Wintermute Founder: There is only one way out for cryptocurrency — escape the "empire"

Golden Path (Part 1)

By Evgeny Gaevoy, Founder of Wintermute

Translated by AididiaoJP, Foresight News

I’ve been thinking about this article for a long time. Whether cypherpunks can succeed, whether libertarianism can succeed, and whether cryptocurrencies are viable—my views have been changing all along.

What follows are my recent thoughts on the philosophical position of cryptocurrency. This is more like a declaration, explaining “why we are here.”

The Golden Path

For a long time, Dune has been one of my top three favorite books. It might have changed in recent years (for example, the Culture series is now higher on my list), but it remains very special to me, as it shaped my thinking around age twenty.

Most people focus on the first three books, but for me, it’s the fourth book, God Emperor of Dune, that I can’t forget. It truly influenced my views on progress, diversity, and what the world should be like. The core idea of this series up to that point is: humanity’s only way to survive is through diversification. The “Golden Path” is a millennia-spanning plan that forcibly imposes stability on humanity—once this stability is gone, humans will fundamentally hate it, hate any form of centralization. As the book puts it:

“Give humanity a lesson carved into their bones: comfort provided by protection is no different from total death, no matter how long it can be delayed.”

We are naturally drawn to stability, to organizing things to fight chaos and disorder. We are inherently inclined to build empires—whether nations or corporations. We know all empires will fall, all companies will die, but we keep building, bigger and stronger each time. Yet, the larger we build, the more devastating the collapse. Even more frightening is that this ultimate empire-building could lead humanity to extinction—either because of over-concentration that can’t withstand external shocks, or because internal “evolution” leads to abandoning social existence altogether. So history repeats itself: from chaos to self-organization, to empire, then collapse. From the Golden Path, I learned that during the phase of integration, we should embrace diversity and reject empire, no matter how tempting the stability (and promised prosperity) it offers.

Today’s nations are filled with too much “comfort provided by protection.” The same goes for our corporate and financial systems. I believe both are gradually pushing us toward an inevitable collapse. To be clear, this isn’t an attack on capitalism or progress. Quite the opposite: capitalism within this system is diminishing, replaced by increasingly dysfunctional and unambitious nationalism. In summary, the potential monsters of the future include:

• Anarcho-capitalism: corporations win, governments lose. Whether it’s Tessier-Ashpool, CosaNostra Pizza Inc., or Weyland-Yutani, aside from the big gears in the machine, life is tough for everyone else.

• Nationalism: nation-states control everything, dividing the world. Will it lead to a 1984-like dystopia, or something slightly better? Hard to say.

• Fascism: corporations and governments collude. This is like the Galactic Empire in Star Wars—rebellion is almost inevitable. Which countries might go down this path?

And what’s on the other side? What is it that doesn’t give you “comfort provided by protection,” but instead forces you to prioritize personal sovereignty and independence? What efforts aim to break out of national borders, ignore closed financial systems? What treats “insecurity” as a feature rather than a flaw? Good question—that’s what cryptocurrency is.

The Road Ahead

I’ve been in this “industry” for nearly nine years, and I’ve never felt such confusion and disillusionment. It seems like there’s little to look forward to. On the surface, we seem to have achieved most of what we wanted: “institutions are entering,” and some are using the technology. But something feels missing—not just in price, but in spirit. The “soul” is gone, and the sense of “what are we really doing” has vanished. Meanwhile, the outside world keeps moving forward, and now a newer, hotter thing has emerged—“artificial intelligence.” We are completely lost.

Of course, not everyone feels this way. Some believe that the rise of stablecoins is a win. Others celebrate how decentralized perpetual contract platforms have defeated traditional and centralized finance “dinosaurs.” Still, some want to build their empires at the intersection of DeFi and traditional finance. We see “enterprise chains” re-emerging, with enterprise blockchains being “great” again. So yes, some are excited, but I’m not—though Wintermute could profit from integrating with traditional finance.

My lack of excitement comes from seeing several different paths ahead, with only one that is feasible and worth pursuing:

• Traditional finance absorbs cryptocurrencies. Stablecoins become widespread, enterprise chains with KYC, decentralized exchanges with KYC. The financial machinery speeds up, with fewer middlemen. Bitcoin becomes digital gold, mostly held by sovereign governments, corporate treasuries, and ETFs. Or perhaps CBDCs are adopted worldwide, with our (financial) privacy fully controlled. The technology is impressive, but it’s clear we lose—badly. Probability: highest.

• Governments surrender to blockchain, everything runs on permissionless ledgers, KYC/AML systems remain in place. Only when converting to fiat do cryptocurrencies get taxed, with token market cap reaching trillions. A free, glorious world—though purely imaginary, a dream we might have. Probability: lowest.

