Last Thursday, while the Argentine government was announcing that July inflation had reached a whopping 7.4%, the highest monthly rate in 20 years, thousands of locals were walking into the Convention Center in Buenos Aires for the start of ETHLatam.
Robust attendance at the event made sense in Buenos Aires. Ethereum Foundation Executive Director Aya Miyaguchi noted during the opening keynote on Thursday that the city has generated one of the world’s strongest Ethereum communities.
“The hackathons and crypto gatherings in this place were the origin of birth to the teams and individuals that have built this beautiful community,” Miyaguchi said. The Buenos Aires event was the first of nine ETH conferences that will take place across Latin America, with the final event in Panama on Oct. 28.
ETHLatam marked Argentina’s first mainstream, international crypto event since the crypto boom started in the South American country in 2019. Argentina has welcomed millions of new users to the crypto segment since then, becoming one of the world's top 10 countries for crypto adoption.
In attendance was Buenos Aires Mayor Horacio Rodriguez Larreta, a candidate for the country’s presidency next year who has tested integrating crypto into the financial system. In April, he announced the city would allow residents to pay taxes using cryptocurrencies.
In addition, Diego Fernández, the city’s secretary of innovation and digital transformation, announced Thursday that Buenos Aires plans to deploy Ethereum validation nodes in 2023. He added that the effort “has exploratory and regulatory purposes” and will help the city of three million people “develop adaptable regulation” for crypto.
If successful, Buenos Aires would become one of the world’s first cities to deploy Ethereum nodes. And it also plans to be among the first to launch a blockchain-based digital identity platform, TangoID, which would give residents control over their personal data as of January 2023.
On Saturday, Ethereum co-founder Vitalik Buterin tried to explain the Ethereum overhaul known as the Merge in a video call in Spanish. He also talked about various topics, including LUNA and the Tornado Cash developer arrested in Amsterdam.
The strong relationship between Buterin and Argentina is nothing new. In December 2021 he visited the country, met with different personalities and spoke to a full house of 1,200 people. Buterin even attended a guided tour through Buenos Aires with Jerónimo Ferrer, a bitcoin evangelist who explains to foreigners how the Argentine economy and its runaway inflation promotes the use of crypto.
One more crisis, but with crypto
Since mid-2019, Argentina has been living through a financial crisis that has led to high inflation and a devaluation process that took the Argentine peso from 40 to the U.S. dollar in August 2019 to 350 in July this year.
Argentina is used to systematic traumatic, economic experiences, such as the so-called corralito in 2001, when the government confiscated savers’ deposits. Crypto growing in popularity is logical, given how younger generations watched their parents suffer because of government mismanagement.
Currently, the Argentine government's foreign exchange restrictions prevent locals from buying more than $200 per month in commercial banks, although Argentinians can access foreign currency in brokerage houses or stablecoins in crypto exchanges.
Crypto has beaten the traditional stock market in Argentina. According to Argentina’s Securities Exchange (Caja de Valores), Argentinians had opened 575,000 accounts with brokerage houses as of the first quarter of 2022. The local crypto exchange Lemon alone has more than 1.3 million users.
Increasing use of debit cards that local exchanges such as Lemon, Buenbit and Belo launched in the last year and a half, can partly explain Argentina’s crypto boom. They have made crypto transactions user friendly and include cashbacks. Binance, the world’s largest crypto exchange by trading volume, joined the boom in early August.
Crypto yields double those of developed markets have led many users to avoid interest rates in Argentine pesos and turn to generating returns in stablecoins tied to the U.S. dollar, such as DAI or USDC. Exchange houses, do not offer interest rates, which makes them less desirable given high U.S. inflation.
Argentines have even learned to use crypto to hedge against government announcements on Friday afternoons or weekends, when the financial markets are already closed. On the July Saturday following the resignation of Argentina’s economy minister, Martin Guzmán, due to the economic crisis, Argentines purchased between two and three times as many stablecoins as they do on a typical weekend. They were hedging against a potential devaluation of the Argentine peso on Monday when equity markets reopened. That became reality.
Many young people involved in the Argentinian crypto ecosystem have decoupled their incomes from the local government by earning in U.S. dollars, euros or crypto working abroad from Argentina.
First generation entrepreneurs
ETHLatam featured a first generation of crypto Argentinian entrepreneurs who have become global players in their segments, such as Decentraland, which is building a metaverse on the Ethereum blockchain, and the decentralized finance (DeFi) audit firm OpenZepellin. The bitcoin (BTC) wallet startup Muun also appears among the outstanding cases.
The three firms had their beginnings in Casa Voltaire, a building in Buenos Aires’ Palermo neighborhood. Casa Voltaire was a meeting point for different crypto developers between 2014 and 2016.
Now, a second wave of crypto entrepreneurship is generating promising projects. The Argentinian entrepreneur Patricio Worthalter talked at ETHLatam about POAP, a Proof of Attendance Protocol that gives unique NFTs to people to commemorate and prove they attended an event (virtual or physical).
The Argentina-born Exactly protocol passed a testnet at ETHLatam. It is a decentralized, non-custodial, open source protocol providing an autonomous interest rate market to lenders and borrowers. Gabriel Gruber, Exactly co-founder and CEO, told CoinDesk that the protocol, setting interest rates based on credit supply and demand, will allow the users to frictionlessly exchange the time value of their assets at both variable and fixed interest rates for the first time in DeFi.
Another Argentinian, Web3 entrepreneur, Juani Gallo, shared details of FundIt, a crypto crowdfunding project, created in partnership with the Argentinian entrepreneur Damian Catanzaro.
According to Manuel Beaudroit, CEO at the local exchange Belo, Latin America is among the few regions using technology to solve specific, daily problems, compared to Asia or the U.S., which use tech to improve trading and speculation systems.
“In Argentina and Latina America, we need to solve issues of inflation, remittances, value protection, and savings in general,” Beaudroit told CoinDesk. “That is what a large part of the ecosystem is working to solve and bring these applications to the ecosystem.”
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