Episode 358

Camila Russo – Laying Bare the Story of Ethereum

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Camila Russo is a financial journalist, starting her career writing for Chile’s largest national newspaper. She then spent 8 years at Bloomberg covering the Argentine market from Buenos Aires, the European stocks from Madrid, and analysed macro emerging markets moves for the Markets Live blog in New York.

She is the founder of the Defiant and recently wrote and released a book on the foundations of Ethereum, “The Infinite Machine”. This tells the story of how 19-year-old coding genius Vitalik Buterin led a “ragtag group of feuding hackers with no business plan and no live product” to pioneer a whole new way of raising money, on a platform that’s grown to a value of $27 billion. It is being hailed a complete hit and we highly recommend you give it a read.

Camila joined us to chat about how her journey through journalism led her to crypto, and how she became a successful author.

Topics discussed in the episode

  • Camila’s background and how she got into the crypto space
  • Becoming involved with Bitcoin in Argentina back in 2013
  • Her move to the US and the introduction to Ethereum in 2017
  • What made her decide to write a book and the process involved
  • Some interesting stories that didn’t make the final cut
  • Camila’s views on the Ethereum narrative and how it has changed over time
  • Camila’s view on the current DeFi situation and the risks of regulators becoming more involved
  • What is The Defiant?
  • How to follow Camila


Sebastien: I’m here with Camilla Russo, who is an author now, but a writer and the founder of The Defiant, which is a newsletter, a podcast, a YouTube channel about DeFi. She’s very present on Twitter as well, and very present on all sides Ethereum and crypto conferences. Thanks for joining me today.

Camila: Thank you so much for having me excited to be here.

Sebastien: I just finished reading your book a couple of days ago. I thought it was great. It was a really interesting and fun read. I was around the time that Ethereum was launching and everything, so it was cool to go back and think back about those times. It was just a nice walk through memory lane, in a lot of ways. That was fun, but we’ll talk a bit more about the book during our conversation here, but first I let’s talk a little bit about you and share with our listeners a bit about your background, where you came from and how you got to where you are today.

Camila: My background is obviously in journalism before going full time, The Defiant and writing The Infinite Machine. I was at Bloomberg for eight years covering markets. I started with an internship in New York with Bloomberg. Then they sent me to the Buenos Aires office to cover Argentine markets, mostly focused on the currency. Then I spent there like four and a half years in Argentina. Then I asked to move to Madrid where I covered European stocks, which wasn’t so exciting after covering the crazy Argentine market.

I took the chance to move back to New York when they opened this new team called Markets Live, which covered micro-markets real time. That’s really, when I started to cover crypto day to day. I had written about Bitcoin before in Argentina in 2013, that’s where I wrote my first story on Bitcoin and when I became interested in crypto, but I was in New York, in 2017 covering markets. I had remained interested in crypto since I first wrote about it in 2013.

I took the test to really start focusing on crypto with the boom. There was just an insatiable appetite for Bitcoin stories from Bloomberg readers. That’s how I got into the space. Then at the end of 2017, I decided I wanted to write a book on the history of Ethereum, then early 2018. I got the deal with Harper Collins and started focusing on writing the book almost full time. In 2019, I left Bloomberg to finish the book, also because I wanted to be more independent. Then June, 2019, I founded The Defiance. Yeah, that’s right where I am.

Sebastien: Let’s talk a little bit about, you mentioned you’re from Argentina and that you started covering Bitcoin in 2013. Quite early, what activity were you noticing back then in Argentina in terms of Bitcoin use and how has that evolved in your view since then?

Camila: Just one small clarification and I’m actually from Chile, from Santiago. Yeah, so I was covering markets with Bloomberg in argentina. Now the reason why I pitched this story on Bitcoin when I was mostly writing about our argentine bonds and FX was a big part of what I was doing was like, the big story was inflation in Argentina. There was 25% inflation and the currency controls, which was Christina Fernandez, second term. A few days into her term, she decided to ban all dollar purchases. That was a big ongoing story.

I was covering the different ways that Argentines had to protect against inflation and currency controls. That’s how I got to Bitcoin like a colleague said, Hey, check out this weird digital currency that’s gaining steam in Argentina. I saw there was a Bitcoin meet up with like over a hundred people going. I said, okay, so this is like a real thing. I spoke with some of the leading exchanges there, and some like Bitcoin holders in Argentina and asked them why they got into Bitcoin in the first place.

That really opened my eyes, that there was this possibility of having a completely independent money that didn’t rely on central banks and financial institutions that couldn’t be influenced by governments. There’s like this active Argentine community within crypto. It’s because they it’s very easy to understand the value proposition of cryptocurrencies. When you’ve been living through that economic mismanagement with your local currency, all your life. I lived through that as well. I was earning my salary in arginine pesos.

As soon as I got to Argentina, the first thing I was told by my Bloomberg colleagues was when you get your salary, you need to exchange it for dollars or else you’re going to lose money. I was doing that. Then just dealing with all the hassle of having to, you have to pay your rent in dollars because property owners weren’t taking pesos. It was all a big hassle to be living with that high inflation.

