Andre Cronje's Latest Interview: "I Didn't Get Into Crypto to Make Money" | Deep Dive

Original Interview: Decypher Podcast;
Guest: Andre Cronje, Co-founder of Sonic Labs;
Original Translation: Deepseek

Editor's Note: In this episode, Andre Cronje shared his original intentions for entering the crypto industry, his views on the current state of the industry, and his outlook for the future. He mentioned that he is not money-driven but is attracted by the industry's innovation potential. Despite the prevalence of numerous low-quality projects and issues with fund flows in the current industry, he remains committed to addressing the industry's challenges. Andre discussed the impact of Meme coins on capital flows, compared the ICO era with the present, and pointed out that infrastructure progress has reached 50%-60%, but breakthroughs are still needed. He also emphasized that future innovation will come from "crypto-native" developers and expressed his desire to drive the development of decentralized exchanges and infrastructure, ultimately achieving a transformation in the financial industry.

The following is the original content (lightly edited for readability):

AC's Original Intentions for Entering the Crypto Industry

Host: Today, I am very excited to have the opportunity to sit down and chat with Andre. I have been closely following your progress in DeFi, and many people have been inspired by you. I have a question – you have produced a lot of results and achieved success in this field. I believe you are already financially free, so why do you continue to persist?

Andre Cronje: When I entered this field, I was already financially free. I have never been someone driven by money. For me, money has never been a compass, no matter what the reason. At that time, I was working as a CTO in a traditional financial institution, and my job was stable, and my income was sufficient. Even if I lost my job, my savings were enough to support me without any problems for about five years.

Initially, when I entered the crypto industry, I was actually a skeptic because it was full of various exaggerated claims. I don't know if you are familiar with my experience, but I started by performing code reviews on Medium blog posts. Many project companies would claim to have solved some distributed system challenge that had plagued the industry for decades, but when you looked at their code, you would find it was just a 'Hello World' – they hadn't done anything substantial; the disparity was very clear.

The reason I eventually stayed was that while 99% of things were garbage, that 1% was real. The underlying technology in this industry does offer a new financial paradigm, a better financial model. Despite traditional finance always claiming that crypto is a scam, from a data perspective, cryptocurrency fraud accounts for less than 0.02% of all financial fraud.

Of course, this is also a numbers game, with traditional finance being much larger in scale. But fundamentally, you can see on one side a highly opaque system, and on the other side an extremely open and transparent system that anyone can view.

The reason I stayed is very simple. I am inherently a problem solver, and there are still too many problems to be solved in this industry. In my previous career, most of the problems had already been solved, lacking true innovation. The banking industry, the financial industry, and even now, although there has been some innovation such as optimizing user experience (UX/UI) and launching mobile apps, these are not real problems for me. Of course, this is not a lack of respect for designers and UX/UI professionals; their work is very important, but it is not what excites my brain.

In the blockchain industry, especially now, there are not many people truly trying to innovate. In 2016 and 2017, when I first entered this industry, I could see multiple in-depth and valuable whitepapers every day. Now, it's considered lucky to see one decent whitepaper in six months. I can understand this change because I have been through it myself. For example, when the ACC (a protocol founded by Andre Cronje) was squeezed out of the industry, I understand that feeling and why many developers gradually gave up.

Furthermore, there are significant issues with the flow of funds, and most developers are inherently lazy. If a skilled developer has two choices — either spend five minutes issuing an ERC20 meme coin on Solana or Ethereum and potentially make millions of dollars, or spend several years writing papers, going through peer reviews, validating contracts, fixing bugs — the lazy choice is almost obvious.

Host: And besides, the lazy choice is actually more advantageous, right? Like meme coins are not secure now, right?

Andre Cronje: No, you are 100% secure because now we have relevant legislation that clearly states you are safe here. But this actually makes the situation worse, right? Because it further hinders those willing to take risks and innovate, which is a problem I have been pondering.

For example, when I initially launched my first token, it was seen as a community-driven model and a way to be immune to regulation. Since there was no fundraising, it was 100% community-driven, with no team allocation, hence there was no expectation of "what the team should do."

To some extent, it also provided a blueprint for others, indicating that there are indeed ways to bypass regulatory constraints. But at the same time, the incentive mechanism of this model also has issues — the team lacks economic or future development incentives, or even salary security.

