🎙 "Having Legal Tender in a Currency You Cannot Control Means You Cannot Print Problems Away:" Mariano Conti

In this week’s episode I speak with Mariano Conti, the former head of smart contracts at MakerDAO. Mariano knows the value of having permissionless and uncensorable currencies first hand —he started earning in Bitcoin in 2014 in Argentina because pesos would instantly lose value and it was hard to get dollars. When he learned about Ethereum he went all in and started working at Makerdao before DeFi was even a thing in 2016. When Dai was created, he was one of the first to take out a collateralized loan against his ETH and used that loan to buy a car. It must have been the first DeFi loan used to buy an actual physical thing.

The crypto space has come a long way since with an entire financial system built out of money legos and this week with a huge milestone of El Salvador becoming the first country to adopt Bitcoin as legal tender. 

Mariano talks about this historical moment and why it’s significant that it was a Latin American country to take this step. But he’s also cautious about what’s next, saying that he doesn’t expect many countries to follow suit as El Salvador had some very specific characteristics which made it easier for it to adopt Bitcoin, which other countries don’t have —namely, the fact that it was already dollarized. He also wonders whether it would have been better to adopt a stablecoin instead of Bitcoin.

Still, to Mariano, that doesn’t really matter as it will be the people of Latin America and elsewhere who will adopt crypto -- regardless of what governments say.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau and Dan Kahan.

🎙Listen to the interview in this week’s podcast episode here:


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Mariano Conti: I studied engineering. Been a developer most of my life, very interested in computers, technology. I was born in Argentina, but I used to live in Mexico City. I came back to Argentina around 2011, right about the time when capital controls were coming back to the country and it started a slow period of economic decline. It was already happening, but it kind of exacerbated it. 

I was working for a digital agency in 2014. I was supposed to be getting paid part of my salary in dollars, and we couldn't find a good way to do it. My boss asked me to fly to Miami and get a bank account in USD. That was extremely common. I wouldn't do it. I didn't have the time. The government had one exchange rate in USD, the official one, and then we had a parallel one, an informal exchange rate. And, of course, the government wanted to take your dollars and exchange it at a very bad exchange rate. So a black market of sorts was created. I had no good way of doing that, of protecting my savings. 

When we found Ethereum we said, oh, programmable money, the possibilities are endless. We slowly tried to join the community, the ecosystem, and we found Maker in 2016. I was lucky to start there as a developer back when there was no DeFi, no anything, it was just a few teams building and figuring out what could happen.”

And my boss said, how about I pay you in Bitcoin? And down the rabbit hole I went. I investigated. I said, okay, sure, pay me in Bitcoin. That was 2014. So that was my first foray into crypto. We discovered Ethereum in 2015 and went all in. we figured that was the next, you know...We were using Bitcoin as what it does best, storing value, but nothing else. 

When we found Ethereum we said, oh, programmable money, the possibilities are endless. We slowly tried to join the community, the ecosystem, and we found Maker in 2016. I was lucky to start there as a developer back when there was no DeFi, no anything, it was just a few teams building and figuring out what could happen. When I joined Maker, we were like 10 to 12 people, and it would be a year before releasing single collateral DAI. To me, marking the beginnings of decentralized finance, right? 

So in a nutshell, my journey through DeFi. I stayed at Maker for four years, up until August 2020. I helped with the oracles, helped with single multi-collateral DAI. It was probably the best period of my life. And then after four years, I said let's try something different and I became an angel investor in the ecosystem. I help out projects when I can, and I'm just a fan of Ethereum and DeFi and this community, and just try to stay active and around everybody.

Depreciating Pesos

CR: Great. So let me go back to a few points you made. First, you started earning in Bitcoin around 2014. and I think there are many people listening who might not have all the context of what was happening in Argentina and what is still happening in Argentina that made it attractive to you to be paid in Bitcoin. So what's the situation there for normal Argentinians, and also people in other Latin American countries like Venezuela, that makes Bitcoin attractive?

MC: The first one, of course, is inflation. I'm going to describe what's happening today, which is still very similar to what was happening in 2014. But I don't remember the exact numbers in 2014. So right now in Argentina, we have around 50% inflation. The government says you can buy $1 with 100 pesos. But that's a made up number. That's a made up exchange rate. The actual number is closer to 160. 

