Fantom Ecosystem Coins, DeFi Value Locked Plunge After Developer Exit

Investors reacted to the exit of an influential Fantom developer Andre Cronje.

AccessTimeIconMar 7, 2022 at 10:48 a.m. UTC
Updated Mar 7, 2022 at 8:44 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Add developer exits to the list of fundamental issues that could make or break tokens that power crypto projects.

Tokens of the Fantom ecosystem dropped as much as 33% in the past 24 hours after influential developer Andre Cronje called it quits on developing decentralized finance (DeFi) projects, a multibillion-dollar crypto sector that relies on smart contracts instead of third parties to provide financial services like trading, lending and borrowing

Investors initially started to react as Cronje – who had served as an adviser to the Fantom Foundation since mid-2018 – updated his LinkedIn bio to reflect the end of his tenure at the foundation last month.

Business partner Anton Nell then confirmed the exit in a tweet.

“Andre and I have decided that we are closing the chapter of contributing to the defi/crypto space,” Nell wrote. “There are around ~25 apps and services that we are terminating on 03 April 2022.”

FTM lost 30 cents in the following hour as the tweet went viral. Reactions were mixed, with some supporting the move and others seeing it as suspicious. FTM fell as much as 18% in the past 24 hours, dropping to a weekly low of $1.32 in early Asian hours before slightly recovering to $1.42 at the time of writing.

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FTM tokens dipped to support levels in early Asian hours. (TradingView)

The drop contributed to an exodus of the total value locked (TVL) in Fantom-based DeFi protocols, which have slumped 20% in the past 24 hours. TVL on decentralized exchange SpookySwap and lending platform Scream dropped over 21%, while recently released Solidly – which Cronje was part of – lost 42% in TVL, data from DeFi Llama show.

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Millions of dollars' worth of tokens left Fantom-based projects in the past 24 hours. (DeFi Llama)

Fantom ecosystem tokens plunged with the drop in FTM prices even though there's no apparent connection between their related projects and Cronje. In the past 24 hours, SpookySwap’s BOO tokens lost 16%, SpiritSwap’s SPIRIT fell 21%, and Scream’s SCREAM tumbled 30%.

Solidly’s SOLID tokens took the biggest hit, with prices dropping to as low as $0.80 on Sunday before recovering to $1.29. The price is now down 92% from highs of $15 in February, data show.

Overall, Fantom ecosystem projects lost $1.5 billion in market capitalization, data from analytics tool CoinGecko show.

Meanwhile, some investors said Cronje’s exit won't mean the end of the projects he worked on because the underlying smart contracts continue to exist.

“While Cronje’s departure from crypto and DeFi is undoubtedly a great loss, the developer has helped build the projects in a way that will allow them to function without him,” Dmitry Mishunin, founder of a DeFi analytics company HashEx, wrote in a Telegram message to CoinDesk.

“Since they are deployed as immutable smart contracts, there is no way to shut them down, so as long as there is a community to run them, the projects will survive,” Mishunin said.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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