6 Questions for Alex O’Donnell about the future of DeFi

Umami Labs CEO Alex O’Donnell grew up in suburban Philadelphia and went to Temple University to study literature and economics. That path led him to seven years as a financial reporter at Reuters, specializing in mergers and acquisitions and initial public offerings.

He said his academic focus created “a pretty natural synthesis” when it came to financial news. However, he said he was “disillusioned” with his industry while being cooped up at home during the Covid-19 pandemic. “There is indeed a three-way alliance between journalists, government officials and technology companies trying to control the flow of information,” O’Donnell told Cointelegraph.

He began researching cryptocurrencies, which led him to launch Umami DAO and eventually create Umami Labs.

O’Donnell and his wife Sanjana are preparing for a “third, smaller person” to join their family next year. At the same time, he said he is also preparing for another cryptocurrency-related venture. Details have yet to be fully disclosed, but he said he plans to release more information in the coming months.

1) How did you transition from journalism to the cryptocurrency industry?

For the better part of a decade, I’ve been a reporter, covering mergers and acquisitions. I have always been interested in finance and technology. But during the pandemic, I became disillusioned with mainstream media. That was the first time I started to become more cynical about my industry’s role in the information economy. So I started paying more attention to privacy, censorship, and other things that I wasn’t that interested in before.

I spent much of 2020 covering the Covid-19 pandemic. There is indeed a three-way alliance between journalists, government officials and technology companies trying to control the flow of information. Even the official line is correct. First, dissent is suppressed. This really sparked my interest in decentralized platforms.

That’s when I started to take a keen interest in cryptocurrencies. Given that I come from financial journalism, decentralized finance (DeFi) particularly interests me. It was 2021 when I really started actively investing in different crypto protocols as a retail investor. I am becoming more and more involved in the DeFi community, one of which is the predecessor of Umami – ZeroTwOhm.

2) How did you create Umami Labs?

I participated in ZeroTwOhmas, just like many people, I am an ordinary retail investor. It’s a very small community, so I was able to quickly get in touch with the developers who built the protocol.

But they don’t really have a clear sense of direction as to what they want to do next. They raised millions of dollars in capital, but much of it sat there. It felt like someone needed to step in, and frankly the developers were more than happy to hand the responsibility over to someone else, which ended up being me.

3) What are you focusing on right now?

What I’m most interested in right now is focusing on solving the problems that became very clear to me during my time at Umami.Essentially, asUmami LabIn preparation for launching our first product in early 2023, I met with many crypto-focused hedge funds and large individual investors. There is an urgent need for some way to securely earn interest on USDC, USDT, and other stablecoins without having to move completely off-chain.

I was already focused on developing another product at Umami aimed at generating stablecoin returns, but what was really needed was something as safe, boring, and reliable as a traditional savings account, but for those holding stablecoins on an on-chain wallet For currency people. Other players have dabbled in this area, but I haven’t seen a complete solution to this problem. It requires combining the right off-chain regulatory entities with seamless mechanisms both on and off the chain.

This is something I’m personally focused on right now. I’m working on something with others and getting feedback from potential early adopters. We will share more details in the coming months. But for now, it’s still early days.

4) What do you think will be the biggest cryptocurrency trends of 2024?

In my personal opinion, I do think that the high point of the cryptocurrency market in 2021 is indeed the high-water market in this era of very DIY, unregulated, community-run bootstrap protocols. I think over the next few years, including now, we’re going to see a very clear shift where DeFi no longer looks like a completely separate ecosystem. For all intents and purposes, it will be a subset of TradFi.

Related: Coinbase launches regulated cryptocurrency futures service for U.S. retail traders

I don’t think the difference between DeFi and TradFi will last. Obviously, we’re seeing a lot of ETFs going through the registration process. Against this backdrop, major players are acquiring licenses to engage in a wider range of financial activities on USCoinbase, such as:Registered as a futures broker, it is also a designated contract market of the U.S. Commodity Futures Trading Commission (CFTC). This authorizes them to operate exchanges and open accounts within the futures market. Of course, the focus will be on Bitcoin and Ethereum.

Coinbase and Circle are accumulating different components that will make them deeply integrated operators in traditional finance. I think this is very interesting.Meanwhile, firms including Fidelity, Franklin Templeton and BlackRock are also developingregulatedcryptocurrencyinvestproduct. Franklin Templeton is developing its own tokenized Treasury ETF. It’s clear that this will be a source of momentum for the industry in the coming years.

5) What are you most excited about right now as an investment?

In fact, the only cryptocurrency I’m interested in as a long-term investment is Ethereum and its staking and re-staking derivatives. I think we are still at a stage where the vast majority of potential investments in cryptocurrencies are extremely speculative. The underlying value proposition of the token remains unclear. I think ETH is one of the few exceptions. So I do hold ETH, and I’m comfortable with it as a long-term investment.

I’m looking at staking protocols like Lido and Eigen Layer. Eigen allows people to re-stake their already staked ETH to any number of different peoplerelatedPledge Agreement. This greatly expands the range of activities that can be accomplished without trust. Over time I expect to see a lot of builds based on Eigen and other similar protocols. I think we will see a proliferation of investment funds and ETFs that specialize in ETH staking and re-staking.

6) What do you see as the main barriers to mass adoption of blockchain technology?

Blockchain cutting-edge protocols need to be fully integrated, requiring more mature companies to integrate into the traditional financial sector and be able to operate compliantly from a regulatory perspective. We need to see mature players integrating complex smart contracts and leveraging the full potential of blockchain. Then we will start to see blockchain become part of everyday financial transactions and activities.

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Cointelegraph Magazine writers and reporters contributed to this article.