Treading into the DeFi Dark

I pursued software because I believed I could build incredible things. I won’t give up now.

I was looking into the optimization of integrated circuits as part of an undergrad research program. Three years of my hardware engineering degree had been completed and I was exploring what I would do after completing my studies. One of my responsibilities within the research team was to tweak some simple bash scripts we were going to use for the data pipeline. At the time, I had minimal experience and minimal interest in software development. Writing the first script was tedious; I was constantly pestering my peers for help understanding the existing systems and getting stuck deciphering the cryptic syntax of Bash. But once that first script was finished, it just worked. It performed as intended and could do it repeatedly for anyone on the team. I had created something of value in a fraction of the time it would take to bring an integrated circuit into reality. I realized that I had the potential to build infinitely more using software than hardware and I fell straight into the rabbit hole. I began focusing my time on building tangentially-related software tooling and by the end of the summer, my computer had become a labyrinth of homebrew scripts automating every step of the work. I was intoxicated by the potential of bringing my imagination into reality so quickly and at such scale. I knew I needed to pivot completely and see where programming would take me.

I finished grad school a few years later and was excited to officially begin a career as a software engineer at a well known robotics company. Unfortunately, my experience at work contrasted deeply with the hopes I had about software as a student. Instead of rapidly iterating high-value features, I found myself building esoteric tools for opaque client contracts. Engineers had no say in product direction, and when frustrations arose, leadership passed down placations gutted of any substance by HR and legal teams. My peers indicated this experience was not unique — it was simply how the industry worked. The thought of staying the course and spending the next few decades fulfilling vague corporate obligations was so dispiriting I left the company and the industry altogether.

A few months later, I stumbled into crypto Twitter. I had no real understanding of what crypto was or what it was trying to solve — but when I found its thought leaders, particularly those in the Ethereum ecosystem, I became absorbed. The corporate bloat had been stripped away and replaced by a meritocracy filled with geeks leading simply by virtue of caring enough about the technology to be early. Everyone was encouraged to build anything and had a chance to garner adoption through sheer novelty. The most exciting projects were not corporations tucked away in an office somewhere dropping incremental iterations, but tiny teams of engineers that lived online, built in the open, and created things that had never been imagined before. Most strikingly, a nobody like me could pick up a conversation with the people actively creating the tech I was using. It was the wild west in the best way. I was hooked.

I found myself digging deeper into DeFi because its utility was often easy for me to see. I was fascinated by the new tools I had access to; studying each new protocol was like solving a new puzzle.

When I discovered Beanstalk, my imagination cracked open. The protocol was seemingly generating millions of dollars of value from nothing, democratizing financial power typically reserved for central governments behind closed doors. Highly skeptical, I joined the Discord and started asking hard questions. I was sure I would be kicked out for challenging the model and doubting the intentions of the team, yet to my surprise the founders responded to my questions directly. They did not demand I justify my inquiries, but simply answered and encouraged me to join the upcoming voice call so I would have a chance to expound on my concerns.

I was unlocked. It was the biggest puzzle I had come across yet and I had access to all the information I needed to solve it. My understanding of the system was only limited by how far down the rabbit hole I was willing to go. My curiosity was insatiable, each day leading me a little deeper. Within a month I was an active contributor, putting up middleware code and helping others onboard to the ecosystem. At first I only wanted to learn how to play the game, but over time I came to understand the fundamental need for a decentralized and scalable stablecoin: abandoning the dollar for volatile assets entirely is not viable, yet relying on centralized stablecoins compromises the entire decentralized EVM stack.

Unfortunately, in April 2022, Beanstalk was targeted by a governance exploit and all user funds were extracted before the system could scale. Development on the Beanstalk model continued, but for all intents and purposes the experiment had been abruptly halted. The team dedicated themselves to trying to restart Beanstalk and repay user funds. Although this was well intentioned, it carried an incredible opportunity cost — for the following two and a half years nobody was iterating on the algorithmic stablecoin problem. The collapse of UST had turned off most of the industry from the idea altogether and the one team still willing to try was locked up trying to make their users whole.

In the years since, the industry ethos of experimentation has worn down. Each new protocol launch is a repackaging of another with a slightly optimized yield strategy. Value extraction is the industry standard and the general assumption upon deployment of new tokens. An air of suspicion surrounds anything that appears too different from the incumbent blue chip protocols.

Pinto launched in November of last year and stands in defiance of this trend. It is trying something that has never succeeded before and that no one can be 100% sure is possible. There is no external expertise or history to reference, and no certainty about what happens next — the only way to find out is to take the leap. Working on Pinto feels like the raw progress I imagined when I was first introduced to software development. Each day Pinto steps into previously uncharted territory and demonstrates how far we can push decentralized technology. The experiment is public and open for us all to contribute towards a better financial system.

Algorithmic stablecoins are not an easy pitch. There is a collective taboo borne from trauma of past failures, which has caused the space to lose its stomach for experimentation and fiercely discourage further attempts. The industry has largely given up, but the fundamental problem has not gone away. Pinto is a push back against 'good enough' — it openly continues to experiment and will bring the industry one step closer to the scalable and decentralized money that we need.

--natto

28 april 2025