Andre Cronje Quits DeFi, Leaving Projects Worth Billions of Dollars in Jeopardy

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Andre Cron­je has quit “con­tribut­ing” to the DeFi and cryp­tocur­ren­cy sec­tors, days after his new project faced crit­i­cism over a secu­ri­ty flaw that alleged­ly caused user funds to dis­ap­pear from liq­uid­i­ty pools.

Cron­je, the famed cre­ator of Yearn Finance and Keep3r, quit togeth­er with fel­low Fan­tom soft­ware archi­tect and long-time part­ner Anton Nell, accord­ing to a tweet post­ed on Sunday.

Announc­ing the deci­sion, Nell said that around 25 decen­tral­ized finance (DeFi) appli­ca­tions will be “ter­mi­nat­ed” start­ing from April 3.

These include pop­u­lar pro­to­cols Yearn Finance and Keep3r Net­work, Bribe Finance, Solid­ly (a new project that went live on Feb. 24 hit­ting $2.24 bil­lion in total val­ue locked in three days), and others.

Ana­lysts warned that Cronje’s sud­den depar­ture could put bil­lions of dol­lars of investor funds at risk.

Nell wrote:

“Andre and I have decid­ed that we are clos­ing the chap­ter of con­tibut­ing to the DeFi/crypto space. There are around 25 apps and ser­vices that we are ter­mi­nat­ing on 03 April 2022.”

Nell said the deci­sion has been com­ing for some time. He point­ed to a blog post pub­lished by Cron­je in Jan­u­ary last year, “Build­ing in DeFi Sucks”, as more than an iso­lat­ed rant.

“Unlike pre­vi­ous ‘build­ing in DeFi sucks’ rage quits, this is not a knee jerk reac­tion to the hate received from releas­ing a project, but a deci­sion that has been com­ing for a while now.”

DeFi tokens crash

Andre Cron­je did not respond to a request for com­ment from BeInCrypto.

Prices of tokens linked to the devel­op­er fell sharply fol­low­ing the news. Yearn Finance token, YFI, slumped 13% to $17,719 but has since pared the loss­es, accord­ing to CoinGecko data.

SOLID, the native token of Cronje’s new pro­to­col, Solid­ly Exchange, plunged 66% to $1.14, as at the time of writ­ing. Fan­tom (FTM) tanked 16% to $1.40.

The total sum of assets man­aged under the Fan­tom pro­to­col has fall­en by more than $4.4 bil­lion since March 3, the time of Cronje’s sup­posed exit.

Over the pre­vi­ous 24 hours, Fantom’s total val­ue locked has dropped 15% to $6.93 bil­lion, per data com­piled by DefiLlama.

Cronje quitting could cost billions, worse than Dani Sesta debacle

Rumors about Cronje’s depar­ture start­ed cir­cu­lat­ing on Twit­ter on March 5 after updates to his LinkedIn page showed the pro­lif­ic coder had left Fan­tom Foun­da­tion, Yearn Finance, and the Ethereum local community.

Ear­li­er in the week, Cron­je delet­ed his Twit­ter account with­out expla­na­tion. Michael Kong, the CEO of Fan­tom, con­firmed that the devel­op­er was step­ping back from pub­lic life “for the time being” because he was “get­ting too much hate.”

The sit­u­a­tion has led some ana­lysts to warn that bil­lions of dol­lars of investor funds may be at risk.

“What are the impli­ca­tions of ‘ter­mi­nat­ing’ active projects that peo­ple are using and have invest­ed in?,” cryp­to ana­lyst, Shiv­asak Huja, quipped rhetorically.

“If it means these projects are shut­ting down, then Andre just pub­licly rugged sev­er­al mul­ti-bil­lion-dol­lar projects. Projects don’t need to die when the lead devs quit. This is a mess, even worse than Daniele Sestagalli’s deba­cle. Decen­tral­ized projects led by cult fig­ures with inflat­ed egos have sim­i­lar risks as cen­tral­ized projects.”

While projects may con­tin­ue to exist on-chain even after the founders leave, Cronje’s sud­den depar­ture could have unex­pect­ed outcomes.

It may lead to investors “dump­ing” assets en masse, caus­ing prices to fall. Some projects may even col­lapse, say, analysts.

Lar­ry Cer­mak, vice pres­i­dent of research at The Block, called the deci­sion by Cron­je and Nell “pret­ty insane”.

“Unless just some reg­u­la­to­ry psy­ops and com­ing back as anons, this is pret­ty insane. The deci­sion has been com­ing for a while now but Solid­ly just launched a few weeks ago…lol,” he mocked in a tweet.

“I get the con­tracts are not upgrad­able and no admin nec­es­sary but that still doesn’t mat­ter much in DeFi. Atten­tion spans are short.”

Solidly security issues

The deci­sion by Cron­je to quit DeFi comes hard­ly a week after some users alleged that a bug in the Solid­ly Exchange smart con­tracts allowed funds to dis­ap­pear from liq­uid­i­ty pools.

Users may have lost hun­dreds of thou­sands of dol­lars swap­ping between assets on the plat­form. Cron­je refut­ed the claims as false, stress­ing that no funds had been lost from the protocol.

“There have been no smart con­tract bugs iden­ti­fied in any of the live con­tracts,” he said at the time, blam­ing users for “trad­ing via pairs that don’t have liquidity.”

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