Adieu mon Amour
Apr 15 2022 · 18 min read
An esoteric eulogy for DeFi Summer
by Tamara Frankel @_s0ftmachine
In the shadow of the Ukraine war, the potential threat of nuclear war and even global economic collapse, greater attacks on personal liberties via governments and centralized services, the lingering effects of COVID and lockdowns, and the societal fracturing from the woke movement, Andre Cronje, the man responsible in many ways not just for kicking off DeFi summer but creating the ethos and values of DeFi and our current open finance ecosystem ceased maintaining all 25 apps he is associated with and closed the chapter of his life as a contributor to DeFi. Many people have wondered if this is the end of the DeFi cycle commenced by DeFi Summer and everything that era represented. On a wider level, more and more people who entered crypto for ideological and political reasons have become disenchanted with the current state of consumerism and appropriation of mainstream culture in the crypto space today as we transition from becoming a fringe movement of appreciators and users of a niche technology into a “real” industry.
“I was farming YFI while you were rioting for BLM” - DeFi God
Let us try to take ourselves back to the spirit and time of DeFi summer, what it meant, what it still means, and the important lessons we can all learn from this truly 0-1 experience.
(Many of the individual tales of the time are captured here).
In the early days of DeFi in 2019, when I began participating in it, it was a time of very little hope for crypto. In the depths of a crushing multi-year bear market, many of the baroque crypto projects promising the world had failed miserably even after large raises, yet the infrastructure and tools for crypto natives were poorly underrepresented and under-serviced. Before Curve, you’d ask yourself, why can’t I simply trade erc20 stablecoins without using a CEX? Seems simple enough. I remember the first time a 7 figure stables trade on Curve had less slippage than Alameda. This was an Aha moment, that these tools that previously felt like toys could actually be viable for real trading and real business. But let’s step back a bit before that time, back to 2019 when the DeFi ecosystem was mostly Uniswap, Synthetix, M0lly Wintermute’s Hegic, Maker and a few other DEXs like Kyber and Bancor. Some of us early adopters could see that DeFi was the future of crypto and the killer use case, at least in the short to medium term, but few others could, few were even willing to try it. Also, the volume and liquidity were always notoriously low- many of these tools were like proof of concept toys at the time- you could see how they could be used if they had the liquidity but it wasn’t quite there yet.
DeFi was also nascent in bringing back some of the original values of crypto with anons founding and running projects springing up, like Molly Wintermute. After so many baroque failures and cash grabs, people wanted to return to the purity of the immaculate conception of Bitcoin, as well as the ethos- that you could release a world-changing technology project without ever disclosing your name or identity, like a gift upon the world, no fundraising, no pre-mine. By 2019, after regulatory crackdowns, exit scams, and the blood of a bear market, this spirit was mostly lost though soon to be rekindled as all things that are forgotten yet longed for are, albeit in new iterations, reshaped by time. At the end of the day, for many of us who survived in crypto for so long, we weren’t here just for the money, but rather the radical freedom and the special camaraderie that participating in such endeavors with other freedom-minded people brings. In it for tech, in it for the social movement, in it for the personal freedom and freedom of expression. And if you’re any type of leader in this space, you have to be in it for the money in some way, as sovereign wealth is the only way you can survive on your own terms.
At the dawn of DeFi summer, before the YFI launch event, there were glimmers of what was to come. Synthetix started yield farming, it went mainstream with COMP, but it was the launch of YFI that crystalized the movement. Andre had built a valuable product that he himself used and decided to fair launch a “valueless governance token” called YFI that anyone could farm by staking their yCRV, a lifetime of emissions released in a week, no pre-mine, no team tokens, everyone had the same rules. Very quickly this got to $50m TVL which though small sounding today in our world of 9-10 figure TVLs was huge for the nascent and notoriously low liquidity DeFi space at the time.
