Andre Cronje, the so-called “Vice President of Memes” at the Fantom Foundation, provided an insider’s view of how the company has maintained positive cash flow over the last 4 years.

The developer noted that the foundation would “probably not be operational today” without decentralized finance (DeFi), and suspects the same is true for other companies.

Escalation in a cycle

What explained In a Cronje blog post on Sunday, Fantom ended 2018 with a rather unprofitable ETH exchange. After raising $40,000,000 worth of cryptocurrency in June, he sold what he held after a major price correction before December. At this point, the company had less than $5 million left.

This forced the company to become extremely frugal over the next year, while periodically selling some of its native FTM tokens to fund unplanned expenses. His main costs during this time were related to paying listing fees to exchanges and endorsement fees to influencers.

“We decided[d] never pay for exchange listings or influencers again,” Cronje wrote.

Starting in February 2020, Fantom began “aggressively” participating in DeFi, using its profits to buy FTM off the market. By March, the company was already earning 20% ​​APY on $3 million in funds, which is $600,000 per year. Combined with yield farming later that year on both Compound (COMP) and Synthetix (SNX), the foundation recouped its treasury holdings to $51 million in early 2021.

The company later sold FTM worth $35 million to the now bankrupt Alameda Investigation, and another $5 million of the asset for Blocktower. He denied Alameda’s requests for further cooperation in the future.

By October 2022, the company had $100 million in stablecoins, $100 million in crypto assets, and $50 million in non-crypto assets.

Like Fantom, many crypto companies were forced to reduce the size when the bear market returned in 2022. Coinbase cut 18% of its workforce, while BitMEX laid off 30%.

Learned lessons

According to Cronje, companies should not try to compete with others for token listings on exchanges. “We prefer to buy our token, we don’t “sell” our tokens for “partnerships”, he said.

“Blockchain companies realistically only make money by selling their token,” Cronje added. “These are finite models.”

Rather, the foundation took an approach of focusing on “infinity” models, including how given partnerships or project launches might affect the company ten years down the line.

“If your entire revenue model is selling your token, you are doing a disservice to yourself, your blockchain, and your supporters,” he concluded.

Earlier this month, both FTT and SRM crashed 90% and 60% respectively after FTX filed for bankruptcy. The company has been heavily criticized for relying heavily on each of these tokens, which once accounted for billions of dollars on its balance sheet.

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