I went through some of that same process of discovering Bitcoin and getting it right away. I reported for this particular story and it was hard to convince my editors to actually take it. It was really early for Bitcoin and Bloomberg was not really covering it. Half of my editors just didn’t really understand what it was, the ones who had heard about it really thought it was some sort of scam, so it took like efforts to convince them to actually take this story.

Sebastien: In this context of hyperinflation. You mentioned that at some point it became illegal in Argentina to convert pesos into dollars. Even in this context, it was hard for you to convince your editors to write about this alternative currency that would allow people to essentially have more freedom with what they could do with their money.

Camila: Yeah. Because you have to like put yourself in the shoes of a Bloomberg editor. They’re like sitting in New York, their readers are very obviously in traditional markets. They’re not investing in crypto. They’re obviously serving those readers who understand buying dollar bonds from an Argentine investor’s perspective or buying some sort of Argentine stocks or something to protect their savings, but that’s as far as they would go. To venture outside of traditional assets and consider that this is really a new currency, that’s not backed by anything other than its own system could be a legitimate, viable, investing alternative was really hard for them to understand.

Sebastien: Even outside of Argentina or places with high inflation. It was hard. Even here in France, I remember for years, and even now, I mean, I had lunch with someone yesterday with whom I had to explain what crypto was, and this is in 2020, it’s hard sometimes to like think back to those times and how difficult it was to explain these concepts to people. It was just so novel.

Camila: I think it’s easier when you’re in Argentina and you can understand how hard it is to deal with inflation. It’s a little bit mindblowing that somebody can tell you what you can and can’t do with your money. I don’t know if I hadn’t lived through that, I would have had a hard time understanding it as well, but it’s not like some abstract concept. Cause it’s like, it’s something that people were already doing. A normal average person was already taking whatever they could save and buying dollars with that. It’s something that every Argentine does.

For the government to one day, just say, you can’t do that anymore. The options are literally gone. You had the option in your online bank account, one day, to take your pesos from your local account to your foreign currency account and buy dollars just online. That, from one day to the next, was just simply not there. If you went to a bank and said, I want to buy dollars, they just wouldn’t sell them to you.

It’s really mind blowing if you’re sitting in the US and you’ve never had an issue with your bank, we never had this crisis where the bank tells you, no, your deposits are locked in, or you never had double digit inflation. You never had currency controls. You have to trust your government, you trust your financial institutions. It’s even harder to understand why cryptocurrencies matter, and that’s Bloomberg. I was dealing with people who think that they’re like bread and butter is covering the traditional market. It was just even harder.

Sebastien: When you moved to the US then you were covering crypto there in the US as well. What was the reception there? Of course, some time had passed, crypto had gotten more into people’s minds. What were your editor’s views on crypto and how was it being covered?

Camila: By that time? It was completely different. I was in the markets team, which, I said, it’s like a live blog of like running market commentary. We were a small team and people in the team had freedom to write about whatever seemed interesting. I started to write posts on Bitcoin and there was like, talk about a Bitcoin ETF at the time. I was writing about about ICOs and my managing editor for markets noticed that I was interested in crypto. At the same time, there was rising demand for stories on Bitcoin and crypto. This time it was the other way around, my editors came to me asking for more crypto coverage. That was a big change.

It was a reflection of Bitcoin becoming more recognized, more accepted as like an actual investment, and recognized that it’s not a scam. It’s an actual legitimate thing, which some editors might be more skeptical than others, but in the end, they saw the value of covering it. That was a big change from 2013. They came up to me and asked me to help with crypto coverage on just the wider Bloomberg news, not just for the blog. I started, I divided my days with like, I need to have at least two posts for markets live in the morning. Then the afternoon was just to write up a crypto. I had those two jobs.

Sebastien: When did you first hear about Ethereum?

Camila: In 2017 covering crypto for Bloomberg? The first time was when I wrote one of the first stories on ICOs for Bloomberg. I remember just trying to wrap my head around what these things were. It’s like Bitcoin, but it’s different digital currencies and anyone can issue them. They’re on top of this other block chain called Ethereum and I was coming at crypto coverage from a markets perspective. I didn’t have a lot of technical knowledge about how blockchains work or crypto works or anything. I understood the value proposition of Bitcoin from having it covered, in Argentina, back then, but that was my extent of knowledge about it.

Writing that first ICO story was when I started looking at Ethereum for the first time, and then just, as I kept covering the space, for the rest of 2017, I started to learn more and more about it and understood Ethereum is a blockchain like Bitcoin, but why it’s valuable it’s because it’s, it tries to be more flexible than Bitcoin. That’s why it’s easier for people to issue all these different tokens on top of it. That’s seeing all of this frenzy around ICOs on these tokens on this like millions of dollars pouring in. I was like, there’s something here this decentralized way of raising money and Ethereum is the platform enabling this.

Sebastien: At what point does one say I’m going to write a book about something? That’s never something that’s ever crossed my mind, or I think a lot of people’s minds. At what point you do decide to write a book? Then what is the process? I mean, forget about the process of writing the book, but like, what’s the process of figuring out what book you want to write? You could have written this book, I mean, it’s a very descriptive account of what happens. It’s mostly in the third person, you could have written a fiction, you could have written a firsthand account of your interviews. What was the process for the creative process of figuring out what book you wanted to write?