• Coexistence that’s somewhat uncomfortable. We build a parallel, fully independent system alongside the existing one. Individuals can operate in both, and governments can’t interfere because it’s designed to be separate. We win, and we do so honorably. Probability: entirely up to us.

You probably sense that I have no interest in Option 1. It’s just making the current machine run more smoothly—regardless of which of the big monsters wins in the end.

I know some believe Option 2 might be possible, but that’s just a dream. Governments won’t give up sovereignty, just as corporations won’t voluntarily relinquish monopolies. Casinos won’t just open on Solana. The CFTC won’t turn a blind eye to Hyperliquid’s lack of KYC and regulation. Need I remind you? Which centralized stablecoin issuer can freeze assets on court orders? For that to happen, the entire socio-economic system would have to collapse. I have three kids to raise and over a hundred people to support—I’m not hoping for that.

So, only Option 3 remains. You can call it the metaverse, digital nation, DAO, or cultural tribe. They all share the trait of existing independently and often clashing with or opposing the “real world” political and financial systems.

The Matrix

Our biggest problem is that many people have never truly internalized this lesson. Especially those of us in Western countries, who have gradually become accustomed to progress and convenience, never really experiencing what life is like without sovereignty. Ironically, from 2022 to 2024, we actually experienced it firsthand: on one side, SEC and CFTC regulation ramped up; on the other, centralized institutions (FTX/Alameda + venture capital) nearly bought up half of all crypto. And what did we learn? The opposite of what we should have. Instead of fighting harder for freedom, we thought that just putting the right people in the right positions would be enough to win.

Meanwhile, we’ve complained for years about poor user experience in crypto—Bitcoin isn’t convenient for payments (and it’s true), and we’ve been hacked endlessly. But what if we’re all wrong? What if these inconveniences are precisely the costs we must pay for sovereignty? A culture we should actively embrace? I’m not saying we should think MetaMask is the pinnacle of innovation, or that everyone should engrave seed phrases on metal plates. I mean that we should work to improve user experience, targeting those 50% of people who truly need sovereignty—whether in developing countries where democracy is eroding and governments are fully controlling them, or in developed nations that are increasingly resembling China and Russia, with laws against privacy (like in Europe and the UK).

Our goal shouldn’t be to fight “regulation” or “governments.” It should be to create something they can’t control. The key is to avoid reliance on choke points: fiat on/off ramps, app stores, DNS resolution, centralized order books, social media platforms—and of course, centralized stablecoins (which can be frozen with a single court order). What we build shouldn’t be shut down by a court subpoena or a bureaucrat flipping a switch. Tax authorities shouldn’t be able to target our non-compliant tokens (unless we switch to fiat). Ultimately, it’s about one thing: creating a place where ordinary people can live without needing anyone’s approval.

Specifically:

• Embrace permissionless, sovereign protocols—avoid opaque off-chain solutions.

• DAO was the right idea, but I mean those that never really took off—those fully controlled by centralized entities, just pretending to have governance. We’ve never truly built a proper community, just thinking about how to incentivize comments.

• Learn to either not rely on centralized systems or be able to switch instantly if they’re cut off. This includes infrastructure (cloud, large models), social coordination tools, and of course, stablecoins.

• Make algorithmic stablecoins great again. Our mistake was being too obsessed with Ponzi models. DAI and UST weren’t wrong in concept; the mistake was adding USDC to DAI, or stacking unsustainable yields on UST. DAI is backed only by ETH, and its scale can’t match Tether—that’s normal. We need to build a parallel economy first, which we’ve never truly tried. Even better, we could directly trade with each other using crypto—though that might still be early.

• Protect privacy at all costs. Whatever tools are needed, just make it happen.

Dispersal

The ending of God Emperor of Dune is “dispersal”—the God Emperor dies, and humanity scatters into the void. After 2022, we should have dispersed too, learned the lesson. But it’s not too late.

We (and) can’t always choose where in the world we are. Some are trapped in nations with no way out; others are bound by their responsibilities. My pessimistic prediction is that in the coming years, the reasons to escape will only grow. That big monster will keep growing, suppressing more and more. Fully escaping into a “better” parallel crypto world is impossible now, and even if it exists, it’s unlikely we can reach it. But at least we can (re)build something—giving future generations a place to escape to, while coexistence of the real and crypto worlds remains.

Tools for escape are the only things worth building. When crypto eventually falls out of favor (which it will), these tools will still be usable, unaffected by the outside world. More importantly, they will give meaning to what we do and build.

Most of us will choose to coexist with the empire—because responsibility, comfort, money, or other pursuits are understandable and acceptable. The small minority that remains will create an exit, then reclaim what we’ve lost.