Best-selling author Camila Russo on the volatile world of decentralized finance
When Camila Russo cut her teeth on crypto in the early 2010s, Bitcoin was the only currency around. The author, journalist and founder of media brand The Defiant was living in Argentina and reporting on financial markets for Bloomberg at the time. The country was suffering through a currency crisis and citizens were looking for ways to hold onto value.
“In Argentina, one of those safe havens was Bitcoin,” she says in a Plumia Talks live interview. Russo explained how cryptocurrency helps people when traditional governments have failed them and the opportunities – and risks – of decentralized finance (DeFi).
From dollarizing to Bitcoin in Argentina
When Russo was living in Argentina, she says that local convention was to convert as many Argentine Pesos into US dollars as possible. This worked until the government put in currency controls that stopped people from buying US dollars in an effort to stem inflation.
Some citizens went to casinos, buying chips with their credit cards and cashing out in US dollars to get around the controls. Others went to the then-novel world of cryptocurrency. “Holding pesos meant losing 25% of my savings over a year,” Russo says. “That really erodes the confidence and trust in your local currency.”
Bitcoin’s volatility makes it an imperfect solution for emerging economies. The Argentine Peso is volatile due to inflation, but Bitcoin also fluctuates wildly. This caused a lot of short-term shocks for users, particularly in Argentina where individuals tend to withdraw money from Bitcoin to pay for life essentials.
“If you're selling your Argentine Pesos to buy Bitcoin, sure, maybe in five years, it goes up to 100%,” Russo says. “But maybe in the next two months, it goes down 50%. So that's not super helpful for people in emerging countries.”
Unlike Bitcoin-style cryptocurrencies that have their own market value, stablecoins such as USDC and DAI are pegged to existing currencies like the US dollar. “You're able to not only buy stablecoins on decentralized exchanges, you can also deposit these stablecoins on lending platforms and earn interest,” Russo says.
Decentralizing your finances
Decentralized finance – known as DeFi – is an open-sourced alternative to the current financial system. According to Russo, DeFi offers an opportunity for anyone to grow their assets.
While the traditional financial world has a lot of barriers, usually around minimum spends to start investing, DeFi opens up a new opportunity to invest in digital assets with much smaller dollar amounts. While there’s still risk associated with DeFi investing, in particular that there’s no deposit insurance like many banks offer, Russo says that DeFi savings accounts typically offer higher interest rates than traditional banks.
“There's a lot of crazy stuff you can do in DeFi,” Russo says. “But I think just starting with savings in a high-yield savings account is great for both people in emerging markets and developed nations.”
In 2020, Russo wrote The Infinite Machine: How an army of crypto-hackers is building the next internet with Ethereum, one the first books on Ethereum that tells the story of the humans behind the currency. “It's much like any other startup story,” she says. “With egos and investors and co-founder drama.”
Russo now runs The Defiant, a media company focused on DeFi, full-time. Currently, The Defiant is a Web 2.0 business, run on a Wordpress site with a Substack newsletter. Russo wants to transition to Web3 infrastructure. “I want to do this very purposely,” she says. “So that it's not like I'm sticking a token into Defiant and calling it Defiant DAO.”
The Defiant’s community is very active. Russo says she noticed how members don’t just want to talk about DeFi content, but are also interested in The Defiant as an organization. “When you create a brand that stands for something and that delivers value, people start to create an emotional attachment,” Russo says. “They want to get involved.”