So, I feel like people in the entire industry have now stopped trying to innovate, and I hope this situation can be reignited. Because what we see now is just the same codebase being redeployed countless times on different blockchains, L2s, or just renamed. I don't know, this phenomenon is just very exhausting.

Host: I am looking forward to delving deeper into this topic with you because I think you have strong views on how the industry can improve. I want to discuss your previous mention of the view that "99% of projects are scams or out to get the users." Do you think this ratio still holds true today?

Andre Cronje: I think the situation has actually worsened, but my view on this issue is somewhat contradictory. On one hand, in my earliest blog post titled "Building in DeFi Sux," I mentioned that the crypto industry votes with capital. If everyone pours money into low-quality copycat projects, the market will be flooded with these projects because they are easier to make money from. Investors are not willing to take the risk of entering a new protocol because the risk is too high, so they prefer to park their money in the "5062nd Aave fork project."

But on the other hand, I also have to admit that those who engage in the Meme coin craze would not have invested in DeFi infrastructure or truly decentralized financial protocols in the first place. So, now my mindset has shifted. 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 copycat projects were not going to touch DeFi or any real decentralized financial protocol anyway.

Host: I think a fundamental assumption of the crypto industry is that all these assets have been financialized, right? These assets were priced from the beginning and could be freely traded. This means that the core of the entire ecosystem is actually built around asset trading. And those who truly entered the industry for the technology (although it has become a meme), are not mainstream either, or rather, they also want to make money from these things.

Andre Cronje: Yes, I don't blame developers with skills for creating Meme coins to make money. Even Vitalik has expressed a similar view, believing that you can first make that money but should then reinvest that money into the product or project you truly want to build. This situation may indeed exist. We can look at the ICO craze, where many people made a lot of money at that time, and they did reinvest a significant portion of that money back into the crypto ecosystem.

But I think the situation is different now. If you look at the flow of funds in the past compared to now, 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 significant amount of ETH on Ethereum—back then, there were no mature cash-out channels like stablecoins, so you had almost no way to take this money out of the ecosystem. So, you would choose to reinvest the funds into new projects, new ideas, or provide liquidity support.

However, the current Meme coin market situation is different, with more of a "money in - make a profit - money out" dynamic. Funds do not truly flow into a broader ecosystem. But as I mentioned earlier, you must adjust your mental model—this money was never meant to enter DeFi or other infrastructure projects.

Nevertheless, I do believe this has led to a new phenomenon—previously, a development team might have issued a token to make some money, but because it was difficult at the time to directly cash out this money to a bank account, they were more likely to reinvest the funds into a new protocol. Now, they can easily cash out this money to a bank account and simply retire with the cash.

Infrastructure Progress

Host: You mentioned the ICO era, do you think one of the problems back then was the lack of infrastructure? How significant was the infrastructure's flaw in all of this? After all, you built a highly successful product in that environment back then and now you are pushing for further infrastructure development. So, how big of an obstacle was the imperfect infrastructure in the past? How far are we from solving these infrastructure issues now?

Andre Cronje: Participation was indeed much more difficult back then; for example, registering on an exchange was harder, depositing money into exchange accounts was harder, acquiring Ethereum to participate was harder, and even setting up a wallet was quite a hassle. From an infrastructure perspective, everything was much more challenging back then.

At that time, we didn't even have on-chain oracles. Apart from ICO participation itself, just from a building perspective, oracles were almost non-existent. There weren't fast RPC calls, and many times you had to read data directly from smart contracts.

The infrastructure now has improved a lot; the experience required from teams is much lower, and they can launch products that we spent a lot of effort on in the past. Because the tools are more mature, infrastructure spending is higher, and user onboarding is smoother. If I were to make a rough estimate, I think we have achieved over 50% of infrastructure evolution, but not much more than that, probably somewhere between 50% and 60%.

Host: So, you believe this percentage is lower than what most people imagine?

Andre Cronje: It depends on how involved these people are in the industry; even on the blockchain level, there are still many issues to address. Moreover, technological advancement is not linear; it progresses in leaps and bounds, with each stage requiring a breakthrough to move to the next level. Just like the development of the internet, there were initially 56K dial-up modems, requiring specific hardware, a specific connection method, dialing in through a phone line, and needing a specific network card. These were the barriers at the time. But if you fast forward to today, you just need to open your phone, and all these things have been seamlessly integrated wirelessly.

