Andre Cronje: The rise and fall of a DeFi God

Andre Cronje gets straight to the point.

In an interview at his home in a gated Dubai neighbourhood, he says it’s “highly likely” he’ll end up in jail.

Could he elaborate? “No, unfortunately, no.” Is he being sarcastic? “No. Not sarcastic.”

Such a scenario may not be out of the question. It’s been a wild year in crypto, and a similar fate has befallen at least one other developer. Tornado Cash dev Alexey Pertsev has been in a Dutch jail for four months, awaiting charges.

Cronje, 39, is well-known in decentralised finance - one of the earliest grand architects. During the DeFi summer of 2020, Cronje’s Yearn, a pioneering yield aggregator - which maximised investors’ returns by automatically selecting the best places to deposit their crypto — played a pivotal role in the rise of such trading strategies. Its native token, YFI, jumped from $32 in July 2020 to $43,000 two months later, according to CoinGecko.

Cronje’s later projects — which made a lot of people rich — were buoyed by his reputation. But they also had fatal flaws, and millions in users’ money was stolen. Within two years, Cronje the god became Cronje the rug-puller as his worshippers turned on him.

“That’s the problem with being a god,” he said. “You’re not allowed any iterations anymore. You’re not allowed to make mistakes.”

He was hunched forward on a dark grey sofa in the sprawling basement of a rented villa in Dubai - a home so vast it has its own elevator. He left for a hotel a few days later, driven out by construction noise, but he’ll call the city home for the foreseeable future. He declined to be photographed for this story.

Conversations with Cronje and those closest to him reveal a complex figure - he adopted stray animals as a young computer prodigy in the university town of Stellenbosch, in South Africa’s Western Cape province. He was bullied at school and harboured dreams to argue cases as a trial lawyer.

But it’s easy to get dizzy following Cronje’s moral compass. He contradicts himself, expressing regret for those who lost money on his projects, but suggesting that they only have themselves to blame. “Rug pull” is a broad term - it means anything from outright theft to the abandoning of a project, leaving users holding tokens of little value. Cronje said he has never rugged anyone: “Not once, never.”

He is in turns sad, thoughtful, defensive, and deeply funny. He doesn’t ride in his home elevator. “I don’t like risk,” he deadpanned.

But hours into the interview, it’s hard to tell if he believes what he is saying. It brings to mind the words of Colonel Flagg, a satirical CIA character from the ‘70s TV show M*A*S*H: “Nobody can get the truth out of me because even I don’t know what it is. I keep myself in a constant state of utter confusion.”

Now Cronje’s on the brink of another comeback - he’s rejoining the Fantom Foundation, which oversees the open-source smart contract platform Fantom, and has goals of building a traditional bank, but for crypto. His remaining flock of followers hopes he can help them through the crypto ice age. How will he shoulder the burden?

Yearn for change

Flash back to early 2020, when DeFi was first gaining steam. Cronje won over developers with iearn.finance, now known as Yearn.

Yearn made waves because it automated yield optimisation. With yield optimisation, users can earn serious money investing their crypto in DeFi protocols for lending or trading, and certainly did during the sunnier days in crypto. But chasing returns this way, a strategy known as “yield farming,” can be laborious.

Research firm Nansen found that most yield farmers abandon protocols after two to three days. Timing is key. The best yield farmers know exactly when to rush in - or “ape” - and when to go to the next protocol. Yearn was able to automate the task - letting users pool their cryptocurrencies in smart contracts, called vaults, and rotate them in and out of protocols including dYdX, Aave, and Compound.

Yearn truly took off after the launch of its token, YFI, in July 2020. Cronje won acclaim for what was branded a “fair launch,” meaning anyone who deposited liquidity in one or both of two pools - Curve yPool and YFI Balancer - within the first week, was able to claim tokens.

In an atypical move, Cronje did not allocate any YFI tokens to himself, the team, or investors in the know. According to Michael Chen, adviser and former chief marketing officer of the Fantom Foundation and a Cronje collaborator, there were only two people who knew about YFI before it launched: Chen and the man known only as Ivan from LobsterDAO. So if Cronje was in it for the money, he didn’t show it with YFI’s debut.

