It does not come easy to say that my time at Rari Capital has come to an end. What started as a side project to occupy my quarantine quickly became something larger than I could have ever imagined. The past two years have been the best of my life and the DAO has been at the center of it all. In fact, I have only ever bought $RGT and $TRIBE since the protocol’s conception; I have never sold even one because I felt it was a part of me. Thank you to everyone, big and small, who has been a part of this journey.
In March of 2020, I was fascinated at the explosion of yield opportunities in this nascent industry, DeFi. With tons of newfound free time thanks to the coronavirus, I called a couple of friends, David Lucid and Jack Lipstone, and began work on a centralized yield aggregator. We called this Farmers Fund. Early quarantine was defined by switching between High School on Zoom and my more exciting work at Farmers Fund.
It was just the three of us: David was writing the code, I was designing the strategy and Jack was managing operations. It was fun, a lot of fun. It took just a couple weeks till we realized the potential of a powerful and trustless yield aggregator: we could actually change people’s lives delivering meaningful yield over an average savings account. Given our desire for impact, we decided to switch to smart contracts as we understood that many people wouldn’t be able to run a server to access the first version of Farmers Fund. Since David had built smart contracts before, it was an exciting plan.
April was full of building. Justin Yu (a friend from my high school) texted me asking for summer opportunities and I asked him to join us as an analyst, doing the math on the best yield strategies in the space. It is in this month that we decide to switch to being called Rari Capital (after an attempt at Rari Asset Management).
July was Rari’s public launch.We received a grant from 0x to help pay for a security review. While we had that one review, we wanted to be extra cautious so we launched with a $350 address deposit limit. This first version was basically just a smart contract that moved capital between dYdX, Compound and Aave. Within a couple days of launch, we hit $10,000 TVL. This was the coolest thing ever at the time to see that technology that we created had secured more than $10k. And this was just the beginning.
At this time, DeFi Summer became the hot thing. While we initially considered pursuing venture capital, we opted to be a pure community-owned project. While Yearn (our primary competitor) attracted tons of crypto twitter attention, we continued our grind and began work on our decentralization plan. At this point Transmissions11 joined the team and infused us with a new source of energy. At this point, Rari Capital was still just a fun project for me and a few of my closest friends.
It was in October that things started to change. We set out to drop a token and be a completely community-owned project. The team had less than 10% cumulatively and more than 87.5% was being distributed to the users of the platform over 60 days. Those who questioned our willingness to give so much ownership to the community failed to understand that Rari was always about building something great - it was never about the financials. Rari’s TVL grows from ~$20k to nearly $95M all in this one month. I remember driving to a friend’s house one night and constantly reloading the site just to see the TVL rise. I was filled with energy and excitement, it seemed like Rari was at the center of the universe - when in reality, most of our users and our community were just around to farm our token.
In December, Jet Jadeja joined the team to begin building projects on top of the yield aggregator. His enthusiasm for all things Rari continued to feed the excitement that the entire team felt. Then, liquidity mining ended. Our TVL began to shrink slowly, then all at once. There was one user who had tens of millions of dollars inside Rari for a few weeks after farming ended, and this user unintentionally provided working capital for the audits of Rari’s next major product - Fuse.
Before we even got to Fuse, Rari, myself included, was in a confused spot. It became clear that liquidity was mercenary and nobody actually gave a shit about any protocol. We had a weird phase when we were planning on outsourcing yield management to Enzyme Protocol and directing all yields to charity while we figured out our own plan. Then we realized in order to reach PMF, we’d have to own more of the stack, a single protocol isn’t a viable business and has diminishing returns. This started the updated vision of: Rari Capital, manifest destiny. At this point our TVL had shrunk, our team was balancing online school and Rari Capital - but we had more energy than ever before.
Near the end of the year, we have a serious discussion about our focus. We were stoked about this idea of manifest destiny and had 1000 different directions to take it. At the same time, our proposals to list our yield aggregator tokens and governance token onto Compound Finance and Aave were ridiculed by their respective communities. I don’t blame them, we were a tiny project (sub-million dollar market cap I think). That’s what led to the idea for Fuse. We intended to make it so anyone can build their own lending and borrowing market, completely permissionlessly. I instantly called David to explain to him the idea and after going back and forth for 20 minutes, we realized its power. We subsequently shared our idea with the rest of the team, and excitement built. We decided Fuse would be our primary focus, it would be our updated shot at the goal.
David began work on the protocol and I thought further about the societal implications about this technology. Fuse made it so anybody (nobody can tell you no!) could borrow and lend anything (assuming it was tokenized). This would spell the end of legacy banking, credit scores, etc. This would change the world.
We begin talking about Fuse to various of our friends. Many of them were bearish about the idea, worried about liquidity fragmentation or inability to attract assets to the platform. But there was a growing population that understood its potential. After plenty of Twitter teases, I published “a prelude to Fuse” in February of 2021 which described the product at a very high level. Soon after, in March we hosted a live Zoom event to demo and launch Fuse. Over 300 people attended the event. The Rari Capital community had blossomed into something so powerful. This was one of my favorite days in Rari’s history. You could feel the energy and excitement just being in that Zoom. It really felt magical.
