Yearn Finance founder and prolific DeFi builder Andre Cronje posted a part two to his initial post “Building in #DeFi sucks.” And while they didn’t say it sucks, other prominent founders in the space agreed that the pressure is on.
Cronje’s post offered a glimpse into the intense pressure that’s put on developers, especially in decentralized finance, as they are building in public for users who are also economically aligned with the project via a token. Founders and builders of some of the space’s top projects told The Defiant that while those challenges make building in DeFi exciting, they empathize with parts of the post.
“Community is Bullshit”
“Your value is only as good as your token, token go up? You built an amazing protocol, it’s the future of finance, blah blah. Token goes down? You are a scammer, fake project, bad coder, blah blah,” Cronje wrote.
Community, a word often used in DeFi, “is bullshit,” he went on. “Your success belongs to your ‘community,’ but your failure is 100% your own,” and the pressure to deliver is to impact the price of the token, not because they’re interested in actually using the product.
Cronje acknowledges that his post constitutes “only the bad, not the good,” saying he’s “still here, so don’t get me wrong there is good.” But the developer is undoubtedly unhappy with what he sees as the risk-reward factor for open finance developers.
Pressure to Innovate
Cronje pioneered “fair launches” in DeFi whereby the founder released Yearn’s ERC-20 token YFI without a pre-mine, founders fee, pre-sale, or investors. The decision excluded Cronje from the traditional upside of a project’s tokens which DeFi founders typically allot to themselves before launching publicly.
Stani Kulechov, founder of the second-largest DeFi lending protocol by deposits, agrees that the pressure is immense, telling The Defiant that the days of “economical moats” which businesses used “to protect their user-base from competition” are over, even for traditional businesses. “Only the rate of constant innovation matters, once the innovation stops, deflation starts,” Kulechov stated.
Aave’s founder expanded, saying, “DeFi builders are just experiencing this (pressure to innovate) 100x since anyone can innovate on Ethereum, from any part of the world. That innovation is exposed to all liquidity that exists in DeFi. DeFi is a war-zone and we’re all in war-mode. It keeps the adrenaline and excitement flowing.”
Users are Fickle
Brenden Forster, COO of Dharma, the smart wallet provider, offered The Defiant a similar perspective saying that “open-source competition has always been fierce,” and “all users are fickle,” pointing to people’s willingness to switch between Uber and Lyft as an example of the latter.
Forster agrees with Cronje regarding the difficulty and echoes Kulechov in saying “the challenge is what makes it rewarding. It’s the same allure of climbing Everest, running a marathon, biking a century — the beauty is in the journey and the personal growth that you experience because of the challenges.”
Publish When You’re Ready
Uniswap growth lead Ashleigh Schap offered counter-arguments in a Twitter thread. She believes the pressure to innovate may come from having a distributed group of smaller token holders, instead of venture capital investors, and that a strong community follows a strong product.
Venture investors “encourage you to focus in on the real problems you are trying to solve and put out something excellent when it is finished, but not before,” she tweeted. “If your users wouldn’t care about your product if there was no way to get rich off of it, then it probably isn’t that useful of a product.
Cronje emphasized that he wrote “Building in Defi sucks (part 2)” because he finds it “therapeutic” to rant. His continued presence in the industry suggests that like Kulechov and Forster, he enjoys the challenge.
Though Yearn’s founder may have a point: the open nature of the DeFi, often lauded as the field’s defining feature, has a downside too.
“You are always going to have pressure from stakeholders,” derivatives protocol Synthetix’s founder, Kain Warwick, told the Defiant. “It’s important to filter it though. And one of the best ways is establishing good community norms early.”
Fair Launch Pioneer
The crux of Cronje’s struggles may lie in his decision to do a fair launch and assuming that decision would allow him to leave the community.
Warwick expanded on the Yearn’s token distribution, saying, “With regard to fair launches I obviously support experiments in this direction but I also think we need to be mindful that we are in a global labour market and if you want to attract the best founders in the world you can’t reasonably expect them all to be here for 100% ideological reasons.”
Aave’s founder, Kulechov suggested an alternative distribution model saying “most of the fair launches aren’t so fair after all. Usually fair launches are based on liquidity provision, meaning that large accounts are receiving most of the governance power and selling it down to smaller accounts who can only afford market purchases of fair launch tokens.”
To rectify this imbalance of power Kulechov suggests the “DeFi community should look more into DAICOs, a model that Vitalik Buterin proposed where the governance goes directly to the community without unfair advantage where whales are receiving free tokens.”
Cronje may have been even more altruistic than the founder intended: he provided the industry with Yearn, regarded as a top-tier DeFi project, and also the information gleaned from the fair launch experiment, which may have come at Cronje’s personal expense.
Forster, for one, hopes the founder doesn’t leave DeFi, acknowledging that Cronje is “extremely talented” and indeed “under tremendous pressure.”