Crypto News
7 Mar 2022

DeFi Pioneers Quit Crypto: What it Means for DeFi Tokens and Total Locked Value

Ananda Banerjee

On 6 March 2022, crypto legend Anton Nell tweeted something that broke the internet. He announced that he would be exiting the crypto space, taking his Fantom co-founder Andre Cronje—the “Godfather of DeFi”—along.

The Dark Knight dialogue “You either die a hero, or you live long enough to see yourself become the villain” seems appropriate today with the departure of the stalwarts—probably for good. Investors sweating, HODLers panicking, and traders flop sweating—it surely is a lot to take in. So here we are to help you as you try to wrap your head around it all. 

Key Takeaways

  • Andre Cronje and Anton Nell left the crypto space, triggering quite a few alarms.
  • As a result, 25 dependent blockchain-specific apps will cease to exist from 3 April 2022.
  • Despite speculations, their controversial exit isn’t a rug pull.
  • Projects like Fantom (FTM), Yearn Finance (YFI), and a few more have been losing gains consistently.
  • The market is likely to start showing some bullish strength and recover.

Andre Cronje and Anton Nell’s departure from cryptoland brings an abrupt end to their roles in some of the leading projects like Fantom Network, Solidly, Yearn Finance, and more. The news has tanked several unwitting crypto tokens, leaving investors in the lurch for now. But there is much more brimming beneath the surface of these fateful controversial exits.

Here’s presenting all we know about these pullouts—the triggers, the current state, and the road ahead for investors.

Why Cronje and Nell Leave Behind a Massive Void

To begin to understand the significance of this latest piece of news in the world of crypto, it’s best to take it slow—one step at a time—and begin with the basics. So bear with us.

Who Are They?

The founder of Yearn Finance—a popular Ethereum-based DeFi platform—Andre Cronje took up the role of a Technical Advisor for the Fantom Foundation, where he met co-developer Anton Nell.

For the unversed, Anton Nell is (was) Fantom Foundation’s Senior Solutions architect at the time. He is considered one of the prime DeFi pioneers along with Andre Cronje.

Cronje and Nell worked extensively towards making the Fantom Network (FTM) a household name. They even announced the Ve (3,3) project on the Fantom Network early this year, foregrounding its AMM (Automated Market Maker) and Emission Incentivizing capabilities (a technique to ensure a balance between the locked tokens and circulating tokens in an ecosystem).

But if they were working on an era-defining project, why did they leave all of a sudden?

Reason for Exit

Short Story: Andre and Anton exited the crypto space citing burnout issues. 

But there is a lot more to it than just a statement. Here is everything that led to the decision. 

Long Story

Cronje was never an outspoken guy. He preferred developing products and staying behind the scenes. Even with ve (3,3), he wanted to focus on building it up while leaving the hype-creation and marketing to Danielle Sesta.

Things went swimmingly until Danielle had to step down to focus elsewhere. Danielle leaving meant that Cronje had to take marketing calls and come out in the open.

The increasing hubbub pissed him off and eventually impacted the performance of the existing FTM protocols. The reception towards his newly launched Solidly Exchange, a Decentralized Exchange built atop the Fantom Network, wasn’t sympathetic either.

Amid the chaos, Cronje, in late January this year, drafted an open letter. He expressed anguish about and disappointment in the current state of affairs in it. The crypto noise got to him, and he ended up updating his LinkedIn profile—terminating tenures in Fantom and Yearn Finance.

Anton Nell followed suit, dropping a tweet bomb on 6 March:

Anton Nell Tweet

It is important to note that Cronje and Nell leaving crypto isn’t a knee-jerk reaction to the hate received upon launching the Solidly project. Instead, it is more of a frustration release, which Cronje’s Twitter theatrics have been teasing for quite some time now.

There is no reason to assume that the exit was simply due to burnout from the relentless work that went into Solidly.

Impact on Connected Projects: It’s all “FUD”dy

Fantom (FTM) crashed by over 20% immediately after Nell broke the news on Twitter. The massive drop in token value also impacted the network’s Total Locked Value (TLV), which plummeted by 21% on 7 March 2022.

But FTM nosediving wasn’t the end of investor woes. Here are some of the other things that followed the exists:

  • Yearn Finance (YFI) dropped by almost 10% on 7 March 2022.
  • As of now, FTM TVL is already down by 40% compared to that on the 3 March.
  • The TVL of the Solidity Exchange was at $735 Million on 7 March, down by close to 70%.
  • Keeper, an automation platform, nosedived by 25% compared to March 6 levels.

With major DeFi platforms losing TLV faster than expected and tokens shedding gains like there is no tomorrow, the fact that Andre Cronje’s exit produced a ripple effect cannot be discounted. The FUD (Fear-Uncertainty-Doubt) quotient is high, and there is no denying that.

