AC candidly admits that he did not enter the crypto industry for profit and expects "crypto-native" developers to drive the development of DeFi.

Original interview: Decypher Podcast;

Guest: Andre Cronje, Co-founder of Sonic Labs;

Original translation: BlockBeats Deepseek

Editor's note: In this episode, Andre Cronje shares his original intention for entering the crypto industry, his views on the current state of the industry, and his future outlook. He mentions that he is not driven by money but attracted by the innovative potential of the industry. Despite the current prevalence of low-quality projects and issues with capital flow, he remains committed to solving problems within the industry. Andre discusses the impact of meme coins on capital flow, compares the differences between the ICO era and now, and points out that infrastructure progress has reached 50%-60%, but breakthroughs are still needed. He also emphasizes that future innovations will come from "crypto-native" developers and hopes to promote the development of decentralized exchanges and infrastructure, ultimately achieving transformation in the financial industry.

The following is the original content (reorganized for readability):

AC's Original Intention for Entering the Crypto Industry

Host: I'm really excited to sit down with Andre today. I've been following your DeFi progress, and many people have been inspired by you. I have a question: you have produced a lot of results in this field and achieved success. I believe you are financially free; why do you still persist?

Andre Cronje: I was already financially free when I entered this field. I have never been driven by money; for whatever reason, money has never been a compass for me. I was the CTO of a traditional bank, my job was stable, and my income was sufficient. Even if I lost my job, my savings would allow me to live comfortably for five years.

Initially, I entered the crypto industry as a skeptic because it was filled with exaggerated claims. I don't know if you are aware of my background, but I started by writing code reviews on Medium. Many project companies claimed to solve a distributed systems problem that had plagued the industry for decades, but when you looked at their code, it was just a "Hello World" — they hadn't done anything, and the gap was very obvious.

The reason I ultimately stayed is that while 99% of things are garbage, 1% is real. There is indeed a new financial paradigm at the core of this industry, a better financial model. Although traditional finance always claims that crypto is a scam, data shows that fraud in cryptocurrency accounts for less than 0.02% of all financial fraud.

Of course, this is also a numbers game; traditional finance is on a larger scale. But essentially, you can see one side is a highly opaque system, while the other side is an extremely open and transparent system where anyone can look.

The reason I stayed is simple: I am inherently a problem solver, and there are still too many problems in this industry that need to be addressed. In my previous career, most problems had already been solved, and there was a lack of true innovation. In banking and finance, even now, while there are some innovations like user experience (UX/UI) optimization and mobile app launches, these are not real problems for me. Of course, this is not to disrespect designers and UX/UI professionals; their work is important, but it doesn't excite my brain.

In the blockchain industry, especially now, there are not many people genuinely trying to innovate. Back in 2016 and 2017, when I first entered this industry, I could see multiple in-depth and valuable white papers every day. Now, it's considered a lot if a decent white paper comes out every six months. I can understand this change because I have experienced it myself; for example, when ACC (the protocol founded by Andre Cronje) was squeezed out of the industry, I knew that feeling and understood why many developers gradually gave up.

Additionally, there are significant issues with capital flow; most developers are essentially lazy. If a capable developer has two choices — either spend five minutes issuing an ERC20 meme coin on Solana or Ethereum and potentially make millions, or spend years writing papers, going through peer review, validating contracts, and fixing vulnerabilities — the lazy choice is almost obvious.

Host: Moreover, the lazy choice is actually more beneficial, right? Just like meme coins are not safe now, right?

Andre Cronje: No, you are 100% safe; we now have relevant legislation that clearly states you are safe here. But this actually makes things worse, right? Because it further hinders those willing to take risks and innovate, which is something I have been thinking about.

For example, when I launched my first token, it was seen as a community-driven model and a way to be immune from regulation. Because there was no fundraising, it was 100% community-driven, and there was no team allocation, so there were no expectations of "what the team should do."

To some extent, it also provided a blueprint for others, showing that there are indeed ways to circumvent regulatory restrictions. But at the same time, the incentive mechanism of this model also has problems — the team lacks economic or future development incentives, and there is not even salary security.

So, I feel that the entire industry has stopped trying to innovate, and I hope this situation can be reignited. Because what we see now is just the same codebase being republished countless times on different blockchains, L2s, or under different names. I don't know; this phenomenon feels exhausting.

Host: I look forward to discussing this topic with you in depth because I feel you have strong opinions on how the industry can improve. I want to talk about your previous point that "99% of projects are scams or are harvesting users." Do you think this ratio still holds true today?

Andre Cronje: I think the situation has gotten worse, but my view on this issue is somewhat contradictory. On one hand, in my early blog "Building in DeFi Sux," I mentioned that the crypto industry is funded by votes. If everyone puts their money into low-quality copy projects, the market will be flooded with these projects because they are easier to profit from. Investors are unwilling to take risks on new protocols because the risks are too high, so they prefer to park their money in "the 5062nd Aave copy project."

