Decentralized finance saved the foundation behind Fantom, the Layer 1 blockchain, from a slow march to financial ruin, according to crypto entrepreneur Andre Cronje, one of the project’s most notable contributors.
When crypto valuations fell in late 2018, the Fantom Foundation was left with a fraction of the $40M it had raised only six months earlier, Cronje wrote in a Monday blog post titled “Fantom: an inside financial peek at being a ‘crypto company.’”
But the pandemic-era boom known as DeFi summer paid dividends. So, too, did the Foundation’s willingness to take advantage of sky-high DeFi yields, which have since proven fleeting.
The Foundation now has hundreds of millions of dollars worth of crypto assets, enough to continue operations for another 30 years, according to Cronje.
“If DeFi didn’t exist, we would likely not be operational today,” he wrote.
The blog post summarizes the financial history of the company driving Fantom’s development, as well as cautionary tale in the peril – and promise – of running a crypto company.
The details regarding the Foundation’s financial strength have sent the blockchain’s native token, FTM, soaring. Its value is up almost 30% over the past week and 10% in the past day, according to data from The Defiant Terminal.
Fantom is a proof-of-stake blockchain that went live in 2019, several months after its $40M raise. At the time, Cronje chaired the Foundation’s technology council and held the position of technical advisor, according to his LinkedIn profile.
Among its early “major expenses” were $3M in listing fees charged by centralized crypto exchanges and more than $500,000 paid to sponsors and influencers.
“We decide to never pay for exchange listings or influencers again,” Cronje wrote. “Fantom becomes incredibly frugal.”
Additionally, crypto values fell in the latter half of 2018, with the total market capitalization of all cryptocurrencies falling from just over $350B in June to just over $100B in December, when the Foundation sold its crypto. The sale left it with $5M, enough to cover four years of operating expenses.
The Foundation slowly bled money. In early 2020, with just $3.5M in assets, started “aggressively participating” in DeFi, yield farming on Compound and Synthetix. By May of 2021, it had $1.5B.
“Not a typo, yes, $1.5bn,” Cronje wrote.
Thanks to crypto’s bear market, those numbers have fallen. The Foundation now has more than $100M in stablecoins, more than $100M in other crypto assets and $50M in non-crypto assets, according to Cronje.
With compensation running $7M per year, it has enough money to cover business expenses for at least 30 years, although that could drop in the event crypto prices plummet even further.
“We have been operating for over four years,” Cronje wrote. ‘We plan to continue operating for at least another 30 more.”