Proof of Work to Proof of Credit, My Winding Journey to the Pinto Farm

From catching up to getting ahead, I am proud to be on money’s frontier.

In 2012, I saw headlines of the Mt. Gox hack and Bitcoin’s peak at $32, I assumed the experiment was over. A few months later, an internet friend told me he’d send me some bitcoin, I’d just need to setup a wallet. Back then, every wallet was a full node, I downloaded it and got my own address. He sent me a tiny amount.

I didn’t have to give anyone my personal information to receive money? I could send this without it getting “frozen”? This was not controlled by a simple database from a single company? I read everything I could in the bitcointalk forums, the whitepaper, the wiki, and joined numerous IRC channels to learn more about the tech. I was hooked. A few months later, I experienced my first bull run. That sealed the deal: I needed to buy more. This wasn’t just an experiment, it was a revolution.

In my mind, Bitcoin was either going to work, or it wasn’t, a binary outcome. But soon, Litecoin appeared. XRP came on the scene, and I felt almost offended by it: it was not decentralized at all. To me it was just a scam attempting to get in on the hype. Then Dogecoin appeared. I decided to ignore everything except for BTC, and didn’t pay much attention to the scene until several years later.

Next thing I knew, ETH had become the new cool kid on the block, and I had totally missed out. Every other project up until then just felt like a ripoff, but this was building on the promise of a cryptocurrency future: complex programs could now run on the blockchain, something Bitcoiners discussed, but was never possible, until Ethereum.

I suddenly realized I was behind on the latest tech: Bitcoin was a great store of value, but that was the only thing it did well. ETH had interesting tech Bitcoin didn’t, such as a browser wallet. You could connect it to websites and interact with dApps, the confirmation times were fast compared to BTC’s 10 minutes, and you didn’t have to store the whole chain on your computer. Other tokens lived within Ethereum’s network, and you could do something with them: trade on chain, lend them out, borrow against them. I learned about Alchemix and it blew my mind: self-repaying loans that allowed access to future yield now? Incredible. Financial experiments were happening on chain that were never possible before. It was the dawn of a financial renaissance, and I needed to get up to speed. I wanted to be a part of it.

The best way to win the game is to play it. I got a MetaMask wallet and started experimenting with these different protocols. I borrowed against some ETH on Aave, bridged USDT to BSC, and ape’d into CAKE. Took out a loan on Alchemix. Deposited in to Yearn. LP’d on Curve. Swapped on Uniswap. It was all starting to make sense.

With Aave, you could borrow against regular tokens, but I thought it would be awesome to borrow against yield bearing tokens, like Yearn deposits or LP tokens. Why not earn with your principle, borrow against it and also earn with that? I did some searching and discovered Abracadabra.money. Great, I’m still a step behind, but I can benefit and learn by using their protocol. Around this time UST and it’s 20% return through the Anchor protocol was getting popular. Abracadabra allowed you to borrow against those deposits at a lower rate and loop it, earning 100% APR per year.

But UST was not sustainable. I managed to get out before the collapse. The yield was artificial, the founder was just topping up this pot from other investors and sending it out to pump his token. The token was not creating any actual value and the founder was simply giving out money, which worked only until he ran out. I was part of a private discord group, and we were now on the hunt for stablecoin yields. Would could possibly be as good of a return as that?

Bean money. What the heck was that? Credit backed stablecoin? Whatever it was, it was working, and it was working incredibly well. After I got in, APY’s shot well over 100%, and that was without any looping. I viewed this as a new Crypto primitive. We already had Proof of Work and Proof of Stake, this was something new, Proof of Credit. As long as the system could attract credit (just like as long as there’s someone mining Bitcoin), the system will keep moving. And when prints occur, what if holders got the prints, rather than the government? I was sold. Millions were pouring in daily. And just like Bitcoin: it was either going to work, or it wasn’t. And this looked like it was! So I ape’d in.

The protocol also had a novel governance mechanism, which unfortunately ended up being exploited, but I understood that it was entirely unrelated to the credit model itself. The model was working. I felt that we must determine if Proof of Credit is viable. What if this is better than Proof of Work? No electricity would be wasted. Are its properties more beneficial than Proof of Stake? I started contributing to the project, I was so Bean-pilled, there was nothing more exciting.

But the Replant, the plan to restart the protocol after the hack, fell flat. The protocol simply had too much debt and too little value in it after all of the funds were drained by the exploit. The model was not able to perform as intended with so much baggage. We needed to let the credit-based stablecoin model be reborn and give it the fair chance it deserves. So, I decided to work on Pinto, the first ever Beanstalk fork.

We want sustainable growth and functionality over the long term. We want a new money. Not in the hands of the government, but in the hands of those using the money, and only by their choice. If the supply increases, we should gain, rather than lose value. If the supply needs to shrink, we should choose the lending terms. And most importantly: we should choose if we opt-in to the system or not.

Like a baby, this thing needs some tender love and care. As it takes it’s first steps, it may need to stumble and learn some new tricks to be ready for prime time. That’s why I’m here.

This is the first time in Human History anyone can build new financial tools. In the past, these tools required custodians and regulators to approve. Now, the blockchain is our custodian and permissionless arena, and we can trust our tools to run exactly as programmed. We don’t need a bank or a company to run this experiment, we simply need code. From anywhere in the world, we can build new tools for freedom; tools to empower individuals, enable free speech through freedom of finance, guarantee the right to life and liberty through secure property ownership, fight inflation through inverting it (you get the money!), and usher in a new era of prosperity. These are the new roaring 20’s, and we are building.

Hope you enjoy the ride,

FordPinto

7 March 2025