Andre farmed YFI early yet gave a good chunk of that away to the community. Realizing how little YFI he had, Andre set up a 98/2 DAI/YFI pool that is incentivized to make people dump YFI which would give him the opportunity to buy even more of it. A 98/2 imbalance permits a forgiving impermanent loss setup - (even if the value of YFI dropped 1000x, the value of your staked tokens would only go down 11%) which became very attractive to LPs. Liquidity providers started to deposit their DAI into the Balancer pool, which meant that they were effectively buying up YFI every time they entered the DAI/YFI pool. The value of YFI quickly jumped from $0 to $3000+. And the farmers started to migrate to the YFI farming pools over a couple of days creating a 3000% APY for those farmers. The peak TVL for Yearn was around $400 million. (You can read more about this here )
Through this, both the fair launch movement and the more complex pool 1/2/3 dynamics were born that showed the world an entirely new way one could launch a token and crypto project without the need for VCs, exchanges, traditional PR, and the typical cartel-like crypto business structures that had been weighing the industry down and enriching the few who had secured their spot at the top of this game at the cost of emergent talent for too long.
What’s more, Andre showed us a completely new way to build an organization around open-source software. In many ways, the beautiful gift of the fair launch of YFI, though it came with so many trials and tribulations and in the end at such a high cost, created something so much greater than the sum of its parts- an ethos, a dev cult, a religion, if you will. In the words of thebluepill.eth.limo:
“There are few things in the world more powerful than the gift.
Andre gave away all the YFI.
Every Single One.
Over a billion dollars in value.
The inflation field from this cosmic gift has left an indelible mark on the collective.
Its vibrations echo in every one of us.
It called us here
Not for money
Not for fame
But because that’s what gifts do.
They are magic.
Andre cast a spell into this world woven with integrity, genius, and generosity.
And Yearn was what he summoned”
“In the land of the blue pills, everything you thought was important ceases to matter.
Your net worth, your nationality, your degrees, your looks, even your name.
All that matters is your contribution.”
For me, personally, the fair launch message was incredibly moving and transformative. This is what crypto was supposed to be before ICO mania and rabid commercialization took hold, a natural evolution of the cypherpunk dream, made modern, accelerated. It didn’t matter who you were, if you had no friends IRL, if you were ugly, didn’t have credentials or were from a place with no opportunities- all that mattered was your contribution and everyone had the ability to contribute. For a brief moment, the new world of DeFi was a glimmer of hope of a new world of techno democracy.
In the summer of 2020, during the second wave of lockdowns and great economic uncertainty and volatility, and great social unrest in America with BLM protests gone insane, this message was especially beautiful and hopeful. For many youths in America, now cut off from their social relationships, school, and direction in the world, there was a productive outlet of rebellion against the status quo - you didn’t have to go out and burn down a Target store to change the world. You could contribute to one of these open source DeFi projects and try your hand in the global intellectual casinos of DeFi. Yes, there are rugs and hacks. But aren’t those better odds with clearer rule sets and risks than in the ordinary world? And isn’t at least trying to create something that might be flawed better than senseless destruction? Isn’t it better to at least try to build a new world than to destroy the old one?
Another key contribution of Andre’s is the test in prod ethos. Testing in prod is dangerous, yet it is also revolutionary. People want safety, however, they also want freedom, desires which are often contradictory. Freedom is dangerous and wild. Safety often comes at the cost of one's personal freedom. In the early days of DeFI summer when we were still a small niche community within the already niche community of crypto natives, things were much simpler. We had already accepted the greater risk social contract of crypto- it’s volatile, there are hacks, there are unforeseen issues and dangers, there is the ever-present risk of getting rekt. In many ways accepting the lifestyle of the crypto native and degen is like accepting the way of the samurai- death is around every corner and the only way to survive is to make peace with death, make peace with the state of rekt as that acceptance will set you free and allow you to fight another day, without fear. If you already accept it from day one you’ll fair much better than others who can’t even fathom this possibility. The early DeFi adopters like us had already accepted this reality in our lives for many years, this was just a newer iteration of it. Accepting smart contract risk in exchange for the chance at yield and making our assets productive was a trade off we were comfortable with. We put our faith in the hands of the devs of these open source protocols (who’s unaudited code is open source and was there for us to audit ourselves if we wanted to). We were able to stomach these risks in exchange for the freedom and immediacy they brought. But as DeFi grew, this all began to change.
The age of endless rugs
It has been almost 2 years since the early innocent days of the YFI launch, and much has transpired to lead us to the place we find ourselves in now. The DeFi space has evolved, some might say for the worse, I guess all things have their rise and fall, renaissance and decline. DeFi has had about 3 short ages, DeFi 1.0, 2.0 and 3.0. DeFi 1.0 was defined by its early projects and ecosystems, namely Synthetix, YFI, COMP, YAM, all the YFI forks and fork wars, Sushiswap, food coins and primitive algo stables like AMPL and its more fun fork, Based.