But on the other hand, I also have to admit that those who participated in the meme coin frenzy would not have invested in DeFi infrastructure or real decentralized financial protocols anyway. So now my mindset has adjusted. In the past, I was angry about the misallocation of funds, but now I realize that those who put money into meme coins or various copy projects would not have touched DeFi or any real decentralized financial protocols.

Host: I think a fundamental assumption in the crypto industry is that all these assets have been financialized, right?** These assets have pricing from the start and can be freely traded. This means that the core of the entire ecosystem is actually centered around asset trading. And those who truly entered the industry for the technology (although this has become a meme) do not actually make up the mainstream, or rather, they also want to make money from these things.

Andre Cronje: Yes, I don't blame those with development capabilities for making meme coins to make money. Even Vitalik has written similar points, suggesting that you can first make this money, but then you should invest it into the product or project you really want to build. This situation may indeed exist; we can refer to the ICO boom, where many people made a lot of money, and they did reinvest a significant portion back into the crypto ecosystem.

But I feel that the situation is different now. If you look at the past capital flows, the crypto industry is increasingly integrating into the traditional financial system, which is both good and bad. In the early days, if you participated in a successful ICO, as an investor, you earned a lot of ETH on Ethereum — back then, there were no stablecoins or mature cash-out channels, and you had almost no way to take that money out of the ecosystem. So you would choose to reinvest the funds into new projects, new ideas, or provide liquidity support.

But the situation in the meme coin market is different now; it is more about "capital entering — making some money — capital exiting." The funds do not really flow into the broader ecosystem. But as I mentioned earlier, you have to adjust your mental model — this capital was never going to enter DeFi or other infrastructure projects.

However, I do believe this has led to a new phenomenon — in the past, a development team might issue tokens and make some money, but because it was difficult to directly cash out that money into a bank account, they were more likely to reinvest the funds into new protocols. Now, they can easily cash that money out into their bank accounts and retire with the cash.

Infrastructure Progress

Host: You mentioned the ICO era; do you think one of the problems back then was that the infrastructure was not mature enough? How much did the lack of infrastructure play a role in that? After all, you built an extremely successful product in that environment, and now you are promoting further development of infrastructure. So how big of an obstacle was the lack of infrastructure in the past? How far are we from solving these infrastructure issues now?

Andre Cronje: It was indeed much more difficult to participate back then. For example, registering for an exchange account was harder, depositing money into an exchange account was harder, obtaining Ethereum to participate was harder, and even setting up a wallet was quite troublesome. From the perspective of infrastructure, everything was much more difficult than it is now.

At that time, we didn't even have on-chain oracles. If we don't talk about participating in ICOs themselves, just from a building perspective, oracles were almost non-existent. There were no fast RPCs, and many times you had to read data directly from smart contracts.

The infrastructure has improved a lot now; the experience requirements for teams have decreased significantly, and they can launch products that we used to spend a lot of effort to create. Because the tools have become more refined, infrastructure spending has increased, and user guidance has become smoother. If I had to estimate roughly, I think we have completed over 50% of the infrastructure evolution, but not by much, probably between 50% and 60%.

Host: So you think this ratio is lower than most people imagine?

Andre Cronje: It depends on how involved these people are in the industry; even at the blockchain level, there are still many problems to solve. Moreover, technological development is not linear; it progresses in leaps, and each stage requires some kind of breakthrough to enter the next stage. Just like the development of the internet, initially, there were 56K dial-up modems, and you needed specific hardware, specific connection methods, and to connect via phone lines, along with specific network cards. These were all barriers at the time. Fast forward to today, you just need to open your phone, and all of these things are wirelessly integrated.

The development path of blockchain is similar; I think it hasn't entered the fiber-optic era yet, but if we compare it to the traditional internet, it is probably at a stage between ISDN and ADSL, nearing the edge of the next major breakthrough. Ultimately, our infrastructure will only be considered truly successful when users no longer care about which blockchain they are using. Because when using an application, you don't think about whether its server is from Hetzner or AWS; these details are irrelevant to users. Blockchain applications also need to reach such an experience; only when the infrastructure develops to this extent can it be considered truly mature.

Developer Ecosystem

Host: So do you think it's worth building applications now? You once thought it was worth making applications but later shifted to infrastructure development. I'm also curious about this change. But if we have only solved half of the infrastructure issues now, shouldn't we focus more on infrastructure?

Andre Cronje: Using the internet as an analogy, it's like waiting for fiber-optic networks to become widespread before starting to develop applications. But in reality, there were already decades of valuable applications before fiber-optics appeared. Of course, you could say, looking back at MySpace, does it still have value? In hindsight, it was a failed project, but at the time, its existence was necessary because products like MySpace paved the way for later social platforms.

The current investment environment is more inclined to look for companies that can last for centuries, but that's not the case. Even if some companies will eventually be replaced, they still have value in their existence. The entire industry needs such iterations; people must start building applications now so that future applications can be developed.

