Now the second largest cryptocurrency by total value, Ethereum’s existence has been anything but boring. In its five-year history, it has seen the highest of highs during its 2017 bull market as well as lows in 2018 and 2019 that threatened its momentum and adoption.
But while much has been written about Ethereum, until now, its story had gone largely undocumented in its entirety.
Fortunately, former Bloomberg Markets reporter and current founder of The Defiant just published The Infinite Machine: How an Army of Crypto-hackers Is Building the Next Internet with Ethereum, a detailed history of Ethereum’s origins, characters and biggest moments.
To celebrate its debut, Camila was kind enough to share a few moments with us and detail some of her key learnings from researching her book.
When did you first start paying attention to Ethereum and why did you find it so captivating?
I first started paying attention to Ethereum in 2017.
As a markets reporter, what initially drew my attention to Ethereum was that 1) it was the platform supporting most ICOs, and 2) it was outpacing Bitcoin’s gains. The endless possibilities, thanks to the network’s ability to process any computer program, captivated me next. While Bitcoin was meant to be peer-to-peer money, Ethereum was meant to be peer-to-peer everything.
If Ethereum achieves its purpose, it would bring blockchain technology to a new frontier.
Finally, as I was researching for my book The Infinite Machine, I was also interested in the colorful army of young hackers filling up conference spaces in Singapore, New Delhi, Berlin, and Osaka, programming through the night at hackathons.
Why was now the right time to write ‘The Infinite Machine’?
When I started to write The Infinite Machine in 2018, there had been no book on the history of Ethereum.
This was noteworthy because even with Ethereum’s short history, the network’s impact was already book-worthy. It became the second-largest blockchain after Bitcoin in terms of market capitalization, and beat it in other measures, like number of transactions and more recently, value transacted.
Additionally, by that time, so many events had already shaped the project, such as Vitalik’s whitepaper, the launch in Miami, debate over how it should be funded, DAO hack, and ICO boom, etc. Amidst this activity, I thought it was time to document and put them in a coherent timeline.
What is the best elevator pitch for Ethereum that you heard in all of your research?
If Bitcoin is like a pocket calculator, Ethereum is like an iPhone.
What is Ethereum’s core value proposition?
Ethereum supports applications that can be accessed by anyone, anywhere in the world. Most importantly, they don’t rely on third parties and cannot be shut down or censored. Furthermore, while today’s internet isn’t equipped to handle money, Ethereum enables an internet of value.
What are the most interesting applications that you’ve seen on Ethereum?
Automated market makers: AMMs (Uniswap, Bancor) are exchanges that rely on pools of tokens and an automated pricing formula to guarantee that traders are always able to swap between any token pair, no matter how illiquid it is. They were game-changers for decentralized exchanges, allowing anyone to easily and permissionlessly trade ERC20 tokens and ETH using incredibly simple interfaces.
Lending and collateralized borrowing: MakerDAO, Compound Finance and others are enabling anyone to borrow against their digital assets. This is done almost instantly without the need to create an account or interact with anyone. Most of these collateralized loans are being used by traders to buy more crypto. But on the other side of the trade lie lenders who are depositing their crypto and receiving the interest on those loans. Effectively this is enabling anyone in the world to deposit digital assets, including stablecoins pegged to the dollar, like Dai and USDC, and get interest in return, creating something like dollar-based savings accounts.
The ICO craze of 2017 brought unprecedented attention to Ethereum, but it also disappointed a lot of people. What is the legacy of the ICO craze?
The ICO boom of 2017 brought billions of dollars and thousands of people into Ethereum. Unfortunately, part of that money was spent on startups that didn’t deliver or were outright scams, but a good portion was also used to fund today’s leading Ethereum projects (Kyber Network, 0x, Synthetic, Aave, etc.).
ICOs allowed entrepreneurs to fundraise any amount of money, from anyone in the world, without the need to go to VCs and banks, for the first time. It was Ethereum’s first financial application. But incentives were misaligned as startups were able to get several millions of dollars with nothing more than a white paper and no guarantees that they would deliver on their promises.
Entrepreneurs and investors learned from this experience and are now implementing more sustainable fundraising models, for example via DAOs and governance tokens which require a functioning protocol.
What are your thoughts on the DeFi movement? Will these applications be Ethereum’s killer use case?
Finance is one of the most important industries in the world, yet it runs on ancient rails. It’s beginning to be updated and Ethereum is leading the charge.
DeFi is delivering the cypherpunk dream of a parallel financial system. It’s actually happening; from value transfers, to payments, to lending, borrowing, and trading. All these applications are working right now, on-chain, and are open to anyone.
What do you expect from Ethereum for the rest of 2020 and beyond?
I expect DeFi to continue growing by any metrics – value locked, volume, users, number of projects – at exponential rates. I also expect Eth2 to be rolled out slowly but surely. Finally, Layer 2 solutions will help alleviate increasing demand for those who use Eth1.
Thank you Cami
Additionally, if you are interested in learning more about the growing DeFi movement be sure to join us on Friday, July 31 at 13:00 UTC, when Kraken Editor-At-Large Pete Rizzo will lead an all-star panel designed to introduce clients to the DeFi opportunity.
The session will dive deep into the challenges it’s seeking to solve and explore how traders and investors might position accordingly.
It is for any current or potential traders/investors interested in understanding the roadmap ahead for Ethereum and DeFi and how to best adapt their strategies.