Spacemesh Postmortem Part III

Three Things #188: September 28, 2025

What it felt like in the final days of Spacemesh.

Note: I’m catching up again on a few delayed issues here, my apologies!

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It struck me that years ago I wrote a long series of articles on how to build a better blockchain, and indeed we put many of these ideas into practice at Spacemesh. But that series was focused on the blockchain, not on the team of humans building it. That was a huge oversight on my part. This series is my attempt to make up for that.

I encourage you to read Part I and Part II before reading this Part III.

Thing #1: Playing Nice 🧸

It’s less obvious, and it wasn’t on my original list, but it struck me later that another mistake we made at Spacemesh was that we tried to place nice. We tried to do the right things in the right way, rather than what was convenient, or expedient, or, it turns out, best for the project in the long term. This was in marked contrast to what our competitors were doing. This behavior is related to our idealism, but it’s subtly different. It’s almost as if we had an overriding core value along the lines of “justice,” “fairness,” or “goodness” that dictated that our behavior as an organization aligned to some arbitrary moral compass.

A bit of context will help. In many ways, Spacemesh was a response to what the team saw as moral and ethical failings on the part of other blockchain projects. For my part, I was, and remain, very frustrated with how Ethereum was launched, especially the crowd sale, something I’ve written about a few times. It had the effect of making a small set of people fantastically wealthy—which, in and of itself, is completely okay, but it did so at the cost of taking too much value off the table for future contributors, in my opinion. The Spacemesh economic model, which I’m still proud of, was explicitly designed to prevent this scenario, leaving well over 90% of all the coins that will ever exist to be mined by the community over 1,000 years—a nice thing to do for the community, and for future contributors. If anything, you could say that we overcorrected for this failure of Ethereum, and as a result, the market struggled to understand our economic model.

Spacemesh was also a response to an excess of hype and cringe marketing on the part of other projects. We saw the same pattern again and again: projects that hadn’t shipped anything and that had very few new ideas or technologies were signing up “KOLs”, doing points systems and airdrops, launching NFTs, and generally engaging in what we considered to be an inauthentic, intellectually dishonest form of marketing rather than shipping something of substance. It was almost as if the less substance a project had, the more it leaned into marketing hype and buzz. We did the opposite, because we felt that Spacemesh had plenty of substance and didn’t need to fall back on cringe marketing.

I’ve always felt strongly that a product that’s good enough sells itself, through its own quality and through word of mouth. We decided not to make much noise about Spacemesh until we actually had something to show, an idea that we called leading with code. Here, too, we overcorrected. There’s actually a lot of exciting things that we could have and probably should’ve said about Spacemesh from the get go, but we were always in waiting mode: wait until the design is complete. Wait until the network is live. Wait until the VM is working. In retrospect, I can see how important marketing, narrative, and messaging are, even and maybe especially before the product itself is live. In this case, too, what seemed like the “nice” or “right” thing to do wasn’t actually in the project’s best long term interest.

Yet another example is exchange listings, something we really struggled with. I have to admit that I was completely naive to this prior to Spacemesh. I use exchanges all the time, but I never really reflected on how and why they list the coins they do, when they do, and on how their business model works. I’m sad to say that this is anything but a fair, transparent, organic process. Exchanges are a necessary evil: necessary, for now, at least until DEXs are a little more mature, but evil because of how they rent seek and act in ways that are perfectly antithetical to everything that crypto stands for, in my opinion.

Long story short: with very few exceptions, all exchanges expect you to bribe them to list your coin. They have various euphemisms for these bribes, dressing them up in colorful language such as “technical support fees,” but bribes they are. The amounts depend upon various factors, including how large the exchange is, how complex the integration work is, and how profitable they expect your coin to be. And, yes, they charge these bribes in spite of the fact that they’re the ones charging fees and making money from an integration. It’s shameful, despicable behavior, if you ask me, and they do it simply because they can (the very definition of rent seeking, which is exactly what crypto is designed to fix).

Spacemesh refused to pay any such bribes for a long time. We had many offers, including from top tier exchanges. These listing fees can be in the millions of dollars, and one reason we refused to pay these bribes is because we simply didn’t have the budget. Eventually, the team decided to pursue listings on a handful of second-tier exchanges, and did pay some fees. When exchanges list your coin, in addition to fees they often ask for a large grant of coins for “marketing purposes,” to do things like airdrops and other games to incentivize users to buy or trade your coin. We also opted out of these games because we found them distasteful.