Camila: For background. I always wanted to write a book, that’s been a goal of mine forever. I got into journalism because I like writing, growing up one of my favorite books was In Cold Blood: Truman Capote. I think that was the first time I realized, wow, you can write about real life, nonfiction in a way that reads like a novel. That idea to me was really powerful because going into journalism and especially business journalism, which is usually so dry. I found that stories can make these very complex dry concepts come alive if you tell them in the right way.

Getting the example from Truman Capote and then especially Michael Lewis, I saw, okay, wow. This is a really powerful way of speaking about nonfiction. Obviously I love fiction it’s what I personally read the most, but I just thought if I was ever to write a book, I would want to provide like value to readers by bringing something from the real world and making it colorful and read like a story, because I just thought there’s like so many interesting stories in the real world that need to be highlighted.

Why should I go and invent another story from my own imagination when there’s already so much to tell in real life, at some point it was probably when you get into the Bloomberg internship, they give you a list of recommended readings. One of them was a Mike Lewis book, I think it was Liar’s Poker. When I read that book, I was like, okay, I need to find a story that I can pick up like Michael Lewis does for his books. I was always on the lookout for that, what can be a story that I can tell in this way, something I can make into a nonfiction novel? I think with crypto was the first time that I thought, okay, this is it. Like, this is where I need to find my story to tell.

Sebastien: Sorry, when I said fictionally, I meant to say like a dramatized version of it, something a little bit more like, of course could make a fiction of the story of Ethereum, but something akin to the Bitcoin Billionaires book. It’s like this more dramatized version of the facts, but like the way you wrote the book is like this very factual account that reads like a novel, it does read like a story, but it’s like this very factual thing based on your interviews, based on your conversations. When you’re reading it, you really get the idea like, this is how things happen. This is exactly what happened. Yeah.

Camila: I love the Bitcoin Billionaires, but you know, reading the forward where the author says some of these things were fictionalized. There’s always like that question in the back of my mind as I was reading the book, okay, what part did they make up? I don’t love that to be honest. I love the book, but I think it’s just a personal preference that I wanted everything in my book to be as factually accurate as possible.

Sebastien: I don’t want to make this interview entirely about the book, but like, I’m just curious about the creative process that goes into writing a book like this. There are passages in the book where, of course there’s conversations, right. You’re citing people, you’re setting conversation, you’re citing Skype exchanges or things like that. She interviewed this person and this person gave her the account, but like, how does he really remember exactly what he said? Well, then there must be some kind of like this is the account of what that person said that they thought they said at the time. It might be a little bit stretched, but like generally it’s an account of what happened based on people’s stories. Right?

Camila: Definitely. As accurate as possible. I think the way to make sure I’m not straying too far from reality is just to verify, to make sure I’m not using just one person’s version. For example, a conversation, getting both like everyone’s accounts of those who were involved and contrasting that and the process involved, many interviews and making sure that everyone involved in a situation or conversation was interviewed and I got their side. In that way I could reconstruct what happened.

Sebastien: One thing that’s interesting about this and you came to Ethereum around 2017, you said, and you’ve now become like this personality in the community. You have your podcast, you have your newsletter, you get the YouTube channel, you speak at all these conferences. It reminds me of Neil Strauss and what he went through when he wrote The Game. He went into this wanting to understand this community of like pickup artists and then by doing so he himself became a pickup artist and well known for this. You went into this wanting to write a book about Ethereum and then you became like this personality within the Ethereum itself. Did you anticipate that by writing this book, you would become this personality and go and build The Defiant and be a voice in the community? Or was that something intentional?

Camila: No, I could have never anticipated anything of what happened later with this book. The reason for writing it first and foremost was achieving this lifelong goal that I had of writing a nonfiction novel. Then my plan was, after writing the book, to just continue doing journalism, I thought this book will be great in cementing my journalism skills, my writing skills, just adding to my profile or whatever, as a journalist. As a writer, not as someone in Ethereum.

My original plan was once I finished this book, I would go and freelance and you know, what I wanted to do was just write more magazine type stories and start writing like tech and finance features for different magazines. Then see what I wanted to do. I mean, I always wanted to start my own media company or just my own venture at some point. That was still in the back of my mind. But my original plan when I left Bloomberg was finished this book and then freelance and freelance in general tech and finance, not specifically on Ethereum.

It wasn’t part of the plan, but I think as I was researching and I was in the Ethereum community at all these hackathons on conferences and talking to people, I really saw this DeFi ecosystem blossom. For me it was just fascinating what was being built. It just seemed like a huge opportunity to cover because nobody was doing a great job at it, I thought. I just saw that opportunity and I was really fascinated by what was going on. I would have covered it anyways, but I also just always wanted to have my own thing as well. I thought I’ll start with a newsletter and see how that happened.

Sebastien: Let’s get into the nitty gritty here. Give us some juicy anecdotes. What are some interesting stories that happened on the sidelines that you could share that aren’t covered in the book, but are like meta things that may have happened.

