At ETHDenver, Weird DeFi Comes Out of Its Shell

CoinDesk’s DeFi reporter shares some perspective on Ethereum’s most optimistic conference to date.

AccessTimeIconFeb 24, 2022 at 8:40 p.m. UTC
Updated May 11, 2023 at 4:47 p.m. UTC
AccessTimeIconFeb 24, 2022 at 8:40 p.m. UTCUpdated May 11, 2023 at 4:47 p.m. UTC
AccessTimeIconFeb 24, 2022 at 8:40 p.m. UTCUpdated May 11, 2023 at 4:47 p.m. UTC

In spite of it all, the vibes were indomitable.

Between the Thursday Schelling Point mini-conference and the Sunday ETHDenver closing ceremony, Ethereum ether (ETH) token’s price fell as much as 15%. Meanwhile, Russian military equipment and personnel continued massing on the Ukrainian border, setting the stage for what has, as of today, become the largest land conflict in Europe since World War II ended in 1945. Just after the ETHDenver event formally ended, a $1.7 million non-fungible token (NFT) hack briefly appeared to be a wider OpenSea vulnerability that could have wiped out the fortunes of dozens, if not hundreds, of those gathered.

And yet, perhaps the most common conversation I had with attendees was jovial and conspiratorial: “Do you think Banteg is here?”

The pseudonymous purple bunny avatar was the most popular ETHDenver attendee who wasn’t actually in attendance. Like many, I was shocked when I saw that Yearn Finance, Banteg’s project, was hosting a booth at the conference. The OG “yield vault” is one of decentralized finance’s (DeFi) largest and most notorious platforms, and has a sprawling history as rich in innovation as it is in controversy. It was born in the COVID-19 years, is entirely online-native and a booth – a classic corporate fixture – felt at odds with Yearn’s rebellious ethos.

On Twitter, Banteg is an outspoken cypherpunk waging a one-rabbit campaign to keep DeFi weird and out of the hands of “the suits.” They’re known as much for sharing their (vast) hentai collection as they are for waxing poetic about the revolutionary potential of decentralized autonomous organizations (DAO). In many ways they serve as a figurehead for Yearn, embodying all of its ambition and weirdness.

Bringing any kind of internet-based culture into the real world is both awkward and inescapably uncool.

In Denver, I saw at least a dozen different name tags proclaiming its bearer as “Banteg,” as everyone took a turn at playing Ethereum’s own pathological, porn-posting Spartacus in place of the real thing.

I thought it was a fun bit, and one which benefited from some extra oomph courtesy of a semi-staged heist, and eventual recovery, of two hand-painted dakimakura pillows – a sting operation ostensibly organized by Banteg themself.

Reactions to the stunt on social media were decidedly mixed, however.

Yearn’s presence at the conference struggled with the painful reality that bringing any kind of internet-based culture into the real world is both awkward and inescapably uncool. While this is most acute among chuds wearing Bored Ape hoodies and the like, the rule nonetheless also applies to DeFi degens.

Growing pains

In DeFi’s case, facing an awkward entrance into the physical world is also starting to look like an inevitability. Indeed, the fabled DeFi Summer – when the notion of DeFi surged for the first time from an oddity to a true financial vertical – was back in 2020, the first summer of COVID-19 lockdown.

Until now, DeFi has thrived in a cloistered, largely online-only culture and environment. Similar to Yearn’s rise, from DeFi Summer to now, the ecosystem leapt from roughly $500 million to a staggering $200 billion in total value locked. In terms of deposits, that’s now the equivalent of a mid-sized American bank; in terms of the pace of growth, there’s not a lot of comparisons to be made without sounding hyperbolic. The steam engine? The invention of the internet? It’s closer than not.

The next foot to fall will be when DeFi begins integrating with legacy financial infrastructure. In addition to hosting a fish-on-a-bicycle booth at a conference, Yearn is cooking integrations with the likes of crypto blue-chips Coinbase (COIN) and Ledger, among dozens of other popular onboarding platforms, according to pseudonymous spokesperson Weaver.

And Yearn is not alone, either: MakerDAO is working with French banking giant SocGen on a bond trial; Aave and Compound are in a footrace to attract users to smart contract–based institutional lending; Centrifuge has hurdled $100 million in real-world collateral into DeFi. Short of a unified, concerted effort from an unprecedented alliance of global regulators to ban the tech entirely, I don’t see how it stops.

In cultural terms, what that means is the people who used to only tweet psychotic stuff on the internet are suddenly going to be shouting psychotic stuff in real life. We’ve gotten a glimpse of that the past few weeks: If Messari’s Ryan Selkis on Tucker Carlson and the Yearn guys playacting hentai stings at a 12,000-person conference are any indication, it’s gonna get real weird!

In more practical terms, though, what real-world integration means is that DeFi yields will soon be easily available to even the most unsophisticated of crypto investors, including those who have never ventured from a centralized exchange. Shortly after that, too, I’m aware of at least two companies set to offer publicly traded vehicles bringing those yields to crypto-curious savers who can’t even be bothered to wander off their boomer brokerage websites.

No one should be shocked when – in just a few months to years – this infrastructure is freely and easily available as part of savings, spending or retirement products. Nonetheless, outside observers largely will be shocked.

ETHDenver attendees wait in line to enter the venue. (Chet Strange/Bloomberg via Getty Images)
ETHDenver attendees wait in line to enter the venue. (Chet Strange/Bloomberg via Getty Images)

Out of the ether: 2020 vs. now

I spend the vast majority of my social, professional and intellectual life online. It warps my sense of reality in a variety of ways (months feel like years in DeFi, and money is increasingly an abstraction), but conferences like ETHDenver snap into focus time and scale. The word that often came to mind over the weekend was “parallax.”

Just a few years ago, at ETHDenver 2020, existential angst was perhaps the norm. The ecosystem was emerging from a devastating bear market and not everyone thought the rally was real. I was working for a crypto infrastructure provider and didn’t know if I’d have a job in a month, let alone a year.

“All of Web 3 is a startup,” one grizzled tech vet told me at the hotel bar back then, his eyes bloodshot from one too many Vodka Red Bulls. “This could all go to zero.”

Not so much today! In 2022, a popular posture among the old guard was to actively call for a bear market – just a lil grizzly to wipe out the NFT kids and the sudden proliferation of VCs (everyone is a VC these days). In just two years, the dominant question has shifted from “Will we survive?” to “How long until the next big thing?”

In Denver, I saw a former DeFi developer who is now a congressional candidate (and likely frontrunner), Matt West, shake down Selkis, the Messari founder, for money. Billionaire former presidential candidate Andrew Yang showed up to pitch a lobbying DAO, had a hard time getting in and then gamely stuck around for hours after to meet attendees. Fellow billionaire Kimbal Musk also came through to discuss a DAO of his own, and had a photo op with Ethereum co-founder Vitalik Buterin.

Just a short time ago, Ethereum was a technology and culture that felt perilously close to obliteration. Now, the rich and the powerful are choosing to hitch their wagons to it. That alone feels remarkable, but it’s even more stunning when you have the historical perspective.

There is a reason everyone is so optimistic: They’re winning, prices be damned, and it no longer seems close.

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Andrew Thurman

Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.