The development path of blockchain is similar. I feel that it has not yet entered the fiber optic era, but if we were to use a traditional internet analogy, it is probably somewhere between the ISDN and ADSL stages, nearing the edge of the next major breakthrough. Ultimately, our infrastructure will only be truly successful when users no longer care which blockchain they are using. Just like when using an application, you don't consider whether its servers are from Hetzner or Amazon Web Services (AWS); these details are irrelevant to the user. Blockchain applications also need to achieve this kind of experience. It is only when the infrastructure evolves to this level that it can be considered truly mature.

Developer Ecosystem

Host: Do you think it's worth building applications now? You used to think it was worth building applications, but then shifted to infrastructure development. I'm also curious about this transition of yours. But if we have only solved half of the infrastructure problems now, shouldn't we focus more on infrastructure?

Andre Cronje: Using an internet analogy, this is like waiting until after the fiber optic network is popularized to start developing applications. But in reality, there were decades of valuable applications before the advent of fiber optics. Of course, you could say, looking back at MySpace, does it still have value? Now, it is seen as a failed project, but at that time, its existence was necessary because it was platforms like MySpace that paved the way for later social media platforms.

The current investment environment tends to look for companies that can last for centuries, but that's not always the case. Even if some companies will eventually be replaced, they still have value in their existence. The entire industry needs this kind of iteration. 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 basically grew up in the internet age. 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 very unfamiliar and unnatural, I don't like it at all, so I only use Twitter. But for those who grew up with the internet from an early age, they can proficiently use over 20 different applications simultaneously, which makes them better understand this field than I do and allows them to develop the next generation of applications, something that 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, not people who entered the field in their 30s.

Host: So do you think this is a difference between "crypto natives" and "non-crypto natives"? Or is it more like a difference between the "mass market" and the "non-mass market"? Do you see what I mean?

Andre Cronje: I think the end application will make this issue irrelevant. People won't think about whether it's a "decentralized Uber" or a "centralized Uber"; they will only care about which product is easier to use. Therefore, the reason why the decentralized internet will eventually become popular is that its design itself better aligns with incentive mechanisms and can more directly target consumers without the need for as many intermediaries.

For example, you could have a decentralized YouTube. Instead of having creators at the mercy of the massive YouTube platform, going through processes like ad review and revenue sharing, it's better to achieve more direct earnings through a decentralized approach.

In fact, even within YouTube itself, we have already seen this trend. Previously, creators mainly relied on YouTube's ad revenue, but now they are more inclined towards in-video sponsorships because it's a more direct way and helps build better user relationships. A decentralized version of YouTube is essentially optimized for this model.

Host: In the Ethereum whitepaper and some early literature, Vitalik mentioned the concept of a "decentralized Uber." But now, this term has almost become a meme, and many people believe that the development of the crypto industry will not actually move in this direction. However, from what you're saying, you seem to still endorse this view, at least that it might be achieved someday in the future?

Andre Cronje: I think everyone always compares the current internet with current blockchain applications, and such comparisons only lead to disappointment. If we change our mindset, for example, on-chain gaming is a good 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, then crash, and wait 4 minutes to reload to continue playing. But if you compare on-chain gaming with those Flash games, the experience of on-chain gaming is already great.

The problem is when people compare it with today's AAA-grade 3D games, like those ultra-high-definition, next-gen graphic games. In that comparison, on-chain gaming naturally seems terrible.

Host: Yes, it's like running a small game on a graphing calculator; of course, you can't expect its experience to be compared to an Xbox.

Andre Cronje: Exactly, right? We are currently limited by hardware and capabilities. In fact, there are many similar comparisons. Look, back in the early days of the internet, it only made sense in military operations and financial prototypes. Besides military applications, what we see now in the blockchain field is a similar situation. These are the first areas that truly demonstrate value because people are willing to invest money into them to build infrastructure to gain access. At that time, for a megabyte of data, you had to pay thousands of dollars per month. Now, what we're seeing with gas fees is a similar situation; you're paying for bandwidth costs. Although it's still expensive, it's precisely because of this that only certain types of applications can exist.

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

Host: So, how confident are you in this future development? Do you believe that cryptocurrency can really change the entire world?

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

You wouldn't choose the decentralized version, but there will also be a crowd that is more inclined towards a decentralized way. Look at some African countries where they often have community-based banks, where one person holds everyone's money.

For example, Stockfells, I think that's what they are called. This is an operational example because it provides better accounting, everyone can see it, and it still maintains the same trust assumption.