Camila: One story that I had to cut from the book was that I think is really interesting, but it just, I had so many characters my editor was just, I’m getting lost with all of these, you need to cut some people out. I had like in the ICO part of the book, I had a Peter McCormick story.

Sebastien: What’s the story.

Camila: His history is that he got into the space because he started trading tokens. It’s funny, because he comes off as this fake like Bitcoin maximalist, but he came into the space trading Ethereum tokens and obviously Bitcoin, but just riding this ICO boom. I don’t remember how much money he actually had at the top, but it was a large amount, I don’t know, say a million dollars or don’t quote me on that. But he started out with a relatively.

Sebastien: I think I’ve heard this story before. We’re also like where he had quite a bit and then lost quite a bit.

Camila: Yeah. He refused to sell and then just lost it all. In that process he started because in the beginning he was just trading coins and not really learning about crypto or anything, but in the process of the crash, he started to actually learn and understand more about Bitcoin and his family and friends were always like asking him to teach them what was going on. That’s how he initially started. I think it was initially a newsletter and then became a podcast. That’s how he started his business. Now obviously like his main business is his communications media company. I think it’s a fascinating story of going, earning all this money or getting all this money from tokens, losing it all, but then just still being able to build an actual business out of it. That was one interesting story that I was really sad to cut and had to leave and be editing.

Sebastien: Are there any other stories that you had to leave out?

Camila: There were so many people involved in Ethereum. I mentioned a lot of them in the book and there were names I had to cut up. That was just a big piece of the book, a chunk of it, that I had to cut out. Another anecdote is my interview with Joe Lubin. The first interview I had with him was really weird. Like, it was really hard for me to get him talking.

Sebastien: I know what you mean. Having interviewed Joe a couple of times and you know, he’s great and everything, I love talking to Joe, but like he’s a bit hard to read sometimes. That’s for sure. Yeah.

Camila: It was so tough. I was just so intimidated by it because all the interviews, most of them were super easy, conversations flowed. I always began the interview by just asking the person to go back and tell me basically their life story. I was really looking to learn about the person, not just what they did on Ethereum, but just understand them and be able to convey their personality and their backstory. All the interviews started in this way just, tell me about your childhood, your, how you were brought up, your family, all of that. It was the wrong approach with him because he’s a more private person. He just closed up for most of the interview. He was like, why are you asking me?

Sebastien: Yeah. I could see how that might go a bit awry. Yeah. I mean, that’s one of the things I liked about the book. Cause like there’s so many people in crypto, we know so many of them, we see them on Twitter or meet them at conferences, et cetera. But I think one of the most fascinating things about the people in crypto are their background stories because there’s just so many fascinating ones. One of the things I’ve loved about doing this podcast is like asking that question. We usually ask at the beginning, which is how did you get involved in this? A lot of times people have similar backgrounds, but there’s sometimes where there’s like these little nuggets of people that, how did you end up here? And that was one of the things about the book that I really liked too, is getting to learn about some of the background stories with people that, for whom I didn’t really have the background story.

Like I said at the beginning, I thought it was a really great read. I wasn’t in the weeds of Ethereum from the beginning, but I was following it pretty closely and hanging out at the Brent Lane office once in a while and you know, getting to meet some of the people early on, I felt like I kinda knew this, as I was reading the story like, Oh yeah, I remember that. I remember this, there wasn’t anything that was particularly surprising. I would have wished that you would have gone more into the juicy details or like some of the background stuff that like people didn’t really know about or may you may have been revealed. Is this something that was intentional or are you trying to like protect people or were you mindful of not disclosing too much?

Camila: Yeah I definitely tried my best to get like all the main parts of the Ethereum story, and then cover as much as possible. I think maybe if you’re obviously like Ethereum and involved in it, maybe a lot of this stuff isn’t surprising, but you know, I would hope for most people in crypto that weren’t as involved in any Ethereum, they didn’t really know like all the backstory, but you know, about the more like juicy backstories and stuff like that, I really followed really the like Bloomberg standards with this story. If there was some sort of gossip that I heard from one person and they didn’t wanna go on their record and, nobody else would verify on the record or like somebody would hint that was the case, but not really provide any evidence. I wouldn’t include it.

I really wanted it to be like airtight like that nobody could come at it and be like, this is wrong. What my biggest fear was that somebody would just take down the book and ruin it because like they had some issue with it. If anybody has an issue with the book, I want to be able to defend it like, here are five on the record interviews backing this up, here is the documentation backing this up. I guess like, that’s why maybe you didn’t have like all the gossipy stuff.

Sebastien: One part that was totally new to me was the whole part about the house. I didn’t know about any of that. What did, I mean, I kinda knew that there was a house at some point, but like, I didn’t know who was there and the house in Switzerland. Yeah. Let’s switch gears a little bit and talk a little bit about Ethereum and DeFi. Of course, it’s a very hot topic at the moment one could say. How would you describe the arc of the Ethereum narrative and how that’s changed over time and what is the current Ethereum narrative? You know, if there is like a canonical narrative.