The next iteration of DeFi, 2.0, brought us further into the realm of ponzis for ponzis sake. Forks of forks. New iterations on algo stables such as ESD, DSD, Basis Cash, and the endless forks of forks with parameters accelerated to the upmost degeneracy - an age of endless rugs. One I myself got caught up in the game of. As DefiGod (RIP) once said, farming algo stablecoin ponzis is like smoking crack out of a coke can while trading with 100x leverage. Playing with algo stablecoin ponzis was like a drug, one in the dark days of COVID lockdowns lingering on and before the explosive bullrun, I was happy to play even amongst devastating losses, as I wasn’t really here just for the money, but rather for the entertainment, for the movement and to play the game with my friends, all of us developing and honing our skills as we played a greater long term iterative game with each other, in the face of an uncertain future. Looking back I see it all as a type of training, an education, albeit an incredibly expensive one. Yet these ponzis for ponzis sake left us all with a lingering feeling of emptiness inside, as the greater purpose of the unity and open source community of DeFi summer was getting lost amongst the faster and faster iterations of the game. But they also taught us all a lesson and progressed the mindshare of the space in ways previously unexpected.
Some might place OHM is an iteration beyond the algo stablecoins such as ESD and Basis Cash, as it is a new way to do an algo stablecoin ponzi. OlympusPro and the concept of protocol owned liquidity was definitely an innovation, yet the real innovation and difference was the greater strength of the community to organize almost like a cult. There was the early wealth effect that the first 3 figure airdrop was now worth 7 figures, that if we all (3,3) together we can reach an escape velocity beyond even the concrete limitations of what was so clearly unsustainable tokenomics. When Grimes tweeted (3,3) I knew we had made it, though, at that stage, I also knew OHM would eventually fail. Because I knew the power of our memes could reach the mainstream, and money is a meme, the Fed runs a ponzi and that maybe one day our better engineered ponzis with their attempts at fairer distributions and stronger community values could one day take over.
All of these ponzis are like Deleuzian schizo economics, deterratorializing humans’ concept of money. Every ponzi one plays makes one believe less that fiat is money and makes one see how everything is a ponzi. Retirement accounts are 40-year veCRV lock up ponzis used to bid on low float stocks. Every ponzi we played was a form of progress as they are actually tools of intellectual acceleration. We needed to experience these crazy ponzis to teach us that we are actually free- free to choose our own ponzi, our own financial allegiance, our own direction. With that comes a new “red” pill (or it can be blue if you like) - the realization that most things are ponzi scams but you actually have the freedom to choose which one you participate in. Maybe getting rugged is the cost of understanding the true nature of one’s freedom.
You have to hate yourself to build in this space
Before we get into the end of the OHM era, the dawn of the Curve wars and the scandalous OHM forks which inevitably brought us to the ve(3,3) token era that we are just beginning to emerge from, let us reflect a bit about the role of community and the dynamics between the community and founding/core teams of the DeFi space and how they have evolved to the level of unsustainability we find ourselves in today.
In 2020, during DeFi summer, Shitcoin Praxis published a brief satirical thot piece entitled Are You A Slave to Your Shitcoin? which commented on the unhealthy dynamic surfacing between DeFi founders/operators/core devs and the communities surrounding the projects (i/e the token holders). This is a bit of a black and white breakdown as there are many projects stakeholders who act as non-regular contributors to the success of a project, often in abstract yet high-impact ways; yet for our purposes here it’s easier to break them down into these two categories.
In the beginning, fair launches, governance tokens, and high levels of community participation were a revolutionary gift, a way to get people to have skin in the game so we could all play together, everyone cared, everyone had a stake and a say. This soon became a prison for founding teams. Tyrannis maioritatis. ********A community can’t lead a project- not everyone has the vision, the technical skills to even understand how to improve or contribute to a project, the desire nor time, or skills to even give in this way. With too many cooks in the kitchen and too many divergent directions and goals, the vision of a project becomes diluted and diffused. Most people aren’t cut out to be leaders nor do they want to take on that responsibility.