So, I don't think it will completely replace the traditional centralized world, but I do believe it can offer advantages in many areas. For instance, if you look at the bank settlement systems, they are extremely outdated and based on daily settlement, full of opportunities for fraud. Many times people just send Excel spreadsheets via email, and by tokenizing this small step, it could save banks and clearinghouses trillions of dollars, and this change could be achieved in a very short time.

Host: So, in order to reach the stage you mentioned where consumers and businesses can choose to use decentralized or centralized products, what lessons does the industry need to learn?

Because at some point in your career, you seemed to be somewhat tired or weary of the industry. So, the first question is, how tired are you of the industry now? And the second question is, what do you think we should do, how should the industry move forward?

AC's Reflection on the Crypto Industry

Andre Cronje: Currently, I am less tired than before, but this is not because the industry has changed. I used to be very tired because on one side, the blockchain community hardly offered any support, and on the other side, entities like the U.S. Securities and Exchange Commission (SEC) were attacking every day.

Back then, the situation was such that there was no reason for developers to stay and work. Part of the reason was that there had been a significant shift in blockchain participants. You know, when I first started developing in 2017, 2018, almost all participants were technical people. So the conversations we had were always very valuable. By 2021, 2022, participants suddenly became mostly non-technical people, more focused on money, which completely changed the nature of the conversations and made me feel very alienated.

I don't see a way to solve this problem because it's the result of more people entering the market. I think from that perspective, it is almost inevitable. Teams and developers need to adapt. I don't know how likely that is, but it's a real issue on the regulatory side.

You know, we have a grace period of four years to see what we can do in these four years. But four years from now, it could flip around. That's the issue I think everyone must keep in mind. If we can optimize during these four years, integrate blockchain into as many places as possible, it becomes almost irremovable. Then we will be in a very different situation, which is our responsibility as a community.

I think the lesson is that people need to have more tolerance for developers and teams, especially those trying new things. But I don't think that's going to happen because if you look at the crypto community now, what it has turned into, I always try to get people to understand that the mindset model is different when you go from someone posting on an internet forum to meeting them in person—they may become more aggressive.

On top of that, with anonymity, they don't need to take responsibility for their words, which can make them more hostile and aggressive. Now, suppose it's like a sports match; there are two teams competing, there will be more attacks and insults during the game.

Now, suppose there is a financial incentive. It's like a vicious cycle; the worst of human behavior is on display here. We are still incentivizing this behavior. I don't know how this situation changes. For me personally, I've just become more resilient. You know, when I started, going back to that technical group, my standard for whether people were satisfied was 99%.

If someone said something hurtful or had a different opinion, I would reach out to them privately. I talked to them, called them, took the time to understand their perspective. In ninety percent of cases, those people ended up becoming my friends or allies, so back then you could convert these people. By 2021, after a lot of introspection and a shift in my industry awareness, I changed this standard from "let me satisfy 99% of people" to "let me satisfy 51% of people".

I'm not looking to just satisfy 20% of the real audience and then ignore the remaining 80%. But this is also a process I've been through, something I had to learn, and almost every team that enters this ecosystem will go through this process. Many teams will be eliminated during this process.

You know, I think the current participants are probably only around 5% of what they used to be. In the past few years, there have been more builders leaving this space than new ones entering. All the true builders are the people I talked to back in those days.

Host: You mentioned the developer issue in the crypto industry, the lack of talent and builders for those interesting projects. So, what do you think future developers should be like? How do we attract them to enter 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 what we're seeing is a revival of the "Silicon Valley VC-backed" model, where all projects are competing with each other, but I think it's a bit meaningless. However, during that time, there will indeed be some applications that will come out, and people will interact with them.

The reason I like building smart contracts is because they have a strong permissionless and composable nature. You know, everything I build is based on platforms like Uniswap, Alpha, Compound, etc., and I never need to ask for permission from them. I have never talked to any team or contacted anyone on any platform I've built. So, anyone playing at home deploying a smart contract has the opportunity to make a difference, and eventually, this may develop into something significant.

I think what we need to optimize is perhaps that continued composability and open-source nature. Because that is precisely the key to attracting and motivating developers to get involved. But the trend we are seeing now is that more and more projects are moving towards closed source rather than an open environment.

This way, there is no way to incentivize others to build on top of what you have, because they simply cannot, you've locked them out 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 top of it, rather than like my code now, where I have to put a license on it to protect it. The current situation is that it's difficult to truly open-source code as others might fork it and add a token within 24 hours, which is not ideal.