Camila: Yeah, it’s interesting. I think the narrative of Ethereum, when it first launched, it was meant to be a world computer, right. This extremely flexible platform for developers to build whatever they dreamed of. That included all the crazy applications, it was, name an application, put blockchain on it, and this is what we’re building on Ethereum. It was just full of crazy ideas. Then 2016 was more about obviously the DAO and decentralized organizations. The narrative was more focused on that. Then I guess, in 2017 it was ICO and this decentralized way of raising money through tokens that would later be added to these different applications on platforms, mostly as payment currency within the platform.

Then ICOs got a really bad name because not many of them delivered, obviously like many were scams and regulators came in and then there was this market crash and people lost money. Nobody wanted anything to do with tokens and ICO. Then I think 2019 the narrative started went from Ethereum in the bear market, which from the outside just looked like a barren land there, wasn’t a lot going on, at least like on the surface, if you went to like hackathons, you would see there were more like builders and activity then than ever, but.

Sebastien: Like around Devcon4 that kind of time.

Camila: Yeah. Then there was a new narrative starting to rise from the ashes, which was decentralized finance. I think that’s been the narrative so far and it’s the evolution of ICO. I think ICOs were maybe the first iteration of DeFi because raising money is still a financial application, but now instead of having just one financial application or financial service being built, on Ethereum, you have a whole ecosystem of financial applications.

I think that’s the main narrative now. Obviously there are other sectors being developed on Ethereum. Games, reputation, identity, other things, not just finance, but I think finance has definitely taken the majority of attention and not just attention, but also usage of Ethereum. If you look at applications and tokens coins taking up the most gas and transactions, they are related to DeFi, there’s also a bunch of like scams in the top gas users, but so yeah you can definitely say that DeFi is the main narrative on Ethereum right now.

Sebastien: Yeah. When you spoke with all the people that you interviewed for the book, and I’m thinking, more specifically, of people who were there at the beginning, the co founders, the early team and everything, what was your impression of their feelings on how things had gone? Did you get a feeling that they were okay with where Ethereum had landed, which is now this crazy DeFi space, this degenerate farming as people call it, were there any regrets or is everything fine, and this is the way things should be? What was your sense of the general yeah. Impressions about where things had taken us.

Camila: When I spoke with the early co-founders, I spoke with them in like 2018, early 2019, maybe, like DeFi really hadn’t taken off when I did those interviews. This ‘degen’ variation of DeFi is even more recent. I wasn’t like all this stuff hadn’t happened yet. I wasn’t able to get their opinions on all of that. In general their views on Ethereum thinking about what Charles said, what Anthony said, what Gavin said, Vitalik they were all hugely proud to have been part of the project, of the early founding team. Even Charles and Gavin who went off to build their own blockchains. They were all very proud of what Ethereum had become.

I think at that time, Anthony was a little bit disappointed. I interviewed him in the middle of the bear market. He was investing in all these other tokens on Layer Ones, or looking at them. Obviously he was very proud to have been part of the founding team, but I got a sense for him, but he would have wanted more for Ethereum. I talked to him recently for a Consensys conference, and he was like, now I’m more bullish than ever. He came around. Yeah for everyone, it was an amazing project to be a part of. Everyone was happy with how things had turned out for Ethereum, but like for Gavin and Charles, they were happy to see how far Ethereum had come since the early days. But they’re also trying to do something better at the same time.

Sebastien: I’m curious, being so connected in DeFi, reporting on DeFi, what do you make of what’s happening in the space? Coming from having reported what’s going on in Argentina and covering sort of the excesses of global finance, what’s your position on the DeFi space and the exuberance that’s happening in DeFi right now?

Camila: I think what’s happening in DeFi, to me, is really encouraging to see that there is an alternative financial system being built using these decentralized networks, taking out intermediaries. I think it’s really amazing that these protocols are not disrupting yet, but like laying the foundations to disrupt or to try to replace at least for some people traditional financial services. There was a column by Ian Lee from IDO in The Defiant yesterday, which really laid it out really clearly and said, Bitcoin and Ethereum allowed the financial base layer to upgrade because we’ve been using the same for decades and century even, money’s been transacted in the same way for years and years. It’s hugely inefficient, using networks that are not meant to carry value.

Now with public blockchains, we can have this global network for money. Bitcoin and Ethereum are able to upgrade the like base layer infrastructure of money. But now with DeFi, we’re getting to the application layer of financial services and having a more open, more transparent financial services than we have today. It’s obviously very early days and there will be huge improvements and big evolution from where we are today. I think the progress so far has been amazing. I mean, we have ways to exchange and swap tokens in a decentralized way. We have ways to lend and deposit assets and gain passive interest, ways to take out collateralized loans in a permissionless way, and all these more exciting use cases like this, no loss lottery, and yield hopping and all these more crazy things that you couldn’t even do with traditional finance. I think that’s amazing. It’s hugely encouraging.