Such a move won over die-hard devs and armchair investors alike, and was true to the core principle of DeFi. Yearn was perceived by many as truly decentralised. But, as others pointed out, Cronje, via a controlling smart contract - or central clutch of code on the blockchain - had the power to be a conductor behind the scenes.

In crypto lore, Yearn turned armchair traders into millionaires overnight. The truth is murky, but more than a half dozen Yearn and YFI YouTube get-rich-quick tutorials sprung up, and the project cemented Cronje’s star status.

A lot of devs can’t articulate system designs into words. He really walks on both planes.

On July 16, 2020, the day before YFI was released to the public, Yearn had $8.1 million worth of cryptocurrencies locked into its smart contracts - a DeFi metric known as total value locked, or TVL, according to DefiLlama data. By that August, TVL had risen to $1.5 billion. At its peak in December last year, YFI’s TVL was nearly $7 billion.

“I have yet to find yield farming that reached one one-hundredth of what was put out” with Yearn, said Token Brice, a pseudonymous DeFi expert and DL News affiliate. “Absolutely stupid gains.”

Spotting, and critiquing weaknesses in code is a sport in DeFi, and Cronje was a pro at that, too - it’s how he got into the industry. Former colleagues described him as a genius developer, able in hours to solve problems that had stumped entire teams. And he could explain it all clearly and concisely. “A lot of devs can’t articulate system designs into words” like Cronje is able to, said Matt Visser, his friend and collaborator. “He really walks on both planes.”

Yearn wasn’t Cronje’s first venture in crypto. Cronje joined as technical advisor and core developer at The Fantom Foundation after an August 2018 meeting at The Shilla hotel in Seoul. Fantom, an open-source smart contract platform for decentralised applications, called dApps, and digital assets, was touted as a network able to rival the dominant blockchain Ethereum.

Early on, Cronje said, he spotted problems, including the project’s lack of developer talent needed to take on Ethereum’s lightning-speed transactions per second.

By 2019, overspending, exorbitant listing fees, and a crypto winter left the foundation with very little of the $40 million it had raised during the ICO craze of 2018. But Cronje persisted with the project.

“I’m not 100% sure why I kept helping at that time,” he said.

During a March 2019 appearance on the Oh Hey Matty podcast, he was asked why so few developers listed on the Fantom website were able to code. Those people were gone, Cronje told the host, saying the project was in excellent shape. He began working on Yearn months later.

The Blue Pill depicts Cronje as a wise philosopher, and fans have portrayed him as Jesus and the all-powerful Marvel villain Thanos.

YFI helped propel Cronje to fame. His Twitter base exploded from less than 5,000 followers in July 2020 to more than 110,000 by February 2021.

Then came deification. In July of last year, Yearn published an odd tome, The Blue Pill, a 104-page e-book that opens by identifying its version of God, a beneficent saviour, who happens to be Cronje himself:

“No one designed Yearn. It emerged from Andre’s gift of all the YFI,” goes one line.

It gets weirder from there, but The Blue Pill also captures the culture of DeFi: the convergence of social, political, and financial interests, with a community of evangelists that - many lament - tend to gravitate to Messiah figures.

Visser says Cronje became one of them.

“He has acted as a saviour for many, many people,” Visser said.

The Blue Pill depicts Cronje as a wise philosopher, and fans have portrayed him as Jesus and the all-powerful Marvel villain Thanos.

But Cronje says he wasn’t prepared, and was “miserable.”

“I was no longer allowed to have faults,” he said. “One of the things that I always liked was that I would speak my mind, no matter what.” That habit suddenly became a liability.

In the beginning

Cronje grew up in a nuclear family - mother, father, sister, pets - in what he described as a “cookie-cutter, white-picket-fence” upbringing.

At the time, his father was a natural sciences teacher, his mother a librarian. His sister Tanja, who is five years older, recalled a “sweet baby brother” who loved animals and the outdoors. Her brother’s critics have made threats against Cronje’s family, leading Tanja to request that DL News not use her surname.