Host: Yes, sometimes I like to look optimistically at cryptocurrency, much like how I view platforms like Shopify or WordPress. I think some of your early projects exemplify this, they are like modular things, building on top of other things. In fact, some of the constraints you dealt with back then made the product itself more interesting.

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

Andre Cronje: But that's precisely it, you know, I've been thinking, why is Yearn more successful than other similar yield aggregators? The reason is simple; those yield aggregators didn't prepare well for others to build on top of them. Many of them have treasuries, but they didn't tokenize these treasuries. So when I deposit funds, I can't do anything. The first step I took was, well, I need to tokenize these deposits so they can be used elsewhere. That's the key. You need to optimize for composability so others can truly build something, which is 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, then it's meaningless. So you have to keep thinking, how do you open up this system to facilitate the building of other things? People will build something; I don't even know what they'll build. You can do this in FIFA and the entire cryptocurrency space.

Host: Additionally, I know some of your future products are inspired by the problems you encountered while building the current product. We've seen this in Web2, where people often say build for your five-year-ago self or build for your own problems. I feel like in the crypto space, sometimes we lack that kind of thinking.

Andre Cronje: I mean, yeah, we do have that in the crypto space. I often hear this statement. I mean, many of the great products we have today are built by teams that forked out of the original team, they forked out of the original team and kept building. That's also why I say most of it is the same set of builders because they come from the same original OG team, right? But specifically, because they've been there, worked there, they've seen, hey, I can do this thing, and maybe that company doesn't want to do it, so they fork out and do their 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 been a significant change over the years. Even looking at Compound and Uniswap, their initial v1, v2 versions were optimized for composability, very easy to build on top of. You could easily extend their interfaces and functionality. The current stuff might be better products in terms of consumer-facing, but worse in terms of builder integration, right? Much more complex, much more difficult. You need to communicate with the teams, and once you need to do that, you've already excluded 99% of the builders because they don't have a channel to reach out to you. So, yeah, actually, I haven't really thought about it this way, but as we continue this conversation, I think the most lacking aspect right now is that mindset of "how do I build for others on top of me" because I think that's completely missing.

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

Andre Cronje: So my main interest lies in applications that are trying to innovate and explore new things. I don't think they have reached the scale of the past. But I see some teams attempting, like the Shadow Guys, with their Shadow Exchange on Sonic. They are trying new gameplay in tokenomics, which I think no one has done before. I also believe tokenomics is a vastly undeveloped area. I think we still have a lot of work to do in this regard. But everyone, because it's highly financial, is very afraid to try anything new in this area. I don't blame them; it's scary because you're tying your public image to something that can fluctuate up and down. But we still have a lot of work to do in this area, and they are doing great work.

Andre Cronje: Silo is another team that is releasing some new tokenomics. I also really like their overall design philosophy. Now, in terms of gaming content coming out, I think there are many good things happening in terms of account abstraction, economic abstraction, user interfaces, and things like Pasky. I've played some on-chain games like Faith, Adventure, Sacrifice for Kingdom. Who else is truly innovating? Metropolis is working on a new dlmm AMM, which is great. I know there are things happening in the yield space, with Spectral and Pendle being the main players there. It's not an area I'm very familiar with, but there's definitely more going on there.

I think we're starting to see on-chain options and other derivatives go live. In the past, option pricing needed to be very accurate and very cheap, which you couldn't achieve on-chain because you didn't have the data and the fees were prohibitively high. Now we're starting to see a resurgence of these, but I think, like UNISWAP and AMS did for trading, we haven't seen a similar breakthrough for options, futures, and other derivatives. So I definitely think that will come next. The guys playing Margin Zero Strike are also experimenting and trying new things. So I'm keeping a close eye on them.

I think there's more work to be done in terms of on-chain purposes, which is one of the few innovations we're seeing, right? For example, the GMX model, Hyperliquid model. There's another one I'm forgetting right now because it's, you know, liquidity pools as the counterparty rather than exchanges as the counterparty. But I think there's still a step to go because right now your liquidity providers still bear aggregation risk in these pools, right? I think there's a way to make them only bear spot risk, just like the risk you bear in Uniswap. Insurance, I think, is another primitive we will see more of on-chain. Currently, not much is happening in this area; most of it is still finance-related. I think we'll see more in the next 6 to 12 months. But as fees go down and disappear, as wallets are no longer a necessity, as you stop realizing you're on the blockchain, I think we'll see more in the gaming and social layers.