I think with the recent speculation with yield farming and all the meme tokens that’s the nature of this space, which is open and permissionless. People will experiment and try crazy things, people will try to take advantage of others. Humans are motivated by greed, making money. That’s what they’ll do. Because this space is open and permissionless that this is happening. I think hopefully people involved in DeFi so far are more or less, I would think more experience in dealing with cryptocurrencies. I don’t, I don’t think just mainstream people are getting into yield farming right now. I think the space is still small and still very niche, but you don’t see this cliche of the shoe shining person or taxi driver talking about DeFi.

That’s a good thing because it’s so risky right now. I think hopefully people risking their money in these unaudited, crazy yield farming experiments, know the risks that they’re taking and if they do and they know the risk, it’s their money to do what they want. I wouldn’t judge all the DGN farmers for experimenting. I think in the end, what we saw with ICOs is there was a huge inflow of capital and also talent to Ethereum. Some people left when the bear market came, but many people stayed. A lot of the big projects in DeFi and Ethereum day came out of that Boom. If we happen to have this huge DeFi fueled bubble, I believe that it will be a net positive for Ethereum and for decentralized finance in the long run as well.

Sebastien: I have different points of view about this and I think you sum a lot of them up, but you know, my position is I’m fascinated by the experimentation that’s happening in DeFi. I’m fascinated by this sort of permission-less nature and these new financial instruments that people are coming up without with an error. I think like liquidity pools and all these things are super interesting and the yield farming and all that stuff. At some point it gets, even for someone who’s in crypto, gets complex, right. Like, it’s really hard to grasp, but it’s nonetheless interesting. It’s like an interesting technical and philosophical thought experiment to think about this stuff. I love that part of it when I think about the actual, tangible things that are happening though, I question the actual value that exists in DeFi.

However you want to, you want to count it, Ethereum and DeFi combined is about 50 billion in market cap today, or something like that. How much of this is overpriced in terms of the actual value created? You could say the same about Bitcoin you could say the same about like other cryptocurrencies, but like, since we’re talking about Ethereum and since like Ethereum is the place where everyone’s investing their money right now, and there’s lots of speculation and happening that’s the one that I’m mostly concerned about and in the best case scenario Ethereum, and crypto does take over a lot of the financial infrastructure that exists today. If you listen to guys like Jim Bianco, they’ll say that it’s possible that in the future we have a crypto reserve currency and that will be great, right?

I think that would be great, but in the worst case scenario, what ends up happening is that we have all these very financial instruments that are even more complex than the ones that exist today, that are reserved to a very small elite of people that are able to understand them and manipulate them and create them. We end up with even more inequality than that exists today. That’s maybe very far out. This will be like a 50 or a hundred year prospect, but the totally uninhibited free market, I think, probably would produce something similar to what I described, this very dystopian future. Yeah, I do worry about that.

When I see what’s happening in DeFi, I do question, so the value that is actually being created and I think Vitalik when he called this out and during the ICO, boom, I thought it was very noble of him to call it out and say, okay, how many unbanked people have we on banked? Do we deserve all this, all of this value, you know? Yeah. I don’t know what the point of that is, but I guess it’s just to take pause sometimes and to really think about what it is that we’re creating and what do we want to create? And I think like most people in the Ethereum community are well intentioned people and perfectly smart people, but when one is creating a tool or a new financial instrument should also consider this human aspect, right? Like what were people going to be using this for? And what’s the point of this, right?

Camila: The difference that I see with ICOs is that there is actual value being created. It’s not just tokens flying around, going from one bag to the next, they are actualy working on projects, protocols behind DeFi and Ethereum tokens. Take something like Compound Finance, which on one side, yes, there is speculation and people are taking collateralized loans to borrow crypto to buy more crypto and speculate. But the other side of that trade is people depositing their part of their savings to earn passive income, passive interest. I think financial systems across the spectrum work because of speculators on one hand and non speculators on the other hand, you need speculators to create activity and liquidity and to allow this fluid transfer of value.

On the other hand, there are non speculative use cases and that’s happening in DeFi as well. I think it’s hugely valuable to be able to, for anyone in the world, to be able to have a dollar based savings account, gaining interest. From people in Argentina, I said, who simply cannot buy dollars to be able to freely buy DAI and put it in Compound or cDAI and start gaining interest on that, on their savings people in Venezuela the same and not just people in emerging economies, but people in developed where interest rates are zero or negative and you have to pay the bank to store your money. They can also see use from this. I think there’s definitely speculation, but there’s real value being created.

I think it would be hard to create a more unequal financial system than what we have today with DeFi just because of how it’s structured.

I think the current financial system, one is fragmented in geographies. Each country has its own financial system and it’s closed off to the rest. You already have, because of its very architecture, you have like castes of financial systems where you have like the developed nations, the US is its own economy. People from outside can’t really access those markets like DeFi or like an open economy. It’s a global financial system that anyone can access. The fact that it’s permissionless, you don’t need to ask anyone to use these applications. I think just by their very architecture, they should create a less unequal financial system. I see it that I see that it would be very hard to have something worse than what we have today with traditional finance.