I like to use another analogy to illustrate this issue. If you look at all the major applications today, their developers are basically people who grew up in the internet era. I was born before the internet appeared, so my way of thinking is not as "native" as theirs.

Even today, I still find social media strange and unnatural; I don't like it at all, so I only use Twitter. But for those who grew up with the internet, they can proficiently use more than 20 different applications simultaneously, which allows them to understand this field better and develop the next generation of applications, something I cannot do. I think the development of blockchain is similar. Those who can create killer applications are often people who have been exposed to blockchain from a young age, rather than those who entered the field in their 30s.

Host: So do you think this is a distinction between "crypto-native" and "non-crypto-native," or is it more like a distinction between "mass market" and "non-mass market"? You understand what I mean, right?

Andre Cronje: I think ultimately applications will make this issue irrelevant; people won't think about whether it's "decentralized Uber" or "centralized Uber," they will only care about which product is easier to use. Therefore, the reason decentralized internet will eventually become popular is that its design itself aligns better with incentive mechanisms and can be more directly aimed at consumers without so many intermediaries.

For example, you would have a decentralized YouTube. Instead of letting creators be constrained by the massive platform of YouTube, going through tedious processes like ad reviews and revenue sharing, it would be better to achieve more direct earnings through a decentralized approach.

In fact, we have already seen this trend even with YouTube itself. In the past, creators mainly relied on YouTube ad revenue, but now they are more likely to choose in-video sponsorships because this method is more direct and can establish better user relationships. The decentralized version of YouTube is essentially optimized for this model.

Host: In the Ethereum white paper and some early literature, Vitalik mentioned the concept of "decentralized Uber." But now this phrase has almost become a meme, and many people feel that the development of the crypto industry will not really head in that direction. But from what you said, it seems you still recognize this viewpoint, at least that it might be realized someday in the future?

Andre Cronje: I think people always compare the current internet with current blockchain applications, and such comparisons only lead to disappointment. If we change our way of thinking, for example, on-chain gaming is a great example. I actually quite like on-chain gaming; why? Because it reminds me of those rough Flash games from the early 2000s — you had to download them into a Flash browser, play for a few minutes before they crashed, and then wait four minutes to reload to continue playing. But if you compare on-chain gaming to those Flash games, the experience of on-chain gaming is already quite good. The problem is that now people compare it to current AAA 3D games, like those ultra-high-definition, next-gen graphics games. In such a comparison, on-chain gaming certainly looks terrible.

Host: Right, it's like running a mini-game on a graphing calculator; you can't expect its experience to compare with an Xbox.

Andre Cronje: Exactly? We are still limited by hardware and capabilities. In fact, there are many similar comparisons. Look back to the early internet; it only made sense under military operations and financial prototypes. Besides military applications, we are seeing a similar situation in the blockchain field now. These are the first areas that can truly demonstrate value because people are willing to invest money to build infrastructure to gain access. Back then, for one terabyte of data, you had to pay thousands of dollars a month. The gas fees we see now are similar; you are paying for bandwidth. Although it is still very expensive now, it is precisely because of this that only specific types of applications can exist.

However, we are seeing this transition happening; it's just that this process is slower than market cycles and people's attention spans. People will ask, "Why isn't this happening now?" But in reality, we will have such things, but it may take another ten years.

Host: So how confident are you about this future development? Do you really think cryptocurrencies can change the whole world?

Andre Cronje: I don't think cryptocurrencies will necessarily "consume" the entire world. You know, in some places, centralization might be better. But at the same time, if it is centralized, it will be more attractive. However, there will also be some people who prefer decentralized methods. For example, if you are a large bank and all the data is stored in a specific database, like Oracle, you would definitely be willing to pay Oracle for an enterprise license because you want dedicated personnel to solve problems for you at any time.

You wouldn't choose a decentralized version, but there will be some groups that lean towards decentralized methods. Look at some African countries; they often have community banks where one person manages everyone's money. Stockfell, I think that's what they call it. This is a functioning example because it provides better bookkeeping, everyone can see it, and it still maintains the same trust assumptions.

So, I don't think it will completely replace the traditional centralized world, but I do believe it can provide advantages in many areas. For example, if you look at bank settlement systems, they are extremely outdated and based on daily settlements, filled with opportunities for fraud. Many times, people just send Excel spreadsheets via email; tokenizing this small link could save banks and clearinghouses trillions in costs, and this change could be realized in a very short time.

Reflections on the Crypto Industry

Host: So what do you think the industry needs to learn in order to reach the stage you mentioned, where consumers and businesses can choose to use decentralized or centralized products? Because at certain stages of your career, you seemed to feel a bit fatigued or weary about the industry. So the first question is, how fatigued do you feel about the industry now? The second question is, what do you think we should do, and how should the industry move forward?