Projects and movements need leaders and those leaders need resources to deploy into growing the project and its ecosystem. Yet these leaders are often held hostage by their communities - communities who demand innovations and upgrades yet don’t understand the work that goes into them, communities who demand token price to go up and more listings and farming games whose desires are for immediate gratification in stark contrast to the desires of a team and core devs for long term sustainability and survival. DeFi communities become violent and abusive, with death threats and constant abuse common. At any turn if you make a mistake you’re labeled a scammer, a rugger, your reputation is burned. You take on all the risk as a founder, and are the only one with true responsibilities, yet you are open to the constant wrath of the community you brought up, who seemingly bought your token because they believed in you and your vision, yet are only happy when the price pumps. These participants believe they have skin in the game because they hold the token, but is this the same level of commitment as someone who has also staked their entire reputation and long term prosperity on this project’s success? When the price is high they will espouse and evangelize your vision, when the price is down, they’re the first ones to put your head on a pike. DeFi founders expose themselves to the vagaries of the crowd completely and are often enslaved by their communities, an ironic fate for those dedicating their lives to offering the masses new modalities of freedom. What begins as a gift oftentimes becomes an inescapable curse.
The rise of the anon founder presents a partial avenue of escape from this madness, a degree of distance, yet even the sanctity of anonsense is being challenged with the rise of woke and the disaster around Wonderland finance and Mim and 0xSifu being exposed as the QuadrigaCX co founder and serial ponzi scammer (no wonder his ponzis were so good- 20yrs of ponzi experience!).
Bitcoin is more than digital gold, it’s more than the sum of its parts. It is total art. Satoshi deeply understood that money is a meme, that its mythos, symbols, and story were as vitally important as the underlying technology. His anon weaboo artdentity, his flawless execution of an immaculate conception, a fair launch and a full exit to the community are still unparalleled today.
Ethereum created a new cult of personality archetype around the genesis and intellectual leadership of these networks with the cult of personality around Vitalik, one that in my opinion was a net negative for the space (yet also needed to legitimize it), which has been attempted to be replicated, bent, twisted and pushed to its utmost limit seen in the dark everyman revitalization of this framework in the cult surrounding Sergey propagated by the early Chain Link community then later rejected again with the rise of anon founders in DeFi. Even today there are cults of personality surrounding almost every Layer 1 and Layer 0 founder, cults that both prop up their vision and enslave them. Satoshi, like Andre, understood the power of the gift. Unlike Andre, Satoshi understood that to truly give the gift immaculately and god-like, one must be anonymous.
The frog nation debacle, while raising us to the highest highs of ponzi maximalism with its zenith, the Dani x Andre ve(3,3) collaboration, also brought us to our lowest lows in terms of our distrust in anon founders, community barbarism and a shattering of faith in the movement with the unmasking of 0xSifu. Anons are sacred to this space- Satoshi’s immaculate conception of Bitcoin as a form of sigil magick is burned into the very DNA of crypto itself. From Bitcoin sprang life eternal, Ethereum, all the L1’s, all projects in the future were and will be inspired by its spirit and lindiness, and its symbols and magick are imbued into everything we are and everything we do in this space. Yet the space has had an ongoing rough relationship to anon founders ever since Satoshi. The DeFi movement brought us closer to trusting anons again than ever before with trusted anons like Banteg, Tetranode, Molly Wintermute, etc. becoming DeFi institutions yet bringing anons into the forefront also means opening oneself up to the risk of bad actors donning anon identities to scam and rug the community. This coupled with the fact that like all things on the fringes that require an almost eccentric level of belief and are met with derisive scorn of the many in the early days, the communities that form around crypto projects have traditionally been tribal, underground, with fierce values of their and often cult like which amplifies and intensifies their energy and power. The people want freedom and they also want safety and rarely can these values co-exist.
To pump or not to pump, that is the question...
What goes up must also come down. One friend of mine said maybe it’s better to think of a coin’s pump trajectory as a rocket trip to the moon- you aren’t going to stay on the moon, you will eventually come back to earth. It’s a wild ride and the real test of strength is how much of your sanity you can keep intact during the journey and how much you can grow as a person from the experience. How hard a coin pumps is a gauge for the intensity of this ride. You can calibrate this intensity further by the number of coins/% of the network you own.