Obviously it won’t be perfect. There will be whales, people controlling large amounts of tokens and having more control over protocols and using it to vote in their way and we’ll have all those problems, but it would still be a lot better than what we have today, right now. Yeah. There are like governance whales in compounds, but right now, you can’t even have that option with the bank you use, you cannot participate in governance. It doesn’t matter if you’re a whale or not. You know? I think I’m encouraged with where this is going. Even if there is speculation, I do see actual value.

Sebastien: I certainly hope so. After the ICO, boom, we talked a little bit about this earlier, regulators came in and started clamping down. Now ICOs are much more structured like security tokens or as utility tokens. There’s some regulatory arbitrage going on there, but at least in Europe, it’s pretty clear cut what is a security token offering and what is not. I think also in the US. Do you sometimes worry that the exuberance that’s happening in the DeFi space at the moment might tip off regulators and they might see it as this as a very dangerous speculative environment and start heavily regulating what people can do in DeFi regulating things like stable coins, making them illegal. For example, what are your thoughts on like the risks that this exuberance might be the demise of DeFi?

Camila: I think that is a really valid concern to have because effectively regulation is what kills ICO. I think right now DeFi is small enough that maybe it hasn’t caught a regulator’s eye. Also, I don’t think a lot of mainstream people are involved. There’s not a lot of risk of knowledgeable people in crypto losing money. That’s protected this space a little bit, but I think it’s only a matter of time really for regulators to really start watching the space. I think there is certainly a risk that regulatory action could dump in activity in DeFi. I think steps that teams in DeFi are taking to decentralize themselves as much as possible, may protect them somewhat, but I’m skeptical that’s the  perfect solution to regulatory risk.

I think it can help to have a decentralized organization and unlike token holders controlling a protocol, because in the end, if you want to go after someone, how do you decide who you should go after? I think maybe that does offer some protection, but in the end I think regulators can say transacting in stable coins is illegal. Right. Then what do you? As we’ve seen the way that regulators work is dealing with the bridges from crypto to the real world. Maybe you can continue using DeFi, but you can never really cash out or you can’t transfer that to us dollars or your local currency. I think those are the ways that regulators can come in.

The other argument that I’ve heard while in India is that the US is being more open to crypto innovation because they don’t want that innovation to go elsewhere. I think there’s a lot of lobbying for this from crypto people, talking with regulators, being like this is going to happen, it might as well happen in the US and not elsewhere. If you really start clamping down on this industry, you’ll get really brilliant developers and entrepreneurs going outside of the US to build this. I think maybe that’s one way that DeFi can be protected.

Sebastien: I don’t know what’s the state of the ongoing or pending regulation in the US, I’m one of the staff members of the French association for the development of crypto assets. We work closely with the industry here. We’ve been following and working with European regulators on regulatory regime, that’s coming to Europe and I don’t know how much I can talk about this yet, but we got a draft of the regulation that’s coming that will be presented to the commission shortly. It does not look good for stable coins in Europe. Of course this is just a draft that’s going to be presented to the commission, that it has to go through the entire legislative process, et cetera.

Stable coins would definitely get a big hit here in Europe. If that happens, then it becomes very difficult for regulated exchanges to deal with stable coins. One of the, one of the things that this good signal though, however, is that things really go decentralized, right? So then you basically have more decentralized exchanges, more decentralized platforms. Like the trading happens there and then maybe centralized platforms are able to trade in Ether or some of the layer ones, but mostly of the rest of the activity happens on decentralized exchanges. Hopefully we can do an episode with that one when we know a little bit more and more when we’re able to talk about it more, but.

Camila: Wow, that’s so interesting to hear. Would they regulate centralized exchanges offering stable coins?

Sebastien: Let’s just take a hypothetical here where stable coins or some sorts, some types of stable coins are illegal, then regulated exchanges would not be able to list them. If you have a type of stable coin that is illegal in the EU, then obviously the exchanges will have to delist.

Camila: Then you would have to go through like, say Ether in a regulated exchange in Europe, and then take that Ether to Uniswap, and then buy through there.?

Sebastien: Yeah, I mean, yeah, it’s early to tell, but.

Camila: Wow. Do you think people would be liable for just holding stable coins on their like decentralized wallet?

Sebastien: I don’t know. I think that’s hard to do, right. Yeah. I think that’s really hard to do, but then yeah. I mean, projects could also be held liable. Right. If you create a stable coin, that is that he’s illegal in Europe or in any jurisdiction for that matter, then I think you can be held liable for issuing that stable claim, making it, or issuing that asset and making it available to people in that jurisdiction. It’s still very like early information that we have yet to really digest. We just got this like a couple of days ago. We’re still like reading through it.

Camila: Right. I wonder how they would view that. Like, say somebody creates a stable coin and it’s not based in Europe, but obviously the stable coin is available everywhere in the world. How do you regulate that? It’s like, because people in Europe can access it and yeah.

Sebastien: Yeah. That gets tricky then. Right. It gets tricky then, who is the issuer? What is their responsibility to those who are holding edge? Do they have to do KYC when yeah. It’s like, it gets really tricky then when you’re talking about it at the asset level, I do want to talk about The Defiant a little bit before we wrap up. Yeah. Tell our listeners, what is The Defiant and what is it about and what can people learn at The Defiant?