Andre Cronje: Currently, I feel less fatigued than before, but that's not because the industry has changed. I was once very fatigued because on one side, the blockchain community provided almost no support, and on the other side, the SEC was attacking every day.

At that time, there was no reason for developers to stay and work; part of the reason was that the participants in blockchain had changed significantly. You know, when I started developing in 2017 and 2018, the participants were almost all technical people. So our conversations were always very valuable. By 2021 and 2022, the participants suddenly became a lot of non-technical people who were more focused on money, leading to a complete change in the content of our discussions, which often made me feel very alienated.

I don't see any way to solve this problem because it's the result of more people flooding into the market. I think from this perspective, it's almost inevitable. Teams and developers need to change. I don't know how likely this is, but it's a real issue in terms of regulation.

You know, we have a four-year grace period to see what we can do in these four years. But four years later, it could also flip back. This is the issue I think everyone must remember. If we can optimize in these four years and integrate blockchain into as many places as possible, it will become almost impossible to remove. At that time, we will be in a very different situation, and that is our responsibility as a community.

I think the lesson is that people need to give developers and teams more tolerance, especially those teams trying new things. But I don't think this will happen because if you look at what the crypto community has become now, the mindset I always try to get people to understand is that there is a big difference when you meet someone who posts on an internet forum — they might become more radical.

Plus, with anonymity, they don't have to be accountable for their words, which makes them more hostile and radical. Now, suppose this is like a sports competition, with two teams competing; there will be more attacks and insults during the game.

Now, suppose it has financial incentives. This is like a vicious cycle, showcasing the worst human behaviors. We are still incentivizing this behavior. I don't know how this situation will change. Personally, I have just become more resilient. You know, when I first started, going back to that technical community, my standard for measuring whether people were satisfied was 99%.

If someone said something hurtful or had a different opinion, I would reach out to them privately. I would talk to them, call them, and spend time understanding their position. In nine out of ten cases, those people eventually became my friends or allies, so at that time, I could convert those people. By 2021, after much self-reflection and changes in my understanding of the industry, I changed that standard from "let me satisfy 99% of people" to "let me satisfy 51% of people."

I don't just want to satisfy 20% of the real audience and ignore the remaining 80%. But this is also a process I went through, something I had to learn, and almost every team entering this ecosystem will go through this process. Many teams will be eliminated in this process.

You know, I think the current participants are probably only about 5% of what they used to be. In the past few years, more builders have left this field than new builders have entered. All the real builders are those I used to talk about back in those days.

Host: You mentioned the developer issue in the crypto industry, the lack of talent and builders for those interesting projects. What do you think future developers should be like? How can we attract them into this field, especially to build projects here?

Andre Cronje: That's a good question, and I don't have an answer. If I knew what to do, I would have done it already. Right now, I think we are seeing a revival of a "Silicon Valley VC funding" model, where all projects are competing against each other, but I think that's somewhat meaningless. However, during that time, there will indeed be some applications that come out, and people will interact.

The reason I like building smart contracts is that they have a strong permissionless nature and composability. You know, everything I build is based on platforms like Uniswap, Alpha, Compound, and I never need to ask for permission from them. I have never communicated with any team or contacted anyone on the platforms I build on. So, anyone deploying smart contracts at home has the opportunity to make some changes, and ultimately, this could develop into something big.

I think what we need to optimize is probably that continuous composability and open-source nature. Because that is the key to attracting and motivating those developers to start participating. But the trend we are seeing now is that more and more projects are turning towards closed source rather than an open environment.

This makes it impossible to incentivize others to build on top of you because they simply can't do it; you have blocked them from the start. So, we may need to return to a more open-source culture. When I say open-source, I mean anyone can build on it, not that I have to add a license to protect my code like I do now. The current situation is that it's hard to truly open-source because someone could fork it and add a token within 24 hours, which is really not good.

Host: Yes, I sometimes like to look at cryptocurrencies optimistically, like platforms such as Shopify or WordPress. I think some of your early projects embodied this; they were modular, allowing you to build on top of other things. In fact, some of the limitations you dealt with at that time made the product itself more interesting.

Andre Cronje: Right? Exactly. One quick lesson I learned from the Yearn project is not to try to solve all problems. Throw out some problems, and you often get better solutions. Sometimes you get better solutions, but usually, you get better solutions. That's the trade-off.

Andre Cronje: But that's it, you know, I've been thinking about why Yearn is more successful than other similar yield aggregators. The reason is simple: those yield aggregators were not prepared for others to build on top of them. Many of them have vaults, but they haven't tokenized those vaults. So when I deposit funds, I can't do anything. The first step I took was, okay, I need to tokenize these deposits so they can be used elsewhere. That's the key. You need to optimize composability so that others can really build things; it's a different design. You have to think differently about how to build because just building a product is easy, but if no one can build on top of them, it doesn't make sense. So you have to constantly think about how to open up this system to facilitate the building of other things. People will build things, and I don't even know what they will build. You can do this in FIFA and the entire cryptocurrency space.