Sonic Ecosystem

Host: Many of the projects you've mentioned seem to be part of the Sonic ecosystem or are moving towards it. Polymarket is an application that has been widely discussed, as well as Pump Fun. Are these applications attractive to you? Are there any other applications currently not on Sonic that you would like to see brought into your ecosystem?

Andre Cronje: Polymarket might be, definitely. I think they've done some really interesting things in the prediction market space, and I think they can do more. I feel like they are a bit hands-tied, you know, because of things like the lost account, let's see, the FTC thing, as they can 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 do user-sourced articles, and I think that's a very novel idea, right?

Host: Yes, insurance also fits into that.

Andre Cronje: Insurance does indeed fit into that because it's a decentralized on-chain insurance issue, you still need a third party to say, okay, this is a 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 these verifiable sources, suddenly there's a reason to do it on-chain.

What else is interesting? I think we've got our major players that we want, you know, like some of the good gaming content. I think the guys from Fantasy Top are building some cool stuff. I don't mind them rolling out Pump; I think it's a very niche product that only works in its current position. I haven't seen their multi-gen strategy. There are some infrareds, like I would like to see Fantom Wallet come over because I do think they are almost at the stage where people are really realizing the speed we have. Because currently, the slowest part of interacting with Sonic is the wallet. That's where you spend 99% of the time. Because that moment from you clicking from the app to the wallet, that's instant. And then from the wallet submission, that's also instant. But the part in the middle that loads is the actual slow part. Now, there might be a longer list, but you know, these just pop into my head.

Host: I feel like you're particularly passionate about applications; you have a reputation as an app builder. Why did you eventually shift your focus to infrastructure?

Andre Cronje: Well, I mean, I did Fantom before doing any apps. So, you know, I've been on Fantom since 2018. So the focus has always been, and I realized that a lot of the debt we're not seeing is because the underlying infrastructure layer is flawed. The most obvious thing back then was, you know, something as simple as proof of work was designed to be slow. Because it's not designed for speed, it's designed for security, right? So just building a better consensus, you know, the abft consensus that we launched in 2019, which we're still using in Sonic now, is exactly the same one. I still think it's the gold standard in consensus.

But I actually turned to the application layer initially because I built Yearn, because 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 app to do this for me. And then all other things spiraled out of that, as mentioned earlier, you know, it's an idea inspired by the problems I saw in that specific thing.

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

And then I think I started getting obsessed with more traditional banking issues, such as capital efficiency, i.e., IMMS, lending, my remaining work basically focused on that. When I built and when I released solidly, that was already my new AMA model, not as perfect as I have it now, but it was a pretty good implementation at the time.

At that time, I began to realize that, look, there are some underlying layer issues here that we need to solve in a different way before I can actually release my next app. That's what we've always been focusing on with Sonic, you know, Sonic is the pinnacle of all this. Like, it's not just the 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's not going to make you stand out in today's market. Because even if we're faster, even if our finality is lower, the difference in user experience, you're talking about 400 milliseconds versus 300 milliseconds. Users won't notice the blink of an eye.

So the real thing we started to focus on, you know, is fee monetization, where the app gets 90% fee return, because that already means you can start building a lot of different things. And then there's fee subsidy, so using this 90% of the app that can be returned and subsidize new users, so they don't even need gas and other things. And then it's like native abstraction, so you don't need a wallet, because we want to reach a point where apps built on top of us, their users don't need to know they're interacting with us. And when we get there, I can release my next series of apps, because they need that. So again, you know, it's not just about the benefits of building in this space is that I am building things for myself, and then coincidentally, it might benefit all of our builders. So that's the gospel, right? But I mean, ultimately, I'm selfishly busy doing all these things for myself.

Host: Interesting. So many of Fantom's designs are inspired by the issues you encountered there. Do you still have the drive to explore new concepts in the future? You've already to some extent explored the fee-sharing mechanism, like Berachain, who are 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 fully agree that incentive alignment has a fundamental issue. You know, because 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 instead of thinking, well, who are the other participants? And the other participants are obviously the applications. That's why, you know, I think our approach might be too simplistic, just saying, hey, this contract got 90% of its gas spent because that automatically aligns with what people are willing to use for applications.