Camila: Sure. I started The Defiant in June last year after seeing all this activity and decentralized finance picking up and not a lot of good coverage around it. I started it as a daily newsletter. I said, I’ll just have this medium for communicating all the latest, most important developments in DeFi. My goal would be just to explain it in simpler terms because everything is so complicated and provide additional analysis with it. That’s where I started. I said, I’ll try to keep it to a daily newsletter, if not, I’ll go to a weekly one. But in the end it was more than enough for me to keep on doing the daily.

I started doing it just not really knowing how I would do it. I had never done something like that. It was really scary to be putting something out there without the Bloomberg name at the time. I had always been protected by that. Now it’s just my own name writing without an editor. That was super scary. But you know, after like the first few issues, I started getting really good feedback. it started really growing quickly without any marketing other than my own Twitter.

That was really exciting to see. It just motivated me to just keep going. I added a podcast because I was already doing a weekly interview for The Defiant on recording it. I might as well just do a podcast with this. Then recently I started a YouTube channel and the idea with a YouTube channel is to bring DeFi a wider audience, just make it more digestible because right now the newsletter is more for people already who already know something about DeFi. It can get very specific at times. The YouTube channel really wants to get at that broader audience. Yeah. I’ve taken on a small team of contributors who write for The Defiant very frequently. It’s really turning into a small media company. My goal is to grow it from here.

Sebastien: I get your newsletter. I think I’ve listened to one or two of your podcasts. I didn’t know about the YouTube channel. As I was researching this, I looked up the YouTube channel and it’s like some really good content there. It’s like really well produced, high production quality. I think you’re partnering with another project to do a lot of this content, but it’s like, it’s really well done. It’s at the Vox level type content. Yeah.

Camila: Yeah. It’s amazing. It’s amazing what Robin can do. I mean, this partnership has worked out amazingly, Robin from Harmony, we met because he was shooting a documentary last year. He interviewed me for that. Then he came up to me and said, Hey, I want to do DeFi content at Harmony. Like, what do you feel about partnering up for it? Basically it’s like a sponsorship. Harmony is sponsoring my videos for YouTube, but instead of paying me like the sponsorship money amount, they’re producing the video with Robin. It’s really worked out great.

Sebastien: It’s fantastic. Congratulations. I mean, that’s as someone who has a small media company and knows about the struggles of having a small media company you’re doing really fantastic work. How have you, I know you have sponsors on the newsletter and you’re also selling like through sub stack. I’m also curious about a meta topic here, but what’s been your experience with monetizing the content.

Camila: Yeah. For me when I saw The Defiant really picking up on growing, I realized this can be my full time job. I was thinking, should I keep doing this on the side and do like freelance work. But then I decided to let this be my full time job. This is going to be my business. I started with Substack makes it very easy to add paid subscriptions to it. One day like late last year, I just decided to turn on paid subscriptions and still have most of my content be free, but to have a group of subscribers receive added value. Like some, one newsletter a week has blocked off content. That’s just for subscribers. They also get like a full transcript of my podcast, and they get access to a subscribers only discord channel where we chat about what’s going on.

That’s worked out well. Then earlier this year I started getting emails from DeFi companies wanting to sponsor the newsletter. I saw that as, okay, this is like another way to monetize the newsletter. Yeah, I started, I accept things, sponsors for the newsletter. It’s helpful to have that journalism background, because for me, it’s just very much rooted in how I think about media, that there needs to be this Chinese wall between sponsors and content. I will never take payment for the content itself in the newsletter when people like want to pay for like content in the newsletter, it’s clearly marked and separate from the rest of the content.

This is a sponsored post and it’s written by them. I’m not writing it. I thought about this for a long time. Like, should I take sponsors? Like, is it gonna ruin or like taint The Defiant, but I think I’m happy with the balance so far because I obviously have, or I think I have maintained that improve the quality of the content and really have kept it separate with the sponsors. It’s really making this a viable business and I’m just really happy to be able to do this full time.

Sebastien: Where would you like to see it in the next say five years? Where are you hope to see that Defiant?

Camila: Well, my big vision for The Defiant is for it to become the Bloomberg of the open economy. I want to be trusted place for decentralized finance and yeah, just the open economy in general finance DAO’s and FTS, all of that and provide quality journalism and content, and also like data and information about this space.

Sebastien: Cool. Well, thanks so much for joining me today. Where can people find you and where would you like to send our listeners to? Yeah.

Camila: Yeah. On I’m active on Twitter. You can subscribe to the defiance at TheDefiant@substack.com and you can find my book on Amazon if you search for the Infinite Machine there. Yeah, it was a great conversation, really happy to have come on.

Sebastien: Thank you. Yeah. Actually I’m looking at your book in the background and someone was someone on Twitter was asking what is on the cover of the book. I think I know the answer and I think it’s a unicorn.

Sebastien: Yeah. Yeah. It’s a pixelated picture of a rainbow and unicorn.



  • Algorand

    To learn more about Algorand and how it’s unique design makes it easy for developers to build sophisticated applications, visit algorand.com/epicenter

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