Host: Additionally, I know that some of your future products are inspired by the problems you encountered while building current products. We see this in Web2, where people often say to build for your five-years-ago self or to build for your own problems. I feel that in the crypto space, we sometimes lack this mindset.

Andre Cronje: I mean, we do have this situation in the crypto space. I often hear this saying. Many of the major products we have today are built by teams that have separated from the original teams; they broke away from the original teams and continued to build. That's also why I say most of them are the same group of builders because they come from the same original OG team, right? But specifically, because they once worked there, they saw, I can do this, and maybe that company doesn't want to do it, so they split off and do their own thing. But I agree, we can definitely do more in this regard.

I think we can think more about how to make this thing more composable because that's also where a lot has changed over the years. Even looking at Compound and Uniswap, their initial v1 and v2 versions were optimized for convertibility, making it very easy to build on top of them. You could easily extend their interfaces and functionalities. The current products might be better in terms of consumer-facing aspects, but they are worse in terms of builder integration, right? Much more complex and much harder. You need to communicate with teams, and once you need to do that, you have already excluded 99% of builders because they have no channel to contact you. So yes, actually, I haven't really thought about it this way, but as we continue this conversation, I think what is currently most lacking is that kind of "how do I build for others to build on top of me" mindset because I think that is completely missing.

Host: What applications? You mentioned this 99% and 1% thing, which means there are still some applications that interest and excite you. What applications are currently interesting to you?

Andre Cronje: So my main interest lies in those applications that are trying to innovate and experiment with new things. I don't think they have reached the scale of the past. But I see some teams trying, like Shadow Guys, with their Shadow Exchange on Sonic. They are experimenting with new tokenomics, and I think that's something no one has done before. I also believe that tokenomics is an extremely underdeveloped field. I think we have a lot of work to do in this area. But everyone, because it is highly related to finance, is very afraid to try anything new in this regard. I don't blame them; it's scary because you tie your public image to something that could fluctuate. But we have a lot of work to do in this area, and they are doing great things.

Silo is another team that is releasing some new tokenomics. I also really like their overall design philosophy. The game content coming out now has a lot of nice account abstractions, economic abstractions, user interfaces, and things like Pasky happening, which is definitely good. Some of the games I play on-chain, like Faith, Adventure, Sacrifice for Kingdom. Who else is really innovating? Metropolis is doing a new dlmm AMM, which is great. I know there are some things happening in the yield space, with Spectral and Pendle being the main players there. This is not a field I'm very familiar with, but there are definitely more things.

I think we are starting to see on-chain options and other derivatives coming online. In the past, options pricing needed to be very accurate and very cheap; you couldn't do both on-chain because you didn't have the data, and the fees were prohibitively high. Now we are starting to see a revival of these, but I think, just like UNISWAP and AMS did for trading, we haven't seen similar breakthroughs for options, futures, and other derivatives yet. So I absolutely believe that will emerge. Those guys playing Margin Zero Strike are also experimenting, trying new things. So I'm keeping a close eye on them.

I think there is still more work to be done in the on-chain purpose space, which is one of the few innovations we are seeing, right? For example, the GMX model, the Hyperliquid model. That's another one I forgot right now because, you know, liquidity pools as counterparties instead of exchanges as counterparties. But I think there's still a step to go because right now your liquidity providers are still bearing aggregation risk in these pools, right? I think there is a way to let them only bear spot risk, just like the risk you bear in Uniswap. Insurance, I think, is another area where we will see more primitives on-chain. Not much is happening in this field right now; most of it is still finance-related. I think we will see more in the next 6 to 12 months. But as fees decrease and are eliminated, as wallets are no longer a necessity, and as you no longer realize you are on the blockchain, I think we will see more in the gaming and social layers.

Sonic Ecosystem

Host: Many of the projects you mentioned seem to be in the Sonic ecosystem or are moving towards it. Polymarket is a highly discussed application, and Pump Fun is too. Are these applications attractive to you? Are there any applications not currently on Sonic that you would like to bring into your ecosystem?

Andre Cronje: Polymarket might be, absolutely. I think they are doing some very interesting things in the market, and I feel they could do more. I think they are a bit constrained, you know, because of issues like lost accounts; let's look at the FTC situation because they could be more than just a prediction market. You know, we see a new protocol there, True Markets, which uses the concept of prediction markets to create user-sourced articles, and I think that's a very novel idea, right?

Host: Yes, insurance also fits into this.

Andre Cronje: Insurance definitely fits into this because it's a problem of decentralized insurance on-chain; you still need a third party to say, okay, this is the payout. As long as you need that third party, you might as well do it off-chain. You know, there’s no reason to do it on-chain. But once you have those truth sources, suddenly there’s a reason to do it on-chain.