According to Tanja, Cronje was creative and intelligent, and he didn’t need to study to notch up good grades. He became more of a loner as he got older, playing video games with a tight-knit group of friends, she said.

I got bullied a lot. I was a really pale, fat, nerdy kid, I went to a proper sports jock school.

Cronje offered a blunter assessment.

“I got bullied a lot. I was a really pale, fat, nerdy kid, I went to a proper sports jock school.”

In early adolescence he began coding small video games like Hangman, in a programming language called Pascal. In his first computer science class in ninth grade, he ran into what would become a recurring problem: no one could keep up with him. In this case, it was the teacher, with whom he had “massive clashes.”

Cronje had dreamed of arguing cases as a courtroom lawyer. He studied law at the University of Stellenbosch, but lost interest quickly.

“The only thing that kept me going was when we had mock trials. But that was less than 2% of what we were actually doing.”

He still dreams of worthy debate opponents who won’t crumble during confrontation. But a courtroom is a controlled environment. DeFi, and the internet that houses it, is a free-for-all. The ugly side of online celebrity got to him.

In the lead-up to YFI’s launch, Cronje had already been struggling with a growing fanbase and the critics that tagged along. Online trolls led him to retreat from the industry altogether before YFI even launched: “The community is hostile, the users are entitled,” Cronje wrote in a February Medium post that year..

He returned, but disasters began to hit his projects.

The beginning of the end

In September 2020, Cronje tweeted designs for a new project called Eminence, which he touted as a platform for online game developers, contributors, and players. Eminence was still in development — the contracts weren’t tested or secured — but eager users seized on the possibility of YFI-esque gains and piled in.

Hours after Cronje’s tweet, while Cronje said he was sleeping, an attacker stole $15 million. The issue, Cronje said, was his preference for a tactic called “test in prod” - akin to plugging holes in a boat while out at sea. A seasoned dev can, and indeed did, spot a coding mistake and exploit it for profit. The hacker was able to pump up the price of Eminence’s native token in a “flash loan” and then sell it quickly before the price collapsed. The attacker then sent $8 million to a wallet controlled by Cronje, making it look as if he was connected to the exploit. Cronje said he didn’t steal the money, but his reputation was in tatters. Threats of a user-led lawsuit fizzled out.

You know what, if you lost money on this, fuck you.

DeFi’s features are also its bugs. No one is in control, no one is to blame, and users face risks on their own. You don’t like it? Put your money in a bank. This is DeFi. Test in prod is “a statement,” he said. “‘Here be dragons.’ If you don’t double check what’s going on in your blind spots, you are going to get eaten.”

“We didn’t publicise those contracts,” said Cronje. “I did not tell anyone to use the stuff. And that was sort of, you know what, if you lost money on this, fuck you.”

And yet Cronje says the Eminence hack exposed a new “duality.” He added: “People lost money because of me. And that’s not something I could reconcile.”

Then came C.R.E.A.M. Finance, named in homage to the Wu-Tang Clan song. Cream was a lending protocol, where users deposited crypto as collateral to borrow against it. In 2020, while he worked at Yearn, Cronje said in a Medium post that Yearn “teamed up” with Cream on an update to the protocol. He told DL News that he joined as an adviser to Cream after it was beset by hacks and exploits - $38 million was stolen in February 2021, $19 million in August 2021, and $130 million in October 2021.

Things got worse this year when Cronje joined forces with Daniele Sestagalli, who goes by the name Dani.The two planned to launch a project called Solidly. But Sestagalli revealed in January that he had also been collaborating with Omar Dhanani, known online as Sifu, who changed his name to Michael Patryn. Dhanani in 2005 pleaded guilty to conspiracy to commit credit-and-bank-card fraud and identification-document fraud in the US.

Dhanani later joined forces with Canadian crypto exchange Quadriga co-founder Gerald Cotten, who died unexpectedly in 2019. Hundreds of millions of dollars in investor funds disappeared with him. Dhanani wasn’t accused of wrongdoing related to Quadriga’s collapse.

