The Game Theory of Flying Tulips: Is Andre Cronje's "Capital Protection Financing System" Worth Investing In?

Degen of Ethereum have recently been following Andre Cronje's new project Flying Tulip. This article will explore whether we should take a gamble on the investment mechanism proposed by Andre Cronje, “capital preservation redeemable.”

(DeFi veteran Andre Cronje's on-chain Binance: the one-stop on-chain exchange Flying Tulip completes private placement with a valuation of 1 billion )

Principal protection investment? Bet on the rise and fall of tokens with a 4% annual return.

First, let's repeat a concept: issuing tokens is like issuing bonds. And the mechanism of Andre Cronje is: the raised funds are used to run low-risk DeFi strategies, aiming for a billion dollars in capital to generate about 40 million dollars in profit per year. The actual money the project team uses for operation is the 4% annual income.

Investors are essentially “gambling”: “Will the annualized return of FT ( and the price increase ) exceed the opportunity cost of 4%?”

In other words, compared to general fundraising, the FT tokens held by investors come with a “perpetual put option,” allowing them to redeem at the original principal at any time. After redemption, the tokens are destroyed, reducing the supply.

This presents investors with a dual strategy choice:

FT market price > original price: Holding or trading has room for appreciation, do not redeem.

FT Market Price < Original Price: Redeem principal, stop-loss with no risk.

Billion-dollar market cap level DeFi protocols, with FDV exceeding 2.6 billion dollars.

Flying Tulips financing conditions are one billion dollars in full circulation, which is currently at the level of Pancake, Curve, and Etherfi in the DeFi protocol market. The TVL is all over 2.6 billion dollars.

Combining the agreement volume at the same price level with Andre Cronje's financing mechanism, the author believes that the financing conditions for a billion-dollar valuation are actually “the packaging of structured financing” rather than reflecting the intrinsic value of the agreement.

If $FT FDV remains below one billion dollars for a long time, rational investors would think: “Since I can redeem to get back my principal, why hold onto the discounted tokens?” This leads to a wave of redemptions; although the principal is not lost, the opportunity cost is lost, and the project heads towards a slow death.

However, Andre Cronje, as the founder of the DeFi public chain Sonic (, formerly known as Fantom), can expect Flying Tulips to generate over 4% annualized income on Sonic. The methods of creating APY through issuing junk coins can also be applied here. Even if only half of the funds are raised, being able to pull the APY up to 8% through coin issuance would have the same effect.

The article “The Game Theory of Flying Tulips: Is Andre Cronje's 'Capital-Protection Financing System' Worth Investing In?” first appeared on Chain News ABMedia.