What else is interesting? I think we have the main players we want, you know, like there are some nice game contents. I think the guys at Fantasy Top are building some cool things. I don't mind them launching Pump; I think it's a very specific niche product that only works effectively where it is now. I haven't seen their multi-generational strategy. There are some infrared things, like I hope to see Fantom Wallet come over because I really think they are close to making people truly realize the speed we have. Because right now, the slowest part of interacting with Sonic is the wallet. That's where you spend 99% of your time. Because from the moment you click from the app to the wallet, that's instantaneous. Then from the wallet submission, that's also instantaneous. But the loading part in between is the actual slow part. Now, there might be a longer list, but you know, these suddenly popped into my mind.

Host: I feel that you are particularly passionate about applications, and you have a reputation as an application builder. Why did you ultimately turn your focus to infrastructure?

Andre Cronje: Well, I mean, I was working on Fantom before I did any applications. So, you know, I started with Fantom back in 2018. The focus has always been on recognizing that the reason we haven't seen a lot of debt is because there are issues with the underlying infrastructure layer. The most obvious thing at that time was that simple things like proof of work were designed to be slow. Because it wasn't designed for speed; it was designed for security, right? So just building a better consensus, you know, the abft consensus we launched in 2019, which we are still using in Sonic, is the same one. I still think it is the gold standard in consensus.

But I initially turned to the application layer actually because I built Yearn, as I was managing the Fantom Treasury, and I got tired of moving it between protocols. So I thought, I’m a programmer. I’m going to build an application to do this for me. And then everything else spiraled out from there, just like I mentioned earlier, you know, it was an idea sparked by a problem I saw in that specific thing.

So, you know, from Yearn to Boldkeeper, because we were encountering issues on Yearn, I needed to run a bunch of off-chain infrastructure bots and keepers to handle things like moving and liquidating. So I thought, why can't we build an on-chain version? You know, keepers do well. It’s still used by Maker. It’s still used by a bunch of on-chain managed things. Because the idea is simple. You know, I pay someone to do the on-chain infrastructure.

Then I think I started to get fascinated by more traditional banking issues, namely capital efficiency, IMMS, lending, and my remaining work basically focused on that. When I built and released Solidly, that was my new AMA model, not as perfect as what I have now, but at the time it was a pretty good implementation.

At that time, I started to realize, look, there are some foundational layer issues that we need to solve in another way before I can actually release my next application. That’s what we’ve been focusing on with Sonic, you know, Sonic is the pinnacle of all this. It’s not just about speed and the fact that it’s fast. I mean, that’s what I think you need to compete in today’s market, but that won’t make you stand out in today’s market. Because even if we are faster, even if our finality is lower, the difference in user experience you’re talking about is 400 milliseconds versus 300 milliseconds. Users won’t notice the blink of an eye.

So the real thing we started focusing on, you know, is fee monetization, where applications get 90% of the fees back because that already means you can start building a lot of different things. Then there’s fee subsidies, so using that 90% of the application can return and subsidize new users, so they don’t even need gas and things like that. Then there’s native abstraction, so you don’t need a wallet because we want to reach a point where applications build on top of us, and their users don’t need to know they are interacting with us. When we get there, I can release my next series of applications because they need that. So again, you know, it’s not just about the benefits of building in this space; it’s that I’m building things for myself, and then coincidentally, it might benefit all of us builders. So that’s the gospel, right? But I mean, ultimately, I’m busy selfishly doing all these things for myself.

Host: Interesting. So a lot of the design of Fantom stems from the problems you encountered there. Do you still have the motivation to explore new concepts in the future? You’ve already explored fee-sharing mechanisms to some extent, like Berachain, which is trying to integrate DeFi into the base layer. Are you interested in that?

Andre Cronje: I mean, obviously, we are doing fee monetization. So I completely agree that there is a fundamental issue with incentive alignment. You know, because the incentives are designed based on the Bitcoin model. And in the Bitcoin model, you only have one participant, which is the miner. So everything obviously flows to the miner. There are no other participants. And every blockchain sensor just replicated this model without thinking, okay, who are the other participants? And the other participants are obviously the applications. That’s why, you know, I think our approach might be overly simplistic, just saying, hey, this contract gets 90% of the gas it spends because that automatically aligns with the applications people are willing to use.

And I think Berachain’s model, I again like their attempt to solve the incentive alignment problem. It’s a problem that needs to be solved, and currently, it’s wrong; it shouldn’t all flow to the validators. That’s a waste. That’s what we see. Maybe that’s not the only reason, but to me, that’s why we see Uniswap launching Unichain. Because they saw all the fees they generated for Ethereum, $2.8 billion, and they said, we didn’t get a penny of that.