Solidly went live in February 2022. An automated market maker, it was meant to incentivise fee generation and reduce the slippage between the expected price of an order and its actual price at execution, to enable low-cost trades. Sesta was the hype guy, Cronje was the builder.

But a bug in the code meant the features touted by the developers never materialised. Cronje announced he was leaving the project less than three weeks after it launched. Solidly’s TVL, which had peaked at $2.3 billion, fell by $370 million the day of his announcement. It never recovered, sinking to less than $20 million by June.

“If that’s their definition of rug, in terms of they expected to make money, but they didn’t, and therefore I wrecked them, I accept the definition,” said Cronje.

It’s Cronje’s curse, says Token Brice , a word Cronje says he accepts. Brice said Cronje is able to create “a whole new type of product which did not exist before,” but rushes, and bungles the execution.

Visser viewed it differently.

“Over-dependency on system players who are not code, that’s where all the fuck-ups come from,” he said. “If all the players and cohorts behaved as reliably as Andre’s code, he’d be the master of the universe.”

The downfall

In April, Cronje did the unthinkable: He called for regulation of DeFi.

Regulation flies in the face of everything DeFi stands for - autonomy, user control. It was the last straw for a community battered by the Terra/Luna collapse and Solidly’s shortcomings. Backlash was severe - a torrent of angry posts flooded Telegram and Twitter. Cronje once again announced his retirement, deleted his Twitter, and went quiet.

I can’t stop this. There’s nothing I can do short of wiping out the internet.

But he broke his silence in October, again calling for laws in DeFi to match the safeguards found in traditional finance.

The FTX collapse came mere weeks later. Regulators joined in his rallying cry.

“The intersection between CeFi and DeFi needs to be regulated,” he said. Once a project is live, it’s like the internet itself. No owner, no boss. “If you try to regulate these immutable contracts, the regulator goes to you, ‘Okay, you need to stop that.’ And then you tell him, ‘I can’t stop that.’ And then he’s like, ‘Okay, well, we’re gonna put you in jail if you don’t stop it.’ I can’t stop this. There’s nothing I can do short of wiping out the internet.”

Cronje reflects on the mark he has made, and how much control he or anyone else can have, in the Wild West of DeFi.

But all his money came from investing in crypto and yield farming, he said. He notes that his name is mentioned in the same breath as Do Kwon, founder of blockchain platform Terraform Labs who has a warrant out for his arrest in South Korea; and Kyle Davies and Su Zhu, co-founders of the multi-billion-dollar crypto hedge fund Three Arrows Capital, which collapsed in July.

“That rips my soul apart. I gave everything I could to this industry by trying to show them you can launch tokens differently,” Cronje said. “And that’s my legacy?”

I have no more faith in any humans. I don’t trust anyone anymore. I don’t think anyone behaves in anyone’s best interest unless there’s a transactional incentive.

And yet, despite the backlash and disillusionment, he’s planning another comeback, announcing in October that he’s working with Fantom again. Its war chest has been replenished, with funds including some $100 million in stablecoins.

Another big project might help explain recent calls for regulation.

Visser said he and Cronje have plans to develop what they call the Universal Assets Bank - an international, regulated crypto bank.

“We’re going to build the future of what finance needs to be,” Visser said.

Yet Cronje’s own future seems uncertain, and life in the limelight has left scars.

“I have no more faith in any humans. I don’t trust anyone anymore. I don’t think anyone behaves in anyone’s best interest unless there’s a transactional incentive.”

It was impossible to tell whether he was talking about himself.

And his advice to anyone daring to fill his shoes? Don’t do it. And if you do, stay anonymous and guard your privacy.

“Regulation for developers is going to become harsher and harsher,” he warns. “After you’ve deployed those contracts, you can’t do anything to them. You basically need to be willing to go to jail.”

A previous version of this article incorrectly stated that Michael Chen is CMO of Fantom. He is now an adviser. It also stated that Cronje was a developer on Cream. Cronje’s links to Cream have been updated to reflect his 2020 Medium post on a Cream project and his statement that he was an adviser to Cream.