Compound founder Robert Leshner on pulling a Satoshi and why…

If you spend even a brief time in the crypto world, you’ll hear the word “decentralized” thrown around a lot. The term is used to describe a technological ideal where a given project has no central person or group making decisions but is instead run entirely by a loose federation of computers. More often than not, though, “decentralized” is more marketing than reality. There are exceptions, though, including Compound—the popular DeFi platform used for lending and borrowing.

I had the opportunity last week to interview Compound founder Robert Leshner on stage at an event hosted by VC firm CoinFund. It’s been around 18 months since Leshner (who is rightfully known as one of the creators of DeFi) stepped away from Compound entirely, and I put the question to him about the calculations involved in doing so. He replied that pulling off a Satoshi-style exit—which describes the Bitcoin creator’s successful fading into the mist—is harder than it looks.

Leshner explained that if a blockchain founder leaves their creation to fend for itself too early, the surrounding community and developer infrastructure may not be in place, and the project could fall apart. Conversely, sticking around too long risks the project being overly associated with a single person, and potential regulatory headaches. Leshner, though, appears to have hit the sweet spot as Compound—which pioneered an ingenious way to earn interest on collateral without tying up capital—continues to flourish in his absence.

Having walked away from Compound, Leshner is now working on a new project called Superstate that is putting conventional assets like T-bills—“real-world assets” or RWAs in crypto-speak—on the blockchain for trading. I pushed him on this, noting that it’s been nearly a decade now that crypto firms have been trying to do this and that, to this day, I continue to receive breathless announcements along the lines of “Big Bank X offers tokenized version of Apple shares on a blockchain” or “You can now trade tokenized versions of this Colorado hotel.” None of these seem to go anywhere.

Leshner acknowledged it was a fair point. He said one reason these initiatives haven’t got on is that there is basically zero liquidity in the case of real estate, and that no one really wants or needs equities on a blockchain right now. He added, though, there is demand for certain assets like T-bills to be traded on blockchain and that’s why not just Superstate, but the likes of BlackRock, are building platforms to do this.

More broadly, Leshner also offered a refreshing take on the popular crypto world assumptions that blockchain offers a superior tool for Wall Street traders. He said this is actually not the case since the current state of blockchain technology revolves around something called MEV, which involves miners organizing transactions on any given block to maximize rewards. The problem is that this also provides an opportunity to front-run trades. The good news, Leshner says, is the privacy tools called zero-knowledge proofs are evolving rapidly and, in time, will solve the front-running problem.

Jeff John Roberts
[email protected]
@jeffjohnroberts

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