Let’s launch our own chain so we can capture that $2.8 billion. But launching a chain is not as easy as people on X say. You can deploy a second layer with the click of a button. Technically, that’s right; you’ll technically have it, but you don’t have the infrastructure, you don’t have the integrations, you don’t have the third parties, you’re missing a lot of things, and you need to spend tens of millions of dollars to get there. So instead, it should happen on chains that already have existing infrastructure. You see, we see different applications approaching it in different ways, like Arbitrum, trying to build their native fee switch so you can use different tokens. I know they ultimately removed it, but that was still them trying to figure out, okay, how do we incentivize our applications? Avalanche is obviously there; they call it the subnet model. So I think a lot of people are realizing, hey, there’s an incentive alignment problem here.

My only comment on Berachain is that it requires too much active participation from validators. I think that’s a different team’s issue. We run our DevOps or great DevOps, but I don’t want them to be confused about things like, you know, what voting protocol or what pool or thing should go. I think especially when it comes to validators, less is more. You just want them to secure your network. You know, you want someone to have hardware installed in some bunker that can last for 10 years without being touched. That’s ideal because it should provide network security. The more you try to do on top of that, the more attack surface and areas you have. So that’s my only dissatisfaction with their model, but I do think it’s absolutely moving in the right direction, you know, hey, rewards shouldn’t all flow to validators. They should flow to applications. Then what applications do with that is their business, you know, whether they pass it on to their users or as their own fee model. Either way.

Host: You mentioned that you are still interested in building applications. You just need the infrastructure to catch up. It would be remiss of me not to ask what you are most interested in.

Andre Cronje: A lot of the things I’ve already mentioned. We basically have two formulas. You know, you have constant product, which is Uniswap, or you have constant sum, which is stable swaps. We’re not seeing anything else right now. We have concentrated liquidity, which allows you to change shapes. But ultimately, it’s still constant product. That’s still the quote being used at the end of the day.

I try not to be specific, but anyway, I built a new AMM that has a self-referential volatility curve. So that means the more volatile the asset, the closer it is to constant product. The less volatile the asset, the closer it is to concentrated. And the beauty of doing this is because my North Star is always, I envision a world where 99.9% of real-world assets are on-chain. Now you can’t do that with constant product. You can’t do that with constant sum. You need something like 80% constant sum and 20% constant product. So that’s exactly what this does. So every time a trade happens and measures volatility, it has recent deviations, one hour, one day, one month, 200-day moving average, whatever, and then annualized. So this informs the quote. So this already gives you better quotes, this already gives you better pricing, this gives LP more fees. Now on top of that, I believe there’s a new way to do lending markets.

This is actually something I released in Solidly. I don’t know how much time we have, so you’ll have to see if you want to interrupt me at any point, but I’ll try to go through it quickly. So in Solidly, I introduced a concept called reserve-weighted asset pricing. So, Uniswap introduced TWAP. My issue with TWAP is that it gives you a fixed price regardless of size. So no matter if I sell one unit, it tells me it’s worth $3. If I tell it I’m selling a trillion units, it will also tell me it’s worth $3. That’s not true at all. If I give you 1000 of this thing, what price would you give me? The main reason I want this on-chain is, one, to inform liquidation, and two, because the inverse of that problem is, if I give you this, how much of another asset can I liquidate with it?

Now if I can answer that question, it means I know my loan-to-value ratio. In other words, how much can I borrow against this asset? So now you can start borrowing. So now the next question comes. You can’t borrow without knowing what your interest rate model is because you need to know the peak to ensure LPs are safe. In crypto, we have two interest rate models. We have volatile and stable. We already have volatility inputs. So now I can already have these charts based on the same inputs, input into my AMM. So now I can create a lending market. So now I can borrow B against A, I can borrow A against B. Next, because I can borrow A against B and B against A, it means I can have implicit leverage. So once someone wants to trade on this AMM, they can create a leveraged position. And leverage is a function of LTV. So leverage is also implicit relative to the actual size of the pool. So the more liquidity there is, the higher the leverage. So these things again become self-referential. Then because you have leverage and interest rates, you can have implicit perpetual positions, and these perpetual positions only have counterparty risk for those providing liquidity in the AMM. That’s what I mentioned earlier; I think it will still be solved.

I’ve solved it, but it hasn’t been launched yet. Then the last one, because you already have volatility and all these other data points, you can start writing options in the same AMM. You do a few perpetual options until you get the volatility of the application, and then you can start doing standard European and American options. I have some other things in there.

Host: So how are these features developing?

Andre Cronje: Now? It’s all done. The only reason we haven’t launched is that we are waiting for changes in the regulatory environment, as this falls under the jurisdiction of the CFTC (Commodity Futures Trading Commission). So we are waiting to see, you know, Brian’s new appointment and their attitude towards these kinds of things. Because that determines whether we can launch this product with or without derivatives, right?

Host: Okay. Do you think these features will integrate together? Like you’re looking at a multi-functional super app in the financial space, or basically something like that.

Andre Cronje: Again, this is built on the idea of composability. So I think all the applications in our ecosystem can interact in some way.

