Interview with Andre Cronje — DeFi Architect, and Creator of Yearn Finance
In 2020, the DeFi industry boomed and rapidly grew from a niche market to almost mainstream finance. One of the main events among other things has become the rise of Yearn Finance — a cult billion dollar protocol — developed by Andre Cronje.
Last week, we had a chance to talk to Andre. He told us about his background, the features of Yearn Finance, and reasons that led him to develop it. Andre discussed challenges of decentralized governance, explained the Yearn governance processes, shared his thoughts on the current state of the DeFi space, and a “fair launch” of the YFI token, and a lot more!
Let’s start with more general questions. Tell us about your background.
Did my LLB, took a year off, friend needed transport to CompSci lectures, so I gave him a lift to classes and joined some of his classes, figured I’m doing the classes, might as well write the exams, finish CompSci, ended up becoming a lecturer, from there moved to Vodacom, building telecom systems (GGSN, ISN), built mesh networks in Africa, went into big data, neural nets, moved onto fintech, and from there just naturally progressed into blockchain, originally as a researcher, and then finally as an engineer.
What first attracted you to the decentralized ledger technologies?
2016, 2017 blockchain research was making a lot of big promises, solving problems we’ve had in mesh networks, big data, and ML for years, so it seemed very enticing. After getting involved in the space, I realized that it was mostly marketing hype and lies, but at the core, decentralized technology is still powerful, so has been sticking around ever since.
Could you tell a little bit about Yearn Finance. What led you to develop it? What kind of problems are you trying to solve?
Late 2019 I had a simple problem, I had some funds and I wanted to maximize the yield it was receiving. So I would move it around between Aave, dYdX, Compound, and Fulcrum. This quickly became tedious, so I wrote some solidity to move it for me.
I would call the solidity roughly once per day and it would move the funds, this made it simpler, but not optimized, the solution was having more people interact with the protocol, the more users that deposit/withdraw the more rebalances that occur (moving funds) which optimizes the yield on a more micro level. That’s really all Yearn is, simple optimized yield switching.
Could you describe the processes and mechanisms involved in Yearn v1 and Yearn v2?
Pretty straight forward, compare yields at different providers, switch funds.
In your opinion, what are the main challenges of decentralized governance?
Participation apathy. The problem with governance tokens, they have secondary trading markets, so you end up with a large portion of “speculators” holding the tokens, with no interest to participate in governance. This participation apathy makes governance rather pointless, so you have to decrease quorum and proposal thresholds, essentially “cutting out” the speculators, but in doing so, also decreasing the security of the network. The misalignment of incentives between speculators and users is the biggest problem.
Could you tell our readers a bit about the Yearn governance processes?
Yearn governance is a very fluid and open ended system, anyone can make snapshot (off-chain proposals), or create governance discussions (gov.yearn.finance), but ultimately everything comes down to “is someone willing to implement it”, so often the contributors are driving governance, since they are the ones building the solutions. More resembling corporate governance than decentralized governance.
Do you think “fair launch” is fairer than a founder getting at least something to pay off his debts accumulated while building the project?
Nothing “fair” about it, if speculators made money, they will say its fair, if they didn’t, they will say it wasn’t. That simple. Founders should be rewarded for their work and commitment, more so than random users that purchase tokens off of a secondary market.
The only reason I gave Yearn away was because I wanted to give it away. It wasn’t fair, it was selfish, I no longer wanted to be the sole person responsible, so I gave away my responsibilities.
What are your thoughts on the current state of the DeFi space? Which projects are particularly exciting?
Somewhat pessimistic. Most projects are trying to replicate traditional finance, and I simply don’t think that’s the right way to do it, traditional finance works because of fractional reserves, we can’t do fractional reserves on defi, so we will always be capital inefficient. Traditional finance solutions will mostly fail in DeFi.
As a machine learning researcher, how do you think neural networks can be used for DeFi protocols?
I used to work for a credit bureau, thanks to neural networks we managed to optimize the risk profiles, I believe the same should be applied to blockchain to allow under collateralization.
How do you envision Yearn Finance will evolve over the next years? What are you excited to build next?
That’s up to yearn, I am no longer a driving force behind it, you can’t exit to the community unless you are willing to exit.
What’s behind the toxicity in the crypto community that almost drove you out this summer?
Lack of personal responsibility and the delusion that token price dictates value.
There’s this sort of mysticism around you as the genius builder who relentlessly releases code. Besides building, what is your favorite thing to do?
I used to be heavy into MMA and bodybuilding, although nowadays I just code.
Follow Andre on GitHub, Twitter, LinkedIn.
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