Is it a Rug Pull?

The term “Rug Pull” is usually used to refer to unscrupulous crypto projects wherein the developers back out once enough money comes in, leaving investors high and dry. Cronje and Nell exiting the crypto space is more of a call for help amid frustration and burnout rather than a rug pull.

That said, one must also clarify that there are two kinds of rug pulls: the hard and soft kinds. While the hard ones are meant to defraud and therefore illegal, the latter is an unfortunate but undesigned outcome. So yes, in all fairness, it does look like a soft pull, and the price action, for now, is expected to be rough.

However, if investors hang in there, the projects losing TLV and tokens losing gains might steadily bounce back to normalcy. 

Facts to Supplement our Belief of a DeFi Recovery 

FTM’s active address count has started picking up despite the tanked prices. This on-chain metric shows that people are getting hold of FTM at lower prices.

FTM active address

Source: Santiment

*Insights mentioned are time-sensitive. DYOR recommended. 

Exchange Flow Balance (EFB) is yet another on-chain metric that is still barely positive for FTM. This finding means that FTM entering the exchange is still higher (only slightly) than FTM leaving the exchange. HODLers are still keeping a tab on panic selling despite the FUD all around.

Exchange Flow Balance
Source: Santiment

If the EFB value goes deeper into the positive territory, we might see FTM recovering over time. 

*Insights mentioned are time-sensitive. DYOR recommended.

Should Investors Be Concerned?

Not really, as Chuck Noll says, “Everyone’s job is important, but no one is indispensable.”

Yes, Anton Nell dropped a loud Twitter bomb, announcing the termination of almost 25 apps on diverse blockchain networks. And this announcement, quite expectedly, triggered panic within the DeFi community.

But key DeFi platforms like Fantom and Yearn Finance are asking investors to keep an open mind. Fantom Foundation went one step ahead. It released a comforting statement for the panic-stricken investors.

FTM Tweet

Banteg or Artem, Lead Developer, Yearn Finance, also tweeted that Cronje’s exit wouldn’t have any negative impact. 

YFI tweet

Simply put, the positive tweets and sentiments indicate a few key developments (keeping the investors in mind):

  • Fantom network has several resilient developers to keep the projects running as usual.
  • DeFi, as a niche, doesn’t live-die with Cronje and Nell.
  • Most of the bigger projects running the apps are bound to correct, but they will be fine in the medium to long run.
  • There is always someone else in the crypto space to pick up the torch.

The Road Ahead for Investors

Rug pull fears triggered massive sell-offs over the past few days. Fantom Network had to bear the brunt as people rushed in to withdraw holdings. Hence the higher exchange inflow and barely positive EFB.

In an already bearish market—caused in large part by the geopolitical crisis—the news of Cronje and Nell exiting wasn’t taken very kindly. As a result, every DeFi token available at CoinSwitch is in red.

The space saw the “DeFi Godfather” leaving. We should give it time to grieve.

However, it is FTM and YFI that are still seeing sell-offs. And they are down by 17% and 10% respectively, at press time. The prices have dipped, but the utility of these tokens and crypto projects is still very much intact.

Wrap-Up

For now, at CoinSwitch, we would want you to look closely at the market, follow the DeFi tokens from the sidelines, and wait for the crypto space to assume a clear upward trend before taking investment-specific calls. At present, DYOR is the best way forward.

And yes, if you are a Cronje or Nell fan, do not lament just yet. People like them are fastidious but not indifferent. They are builders, and despite the tardiness, they will come back to the crypto space in one way or the other. It is just a matter of time.

FAQs

Q1. Why is your current DeFi Portfolio deep in red?

A1. Leading DeFi architects—Andre Cronje and Anton Nell—announced that they would be closing down nearly 25 DeFi apps on specific blockchains. This news isn’t all that great in the short term and seems to have triggered alarm bells. Investors are selling their holdings in droves, causing the DeFi-driving crypto assets to show weakness.

Q2. Should you sell now? If not, what should you do?

A2. Panic selling due to a sentimental move isn’t recommended. You should hold on to your assets and DYOR for now. Also, there are several geopolitical issues in play complementing this abrupt DeFi-specific development. The only way to scale beyond the uncertainties is to be patient. 

Q3. What’s wrong with Fantom (FTM) and Yearn Finance (YFI)?

A3. Andre Cronje was closely associated with Yearn Finance. Along with Anton Nell, he also worked on several Fantom-based projects, including the Solidly DEX. Therefore, upon receiving the news of their unanticipated exit, these crypto projects took massive hits, losing about 17% and 10%, respectively.

Interested in learning more about similar global crypto-relevant events and developments. Read more at CoinSwitch and stay one step ahead of others.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Ananda Banerjee

Content Writer

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