At the end of the day, these decisions crippled us. Spacemesh and the $SMH coin was never listed on an exchange that was accessible to Americans, the largest market. Our listing came late: if it were a priority, we could even have made a market in the coin using an ERC-20 proxy before the network went live. And there was never much liquidity, which made it difficult for people to place large bets or express strong views on the coin price. We did work with a market maker, but I’m not sure how good they were, and now that I better understand the degree of sophistication and strategy that crypto projects employ in managing coins, coin launches, market making, and liquidity management, I realize that we were total amateurs. It makes me wonder how many other projects fail not for lack of product or substance, but simply because they were either unwilling or unable to play the coin listing game, as we were. The thought makes me sad.

We were naive. We were operating under the Bitcoin mindset: if you build it, they will come, and the market will appear organically if the project succeeds. I still think there’s some truth to this, but the project didn’t succeed, and our failure to better manage the market around the coin didn’t help.

Thing #2: Leadership and Accountability 🎖️

Spacemesh had a leadership problem.

The biggest issue wasn’t a problem with any individual, but rather the fact that, on paper, Spacemesh had only a single leader, and no accountability mechanism in place to replace that leader.

Spacemesh originally had three founders, plus two founding Chief Scientists. One of the three cofounders was a smaller partner and wasn’t very engaged from the beginning, although he did stick by the project until the very end and continued to look for ways to help. Of the remaining two cofounders, one quit the project after a few years. I don’t know the details of what happened, but as far as I could tell, it had to do with his personal relationship with the other cofounder, and it appeared to happen around the time the second cofounder fully vested. (That’s another thing we got wrong, apparently, and yet another lesson: vesting wasn’t long enough to account for the extraordinarily long R&D process. No founder should fully vest before a product is successfully launched.)

This effectively left a single person in the driver’s seat, with no additional accountability mechanism. The Board of a company is supposed to provide this accountability over the leadership, and again, I don’t know the details of the composition of the Spacemesh Board, but as far as I can tell there was effectively no Board to speak of (something I’ve complained about loudly in the context of the Ethereum Foundation: this is bad enough in any industry and any organization, but it’s doubly so, and it’s hypocritical to boot, in an industry that exists specifically to build better systems of incentives).

I spoke highly of our CEO’s positive traits before, and I stand by those statements. But the visionary, founding leader who gets a project off the ground very often isn’t the right leader to fully execute on the roadmap, or to bring a product to market. So it’s absolutely essential that accountability and governance mechanisms be in place from the very beginning to deal with this eventuality when and if it arises. This is one of my biggest learnings from Spacemesh and, in my opinion and in retrospect, one of its biggest failings.

When it came time for this leader to step down, there was no clean mechanism by which to effect the change. Moreover, there was no alternative candidate to step into the role. In fact, on at least one occasion, the leader did offer to step down, but no alternative candidate presented themselves. I was asked on one occasion by the investors if I would consider the role, but I declined on the grounds that it wasn’t my project, I wasn’t a founder, and I didn’t have the economic upside to be in the role, so I didn’t want to clean up someone else’s mess.

The lesson here is that leadership transitions are always messy and complicated, and have to be planned for ahead of time. Obviously, everything possible should be done ahead of time to ensure that the project has the right leaders from the get go. Those leaders should all be sufficiently incentivized and bought into the project, economically and otherwise, with sufficiently long vesting to make sure there are no shortcuts and no short circuits.

But issues arise even with the best-laid plans and best efforts, so projects also need accountability mechanisms and contingency plans. Are the current leaders the right ones to take the project to the next level? Are there cofounders, executives, or other second-tier leaders within the organization, with different areas of domain expertise, who could step into a leadership role in a pinch if trouble arises or priorities shift? It’s critical that the team expand the “circle of trust” at the top of the organization, as a way of training and empowering other team members and preparing them to become future leaders.

Is there sufficient transparency, internally and externally, with respect to KPIs, OKRs, or other project goals to allow for professional oversight? Are these transparency mechanisms being professionally managed? Is there sufficient economic dry powder (in the form of equity, tokens, or something else) to incentivize future leaders? Is there a hands on Board that’s following what’s going on closely, asking hard questions, performing audits where necessary, providing the necessary accountability and oversight, and is ready, willing, and able to intervene if required? This may not be as essential for a truly successful project, but where there’s room for doubt, accountability is extra important.

Another lesson is the contradiction between the efficiency of having a single decision maker, and the risk of too much power and authority being put into the hands of a single person. In general, startups require strong leaders who are empowered to make hard decisions and act decisively, since decisiveness and speed are among a startup’s superpowers. However, if something goes wrong with this leader, if they turn out not to be up to the challenge, or if the startup executes a major pivot and priorities change, there’s a risk that there’s no way to replace the leader, especially if they’re a founder and/or major owner. Again, it comes down to accountability. Founders often complain about active Boards slowing them down or tying their hands, but after my Spacemesh experience, I now see why it’s absolutely essential that every team have effective oversight and accountability, even over the CEO and Founder.