After that exciting event, it was pretty dull. We were expecting something massive to happen when the public got their hands on it, but I think a lot of people were just confused. Then, the DAO kickstarted the protocol with a few hand-made pools and suddenly it clicked for people. We spent days on the phone with DAO’s, whales, institutions to talk to them about Fuse and show them its power. TVL started to grow naturally, a sign of PMF. Over the course of a few months, Fuse hit $100m TVL. A massive milestone.
Then May 2021 happened…the hardest month of my life. My phone died one night and I woke up, plugged it in and thought it was going to be a normal day. I wake up to 100+ missed calls from friends, family and co-workers. Rari had been hacked for $10m+ when I was asleep. I felt a pit growing in my stomach, I wanted to throw up. While we were truly a decentralized organization, knowing that technology that I helped design caused people to lose money made me feel sick. We needed to lead the community to solutions. We hosted a Discord audio call with 400 people to discuss what we could do, the community helped put together a solutions document and the community eventually voted on the outcome. I tried to speak to nearly every victim to understand them. While it was cool to see human coordination happening at this level, I struggled to sleep for months after.
While I focused most of May on helping the community navigate the hack, the rest of the team continued working on Fuse. TVL was growing at an impressive pace thanks to many of our DAO partnerships. We got the opportunity to work with projects all the way from Fei Protocol to BadgerDAO. It was the excitement of this, combined with the Rari team and their continuous optimism that kept me going through the hard times.
As time passed, I spent more time on Fuse. We developed tons of really cool features around it: plugins (my personal favorite), reactive interest rates and so much more. Things were going very well. All of the contributors were like a family, we’d spend every waking moment hanging out and contributing together. In October we passed $1b in TVL, a crazy milestone. It was at this point that it really started to click for me: Rari’s mission is so much bigger than any one person and we had already begun changing the world.
At the end of October, I hosted a birthday party / halloween party. Joey from Fei came to LA to hangout and attend the event. We have a blast. Alongside this, I was coming to this thesis that every protocol would be forked to be a hyperstructure unless their tokens: govern capital or underwrite risk. When the merge was floated, I was ecstatic - this would enable Rari to transcend its existential hyperstructure risk while also partnering with one of the top teams in the space. It would also give our growing ecosystem (at the time: Volt, Midas, Market) an even bigger platform to build on top of. When the merge passed, I was stoked by this idea of re-building every piece of financial infrastructure on-chain.
I got straight to work with the Rari Infrastructure team on some cool problems: how to earn yield with idle assets? We started ideating on Turbo. How to provide more liquid solutions to Fuse markets? Sling. How to make Fuse more efficient? And so much more.
However, as time went on, my thoughts about the DeFi space continued to mature. Over time, I had developed these conclusions:
- Most crypto projects are designed with extremely predatory tactics that hurt retail. Most crypto projects have 0 intention of doing anything besides dumping on retail. And these projects were using the financial infrastructure that I had helped create.
- The unfortunate reality is that most projects have 0 path towards seeing real adoption beyond the 10,000 people on crypto twitter (and lots have no interest in serving anyone besides them). Today’s protocols (with very few notable exceptions) will not trickle to retail adoption and are unlikely to be the rails that power retail applications.
- As the space trends towards efficiency, basically all tokens will trend towards 0. They will be re-rated for the risks that they underwrite or adjusted for EV of capital owned. If they aren’t owning capital or underwriting risk, then they are useless over the macro. On-chain governance is overrated (should likely be structured as a liability more than an asset) and we should be pushing for complete immutability. DeFi has lost its way with tokens and governance.
- Spending my time on Rari Capital / Fei Protocol / Tribe DAO would not be the highest leverage of my time in an effort to really change as many people’s lives as possible. I am highest impact at 0 to 1 and the Rari Ecosystem had already matured so far beyond me.
While this was an incredibly hard decision, it is for these reasons that I stepped back from my role at Rari Capital to focus on other opportunities. Thanks to all the Rari Contributors (Arnx, Cryptic Koan, Jack Lipstone, Jack Longarzo, Nosedrop, Pedro, Sharad, Sri Yantra, Zerosnacks). I wish all members of the Tribe DAO my best. Thank you to the whole community for everything. This story would not have been possible without you.
I appreciate all of the friends who were able to help guide me through this multi-year journey: Dan Elitzer for all of the fun mechanism design chats, Tetranode for all of the support through the years, Tom Schmidt for the continued help through the years, Clay Robbins for helping us get that initial 0x grant that helped pay for the first Quantstamp review, Osprey for being our biggest supporter since day 1 and so many more. Ryan and Ethan, my roommates, thanks for putting up with me on calls every day for two years. Mom, dad, my whole family - I love you all for your continued support. It would take me a whole day to write out everyone who helped us get here. You know who you are. Thank you all so much. Rari wouldn’t be what it is, and I wouldn’t be who I am without you all.