Andre Cronje: And I think the model of Berachain, again, I like that they are attempting to address the incentive alignment issue. It is a problem that needs to be solved, as it is currently wrong for it all to flow to validators. That is a waste. That's what we see. Perhaps not the only reason, but from what I see, that's why we see Uniswap launching Unichain. Because they saw all the fees generated for Ethereum, $2.8 billion, and they said, we didn't get a dime of that.

Let's launch our own chain so that we can capture that $2.8 billion. But launching a chain is not as easy as people on X would convince you. You can't just deploy a Layer 2 as easily as clicking a button. Technically, yeah, you'll have it technically, but you don't have the infrastructure, you don't have the integrations, you don't have third parties, you're missing a lot of things, and you need to spend tens of millions to get there. So instead, it should happen on a chain that already has existing infrastructure. You see, we see different applications approaching it in different ways, like Arbitrum, trying to build their native fee switch so that you can use different tokens. I know they eventually removed it, but that's still them trying, well, 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 issue here.

My only comment on Berachain is that it requires too much active involvement from validators. I think that's a different, team of people. We run our Devops or great to run Devops, but I don't want them to be confused, needing like, you know, to vote on protocols or what pool or something should go where. 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 install it on hardware in some bunker that can survive for 10 years, and they don't touch it. Like, that is ideal because it should provide network security. The more you try to do on top of it, the more attack surface and areas you have. So that's my only gripe with their model, but I do think it's definitely moving in the right direction, you know, hey, rewards shouldn't all go to validators. It should go to applications. And then what applications do with that, that's up to them, you know, whether they pass it on to their users or use it as their own fee model, anyway.

Host: You mentioned that you are still interested in building applications. It would be too remiss of me not to ask you what you are most interested in.

Andre Cronje: I've mentioned a lot of things already, you know, there's a different MMS method now. We basically have two formulas. You know, you have constant product, which is Uniswap, or you have constant sum, which is stable exchange. We haven't seen anything else out there right now. We have centralized liquidity that allows you to shape-shift. But in the end, it's still constant product. Just like it's still using the quote. At the end of the day.

I'm trying not to be specific, but anyway, I built a new AMM that has a self-referential volatility curve. So what that means is the more volatile the asset, the closer it is to constant product. The less volatile the asset, the closer it is to centralized. And the beauty of that is because my north star always is, I foresee a world where 99.9% of real-world assets are on-chain. Now you can't use constant product for that. You can't use constant sum for that. You need something like, 80% constant sum and 20% constant product. So this is exactly what this does. So every time there's a trade and it measures volatility, it has near off deviations, one hour, one day, one month, 200-day moving average, anyway, and then annualized. So that informs the quote. So it's already given you a better quote, it's already given you a better pricing, it gives LPs more fees. Now on top of that, I believe there's still a new way to do the lending market.

This is actually something I released in Solidly. I don't know how much time we have, so you must tell me if you want to interrupt me at any point, but I'll try to quickly go over it. So in Solidly, I've 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 if I sell one unit, it will tell me it's worth $3. If I tell it I'm selling a trillion units, it will still tell me it's worth $3. That's just not right. If I give you 1000 of this thing, what price are you going to give me? What I primarily want this for on-chain is twofold, one is for settlement notification, two is because the reverse of that issue is, if I give you, how much of another asset can I settle with this asset?

Now if I can answer that, that means I know my loan-to-value ratio. In other words, how much can I borrow against this asset? So now you can start lending. So now the next question is, you can't lend if you don't know what your rate model is because you need to know the peak to ensure LP safety. In crypto, we have two rate models. We have volatile and stable. We've already had the volatility input. So now I can already have these charts based on the same input, input into my AMM. So now I can make 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, this 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 pool size. So the more liquidity, the higher the leverage. So these things become self-referential again. And then because you have leverage and rates, you can have implicit perpetual positions, which only the people providing liquidity in the AMM have counterparty risk. That's what I mentioned earlier, I think it's still going to get solved.

I've solved it, but it hasn't been released yet. And 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 applied volatility, and then you can start doing standard European and American options. I have some other things in there.
Host: So how is the development of these features going?

Andre Cronje: Right now? It's all done. The only reason we haven't launched yet is that we are waiting for changes in the regulatory environment because this falls squarely under the CFTC's (Commodity Futures Trading Commission) purview. So we are waiting to see, you know, Brian's new appointment and their stance on these kinds of things. Because this will determine whether we can launch this product with or without derivatives, right?

