraud in the United States involving credit cards, bank cards and identification documents. He changed his name to Michael Patryn to avoid attention. Dhanani went on to work with Gerald Cotten, co-founder of Canadian cryptocurrency exchange Quadriga, who died unexpectedly in 2019, taking hundreds of millions of dollars of investor money with him. While Dhanani has not been charged with wrongdoing in connection with the Quadriga trading platform debacle, there is no doubt that it has cast a negative light on AC.

Dhanani the fraudster

Solidly went live in February 2022, an automated market maker application designed to reduce trade slip points to enable low-cost trading, with CSO Sesta responsible for marketing and hype and AC responsible for project construction.

But less than three weeks after the project's launch, AC announced he was leaving the project after code errors led to touted features not materializing. Solidly's TVL, which reached $2.3 billion at one point, fell by nearly $370 million the day he announced his retirement, and by June, TVL had fallen to less than $20 million.

"In terms of users expecting to make money in Solidly, they didn't, and if that's how they define Rugs, I can live with that," AC said.

Solidly TVL

It's a curse on AC, Token Brice said, and AC also said he accepted the word curse. "Andre Cronje was able to create a whole new type of product that didn't exist before, but was rushed and messed up in the execution," Token Brice bluntly said.

Visser has a different view: "Over-reliance on system participants who don't understand the code is where all the trouble comes from. If all players and partners were as reliable as AC's code, he would be the master of the universe."

fall

In April 2022, AC did the unthinkable: he called for regulation of the DeFi.

Regulation runs counter to the idea of autonomy and decentralization that DeFi stands for. The call for regulation became the last straw for communities devastated by the Terra/Luna debacle and the Solidly incident. But the backlash was also loud, with angry crowds flooding his Telegram and Twitter feeds, AC again announcing his retirement and logging off, and everything was silenced.

But in October he broke his silence again, calling for laws in DeFi to match safeguards in traditional finance. A few weeks after the FTX crash, more and more regulators have formally entered into the regulation of the Crypto industry.

AC indicates that the intersection between CeFi and DeFi needs to be regulated. Once a project is online, it is like the Internet itself - without an owner, there is no boss. "In the face of potential contract regulation, the regulator says to you, 'Now you need to stop the contract you've developed'; then you tell him, 'I can't stop it'; then he says, 'Well, if you don't stop it, we'll put you in jail'; I can't stop it, there's nothing I can do but destroy the Internet."

AC looks back at what he achieved during the DeFi summer and how much control he or anyone else could have.

All of his money, he said, came from investing in cryptocurrencies and liquidity mining, and he noticed, His name is often linked to Do Kwon, the founder of blockchain platform Terraform Labs (for which there is an arrest warrant in South Korea), and Kyle Davies and Su, co-founders of the multibillion-dollar cryptocurrency hedge fund Three Arrows Capital Mr Zhu, whose fund closed in July, was also mentioned.

"It tears my soul. I gave everything I had to the industry, trying to show them a way to launch a new Token model," AC said. "And this comment is the final legacy I get?" .

Despite the backlash, he plans to make another comeback and announced in October that he is once again working with Fantom, whose "war chest" has been replenished, including about $100 million in Stablecoin.

Another big project may help explain his recent calls for regulation. Visser said he and AC are planning to open Universal Assets Bank, a regulated international cryptocurrency bank. "We will build the future of finance," Visser said.

Andre Cronje, however, seems uncertain about his future, having been scarred by life on the edge. "I have no confidence in anyone, I don't trust anyone anymore, and I don't think anyone acts in the best interest of anyone else unless there is a transactional motive."

I can't tell if he's talking about himself.

What advice would you give to the developers who take his place? 'It's best not to do it,' he says. 'If you do, stay anonymous and protect your privacy.'

"Developers are going to be more and more heavily regulated," he warns. "After you deploy these contracts, you can't do anything about them, or you're basically going to jail."

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