Going forward, I’ll be looking for this degree of maturity, accountability, and leadership in future projects that I join, and I’ll be much more thoughtful about putting these mechanisms in place in projects that I found. I’m very unlikely to join another startup without these oversight and accountability mechanisms.

Thing #3: The Face of the Project 🗿

I found myself in a very strange, difficult position in Spacemesh. I’ve never spoken publicly about it, but I think it’s important to describe it here for posterity.

I wasn’t a Spacemesh cofounder. As far as I know, the project was founded and funds were raised in late 2017, and development work began in early 2018. I joined around a year and a half later, in mid 2019. I was an employee, working for the Spacemesh development company, Unruly Tech, and my title was something like Developer Evangelist (whatever that means).

Over the following few years, a strange thing happened. Despite not being a cofounder and not being CEO, and not really having any internal authority whatsoever (I didn’t even have my own team and I had zero equity stake in the company), I somehow became the public face of the project. Initially I just thought it was a quirk, but over time, it became a real problem.

How did this happen? In a way it wasn’t dissimilar from what had happened to me in Ethereum. In Ethereum, I was just a developer, doing core protocol R&D. I wasn’t hired to be in a public-facing role. But I found, over time, that none of the other developers wanted to be public-facing. None of them felt comfortable speaking to the press, or to third parties (outsiders) in general, and very few of them liked to speak publicly, whether on stage at conferences or in podcasts, about their work and about Ethereum more generally. Partially, I think, this is Ethereum culture, for better or worse, but partially it’s a universal trait I’ve seen among developers everywhere. They tend to be autistic and avoid attention, preferring to be left alone to do their work.

This frustrated me. I felt very strongly that the public had a deep misunderstanding of Ethereum, and of blockchain in general, and that if we weren’t willing or able to tell our side of the story and speak publicly about it, then they’d continue to form their own, misguided interpretation of the project. So I offered to speak about Ethereum at every opportunity, on every platform, to get the word out, to spread the gospel, so to speak. However, in line with my values, I insisted on doing so very honestly and to also discuss Ethereum’s shortcomings and the ways in which we could improve it. This made me a lot of enemies in the Ethereum world—and I felt at the time that Ethereans care more about walking the party line than about speaking the truth.

In Spacemesh, this problem was even more acute. Again, there were hardly any other developers on the team who were willing to speak publicly about the project. I remember on multiple occasions securing speaking slots for the project at major conferences, trying desperately to find someone else to give a talk, and failing. Just as in my time at Ethereum, at Spacemesh I ended up traveling a lot, and speaking about Spacemesh at every opportunity: here on Substack, on stage, on podcasts, at impromptu gatherings. Of course, Spacemesh had an even bigger challenge than Ethereum: it wasn’t just that people had a false impression, people had no awareness of the project, so the work felt even more important than it had at Ethereum.

Typically, the founder or CEO of the project would be the public face of the project and would bear the burden of this advocacy, but for various reasons, at Spacemesh the task fell largely to me. This ended up giving the community the wrong impression. Again and again, I’d find that people mistook me for the project founder or CEO. I’d specify my actual title, and later be handed a badge that said something like “CEO”, or find this title printed erroneously on a schedule. People were actually quite surprised when I told them that I was just an employee, just an individual contributor.

There were discussions internally about making me a cofounder after the fact, so that there would’ve at least been some legitimacy in the role, but in the end this didn’t happen, also for reasons I don’t fully comprehend.

Over time, I grew more and more uncomfortable with this situation. I was putting a lot on the line—my personal brand, my professional reputation, exhausting travel and countless days away from my family—with very little potential upside, and certainly without the upside of a project founder. This was a big part of the reason I chose to leave Spacemesh last year. The situation had clearly become untenable. In addition to being in a situation that was felt deeply misaligned and uncomfortable, I felt like I was misleading the community unintentionally, and that needed to stop.

There were lots of learnings here, too. One is that only the project founder can truly be the face of the project, at least in the beginning, and a project without a founder who’s willing or able to be in that role isn’t going to succeed. By contrast, the projects in this industry that do the best are almost inevitably the ones with the most public, most likeable founders: think Ethereum and Solana. Another is that it’s absolutely essential to align the upside and the downside: never agree to do the work of a founder without a founder’s upside. These lessons, too, will inform my choice of what to work on in the future, and will inform how I design my own projects in the future.