Host: Alright. Do you think these features will be integrated together? Like you're looking at this all-in-one super app in the financial space, or basically that kind of thing.

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

Host: Founders should focus on this model because as we're discussing, this solution leads to this problem, but this solution and application, that's one of the beauties of cryptocurrency.

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

Host: Additionally, you know, in the crypto space, there's never a shortage of creativity. Sometimes people will say, oh, this has already been done. No, buddy, you need to be more creative.

Andre Cronje: I mean, look, the reason I didn't initially do Yearn was that I thought, oh, others are already doing this, why bother building it again? In my career, I've stopped launching a lot of apps because of this. Or if I see something not being built, I tell myself, oh, but this is such a basic idea, someone must have already done it and failed. That's why it doesn't exist. In fact, it's garbage. Just tried nine out of ten times. The reason it doesn't exist is that I thought of it too early, right.

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

Andre Cronje: Oh, my, that's a long list. We don't have time to discuss that. I mean, everything I would go back and change. I always used to blame participants because, you know, they put money into a contract, someone sees my deployer has deployed it, just because I didn't change it in half an hour, you shouldn't be putting millions of dollars in it. But at the same time, I should acknowledge that I had so much attention that I needed to communicate better, right? You know, since then I've learned to communicate better. Because that was the issue. I needed to clearly state that unless I announce X on these platforms, it's not true, stay away.

I had to start doing things like address cycling, where every time I did something new, I had to use a new address. This is definitely one area where I will change. Another really big regret might be my trust in Multichain. I think we really got burnt 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 been holding onto the backup key of the original ceremony so he could have full access.

Host: Has this affected the current bridging infrastructure?

Andre Cronje: It certainly has impacted a lot of things, and we've learned a lot from it. You know, this is also because Fantom launched even before bridging infrastructure existed. I mean, now every blockchain has its own standard bridging, Sonic does too. You need this now. However, you know, at the time, we might have been a bit naively overly reliant on decentralization, thinking it should be other parties connecting, not wanting to do it ourselves because we felt we didn't have the in-house expertise. Turns out you have to do that, so it's definitely a lesson. Most of my things.

The things I regret and what I changed mainly are about communication and proper expectation management. Because the way I used to talk to people in the past is not the way I have to talk to people now. It is, I mean, I see this happening to Vitalik now too, right? Because he's been away from X and Twitter for so long, and now that he's back, almost every piece of content he releases gets attacked. That's because he needs to adapt to the change. You can't talk to the on-chain tech crowd like he used to.

I think these are lessons I have to learn. I regret that because of these lessons, people lost money, that's for sure. If there was a way it could be reversed, I would. But at the same time, you know, these same lessons also shaped who I am today. So, I don't know. It's always a difficult question to answer, right? Because you fundamentally change who you are. I mean, if these things hadn't happened, I wouldn't have learned these lessons. And then maybe in the future, something even bigger, something worse might happen.

Host: Additionally, sticking with it is almost a form of punishment, right?

Andre Cronje: No.

Host: You know, if you leave, you got hacked for 600 million and leave, no one will ever mention your name again. But if you keep trying to develop it.

Andre Cronje: It always comes back, doesn't it? People remind you of it every day. So all you need to do is, as I mentioned before, you need to grow thick skin. I think that's the only thing you can do.

AC's Ultimate Goal

Host: You are truly an icon in this field, I think you have really influenced the development of DeFi in many ways. People look up to you in many aspects, you are very influential in this field. 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, the answer will be different. But for now, it's to get the finance/Coinbase/whatever your North Star is exchange fully on-chain. By that I mean, including fiat on and off-ramp, the user experience being the same or even better. That is my goal for the next two to five years, the biggest crypto exchanges have to be a DEX, and I think we'll get there. I think finally we're at the stage of infrastructure and tooling, which will be rolled out this year. Shortly after, it will completely cannibalize centralized exchanges because the barrier to entry for DEXs will be lower than centralized exchanges. So I think that's the big goal for the next five years. And then obviously, further into traditional finance, to a point where it's very hard to remove. I think we need to ensure that over the next four years after the current government. And then we'll see. But what I mean is, we'll then reach a stage where the infrastructure can start doing gaming and social. I think you'll see a lot of other cool things that I can't even theorize about now.

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

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

Host: Fantastic. Andre, I think our time for today has come to an end. It was truly a pleasure talking to you. Thank you very much for your time.

Andre Cronje: Thank you.

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