This is due to forced capital controls and things like that. I cannot legally buy more than $200 a month for savings. Anything other than that, and I have to go through different tricks and market things. One of the things that I can do is buy DAI, or USDC, or LLC to protect my savings. That is what so many people in countries like Argentina do. They just want to protect their savings against depreciating currency. And what they do is try to acquire dollars. That is mostly the easiest way that somebody can protect their savings. So they buy dollars, and the government does the opposite. They try to prevent normal citizens from buying dollars, because they want to have a strong local currency. 

I cannot legally buy more than $200 a month for savings. Anything other than that, and I have to go through different tricks and market things. One of the things that I can do is buy DAI, or USDC, or LLC to protect my savings. That is what so many people in countries like Argentina do. They just want to protect their savings against depreciating currency.”

It is always a tug of war, right? The government prevents the people from purchasing dollars, and people find ways to do it. So Bitcoin was the perfect way, even if it was volatile. And it still is. It gave me a way to denominate savings in something else. And the transparency, relatively speaking, the ease of transferring to somebody anywhere in the world, that became attractive too, at least talking as an Argentinian, a country and people who were at first very technologically-minded, and have always been looking for alternatives. So, that's why there was a big Bitcoin community early on, a big Ethereum community, a big DeFi community in Argentina. Because we're always trying to protect our lives’ work and our investments and our savings accounts. 

CR: To people who maybe don't know my own story, I lived in Argentina as well during this same time when you were first earning Bitcoin, between 2012 and 2016. And to me, it was crazy how it ingrained in society, the dollar concept and this parallel exchange rate. Like, there was the official exchange rate, but everyone knew that was just a made up number, because you couldn't actually buy dollars at that exchange rate. You had to go to the black market and go to a much higher exchange rate. 

And it was just such a normal part of Argentine culture, the black market, which is actually the blue market. It's called ‘Dollar Blue’. Like taxi drivers, everyone you talked to knew the exact exchange rate for the dollar on any given day. It's that kind of prevalent part of life. I'm wondering if that's been the case with crypto? I know back then, when I was there in 2013, Bitcoin wasn't so well known. It was part of this niche group of people, but it wasn't like taxi drivers were talking about Bitcoin. Is that different now? Has it gained more adoption?

MC: Not as much as I would have liked. But what actually has captivated a lot of people's minds and airwaves are stablecoins: that we do see a lot in the papers, on TV, even around the city plastered on walls everywhere, exchanges. Yeah, I don't go out a lot, but I've seen I've seen a lot of stuff for exchanges and others that they specifically talk about stablecoins. Why? Because they’re coins pegged to the US dollar, and like I said, it's another way for us to acquire dollars. And just like you said, taxi drivers, they would know exactly the exchange rate and things like that. 

Now, a lot of people are using stablecoins for the exact same purpose. When you come into some money, you want to exchange it for dollars because holding pesos, you're losing money every day. If you go to a bank, you can only legally get $200 at the somewhat official exchange rate. But other than that, you're left to acquire them in the ‘blue market’. People have been using stablecoins more and more. You know, Maker, the big, big push to make its way to Latin Americans, especially Argentina. 

“Now, a lot of people are using stablecoins for the exact same purpose. When you come into some money, you want to exchange it for dollars because holding pesos, you're losing money every day.”

It's not my favorite, but a lot of people use USDT, especially on cheaper blockchains other than Ethereum, which may not be as decentralized. But I can’t expect somebody here to pay fees of $100 a couple of months ago. So yeah, people have found stablecoins, and they use them, and they save them, and now, slowly, they're also earning, yielding them.

The First Collateralized Loan

CR: Interesting. I definitely want to touch on this point, given the big news today with El Salvador and Bitcoin. But I also want to go back to something from your story. You were earning Bitcoin, then you discovered Ethereum, went all in on Ethereum, so that means you asked to be paid in ETH rather than Bitcoin?

MC: I was still getting paid in Bitcoin, if I remember correctly, but I was exchanging almost everything for Ether.

CR: And then when you started working for MakerDAO, I want to hear your story but I haven't included it in my book. So Mariano was one of the first, if not the first person to actually take a collateralized loan on Maker and buy something with a stablecoin, with DAI. And that's basically this concept of collateralized loans, and borrowing is the foundation of how DeFi is built today. I think that this is just such an interesting piece, so can you tell it?

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