YFI had all of its emissions in 1 week, BTC will still emit until 2140, halving along the way, and had a much longer time horizon to pump with varying intensity, which allowed the cult around BTC to become more deeply entrenched and resilient.
Within every coin there is a powerful latent energy, a synergy of the sigil magick of its brand (and cult of personality around its founders) and it’s potential “to pump” : its ability to attract energy and henceforth value. Really, the result of it being widely adopted by a community of users and holders, to the point that it becomes “money” in some way, that we collectively agree that it contains the essence of value and trust (they themselves memes). I won’t even mention utility, as for these purposes of understanding, it doesn’t even matter- many firms best returns in 2021 were on dog coins. Utility is also a meme for anyone but actual long term users and adopters. Every coin on some level contains this powerful latent energy- this potential - not just to transform itself but also reality, to transform the lives of men and the landscape of the systems they organize around. Many people like to think of these networks and tokens as coordination devices but I’d like to go one step further as they’re also conduits for channeling the energy of the collective: the hopes, dreams, expectations, protests, praise, euphoria and violence of the community and a way for this collective intelligence to be focused and quantified in some way. These are tools of cybernetic network spirituality- new religious technology.
For some, the early ones, these tokens are more than “money”, they are tickets to an experience that can often be life changing, for better or worse. Where else can economics, technology, politics and art intersect at such an immediate, high impact and accessible way in the world today? For true believers, these coins are tickets to an accelerated ontological spiritual journey of the soul- who you become along the way, the ways you allow and don’t allow greed to affect the inner core of your being and your behaviors, how you use them to empower yourself and others; they are tools of becoming. As Heraclitus says, "the whole flows as a river” - Everything flows, nothing stands still. How will you let the nature of these coins evolve you as these networks evolve? Will they upgrade or downgrade your experience of being a human being on earth? Are you ready to be accelerated on your human trajectory?
The “magic” of these coins is the channeling and focusing of energy - the energy of a coin’s creators, its community members and the energy their interaction, culture, and shared history imbues back into the brand. And the same principles of magic apply - as above so below. All energy obeys karmic laws. The euphoric ecstasies that come as the fruits of such dark magic come at a price, often a cost much higher than their rewards. Every creator wants to see their ideas come to life in the world, for them to be adopted, appreciated... to generate more “value” - more utility, art, community, and culture. Going from 0 to 1 is difficult, and takes an enormous amount of focused energy as well as timing, with so many other factors and details needing to be perfectly aligned to jump start the energetic alignment that creates network effects. And the pump of a coin is the ultimate jet fuel. The problem is that no one plans what to do after you get to the moon. And the ride back to earth is always bumpy. Everyone wants a ride to the moon and no one wants a ticket back home. While there is nothing like a hard pump to foster immediate network effects, these network effects are usually mercenary and a community invigorated by an exponential pump will be as exponentially vicious during the decline. The harder you pump, the harder you fall. Est quodcumque est.
Don’t say it’s over...
Some might see this as death for DeFi or at least the death of the hopes and dreams of the DeFi Summer era which kickstarted the current extended bullrun we find ourselves still in today. But every end is also a new beginning. DeFi itself is less about a singular finished product than it is about the conversation: the iterations of ideas along the way that become the story, the meta narrative that weaves itself around this technology, in essence the very fabric of reality of these networks.
To forge a path forward, one question that needs to be answered is how can we improve the dynamic between a project’s founding team, its contributors, and its community of token holders? And what exactly are the terms of these relationships in open public blockchain networks based on values of openness, anonymity, and freedom? The current dysfunctional dynamic with the founders essentially being enslaved by a community isn’t net positive for the space and DeFi in general. How do we preserve the magic of the gift- the gift that every founding team gives the world in the form of their energy, effigy, output and focus? And how do we better give this gift so that it doesn’t become a self-propagating curse as we have seen again and again? How can we transfer that act of generosity into the core values of a community? How do we as humans coordinate in more positive-sum and less violent and zero-sum ways? I don’t know the answers to these questions and I am on a journey of discovery myself. All I know is that these are the questions that we need to be asking to truly evolve to the next level of using the amazing power of these networks to coordinate human energy, belief and value.