Host: Founders should pay attention to this model because, as we discussed, this solution led to this problem, but this solution and application, that’s one of the beautiful things about cryptocurrency.

Andre Cronje: This platform. So you need to leverage composability and create problems for people to solve.

Host: Additionally, there’s no shortage of creativity in the crypto space. Sometimes people say, oh, this has already been done. No, man, you need to be more creative.

Andre Cronje: The reason I initially didn’t do Yearn was that I thought, oh, others are already doing this, why should I build it? Throughout my career, I’ve stopped launching many applications for this reason. Or if I saw something that wasn’t being built, I would tell myself, oh, but that’s such a basic idea, surely someone has already done it and failed. That’s why it doesn’t exist. In reality, it’s garbage. It’s just that nine out of ten times, it was tried. The reason it doesn’t exist is that I was thinking too early, right?

Host: What is your biggest regret in your crypto career?

Andre Cronje: Oh my god, that’s a long list. We don’t have time to discuss that. I mean, all the things I would go back and change. I used to always blame the participants because, you know, they put money into contracts, and someone saw my deployer deploy the contract, and just because I didn’t change it for half an hour, you shouldn’t be putting millions of dollars into it. But at the same time, I should acknowledge that I had so many concerns, and I needed to communicate better, right? You know, since then I’ve learned to communicate better. Because that was the issue. I needed to make it clear that unless I announce X on these platforms, it’s not real, please stay away.

I had to start doing things like address rotation, where every time I did something new, I had to use a new address. That’s definitely one place I would change. Other really big regrets might be my trust in Multichain. I think we really got burned because we were told we were part of the original ceremony. So from our perspective, everyone destroyed those original validator keys, and there was no way to recreate them. We didn’t know their CEO had kept the backup keys from the original ceremony so he could have full access.

Host: Did this affect the current bridging infrastructure?

Andre Cronje: It definitely affected a lot of things, and we learned many lessons there. You know, this is also because Fantom launched before bridging infrastructure existed. I mean, now all blockchains have launched their own standard bridges, and Sonic is no different. You need this now. But, you know, at that time we might have been a bit naive, overly trusting in decentralization, thinking it should be other parties connecting, and we didn’t want to do it ourselves because we felt we didn’t have the internal expertise. It turns out you have to do it, so that’s definitely a lesson. Most of my things.

What I regret and would change is mainly about communication and proper expectation management. Because the way I used to talk to people is not the way I have to talk to people now. Because it is, I mean, I see this happening with Vitalik now, right? Because he’s been away from X and Twitter for so long, and now he’s back, and almost every piece of content he posts is attacked. That’s because he needs to adapt to the change. You can’t talk to the on-chain tech crowd the way he used to.

I think these are the lessons I had to learn. What I regret is that because of these lessons, people lost money, that’s for sure. If there was a way to reverse it, I absolutely would. But at the same time, you know, those same lessons have shaped who I am today. So, I don’t know. That’s always a hard question to answer, right? Because you fundamentally change who you are. I mean, if those things hadn’t happened, I wouldn’t have learned those lessons. And then maybe in the future, it will happen again, on a larger scale, and worse.

Host: Additionally, sticking around is almost a punishment, right? You know, if you leave, you get hacked for $600 million and then leave, no one will mention your name again. But if you keep trying to develop it.

Andre Cronje: It comes back every time, right? People remind you every day. So you just need to, like I mentioned before, you need to grow a thick skin. I think that’s the only thing you can do.

Ultimate Goal of AC

Host: You are truly an icon in this field, and I think you have really influenced the development of DeFi. People look up to you in many ways; you are very influential in this space. What do you hope to create with your legacy, what is your ultimate goal in the crypto space?

Andre Cronje: Ask me this question again in five years, and the answer will be different. But for now, it’s to have financial/Coinbase/whatever your North Star is, exchanges completely on-chain. I mean, including fiat on-ramps and off-ramps, with the same or even better user experience. That’s my goal for the next two to five years; the biggest crypto exchange must be a decentralized exchange, and I think we will achieve that. I think we have finally reached the stage of infrastructure and tools that will launch within this year. Soon after, it will completely destroy centralized exchanges because the entry barrier for decentralized exchanges will be lower than that of centralized exchanges. So I think that’s the big goal for the next five years. Then obviously, more integration into traditional finance, to the point where it’s hard to remove. I think we need to ensure this in the four years following the current government. Then we’ll see after that. But I mean, after that, the infrastructure will reach a stage where we can start doing gaming and social. I think you will see a lot of other cool things that I can’t even theorize about right now.

Host: Yes, that’s very cool. So you personally are really interested in embedding the crypto layer into the social layer.

Andre Cronje: Yes, it needs to be part of everything—the social layer, the tech layer, the settlement layer, etc.

Host: Awesome. Andre, I think that’s all the time we have for today. It’s been a pleasure talking to you. Thank you very much for your time.

Andre Cronje: Thank you.**

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