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

Umami Labs CEO Alex O'Donnell grew up in suburban Philadelphia before attending Temple University and studying literature and economics. That path led him to spend seven years as a financial journalist at Reuters, where he trained on M&As and IPOs.

He says his academic focus created a “beautiful natural synergy” when it came to financial journalism. However, he said he was “pissed off” by the industry as it struggled at home during the Covid-19 pandemic. “It was really a three-way alliance between journalists, government officials and tech companies trying to control the flow of information,” O'Donnell said in an interview with Cointelegraph.

He started dabbling in cryptocurrencies, which led to his introduction to Umami Dao and eventually the creation of Umami Labs.

O'Donnell and his wife, Sanjana, are preparing for a “third, little person” to join their family next year. Meanwhile, he said he's also gearing up for another crypto-related venture. The details aren't fully public yet, but he says he plans to release more information in the coming months.

1) How did you make the transition from journalism to crypto?

I was a journalist for ten years covering primarily mergers and acquisitions. I have always had an interest in finance and technology. But when the pandemic hit, I started to get a little frustrated with the mainstream media. It's the first time I've become a little disdainful of my own industry's role in the information economy. So I started paying more attention to issues like privacy, censorship, and other issues that I had not paid much attention to before.

In the year In 2020, I spent most of my time covering the Covid-19 pandemic. There was indeed a tripartite collaboration between journalists, government officials and technology companies trying to control the flow of information. It wasn't even that the official line was wrong. First was the suppression of dissent. That really peaked my interest in decentralized platforms.

At that time, I started to have a meaningful interest in crypto. Coming from a financial journalism background, decentralized finance (DeFi) particularly caught my interest. In 2021 I started actively investing in various crypto protocols as a retail investor. I've been getting more involved in DeFi communities, and one of them is the predecessor of Umami – Zero Toohm.

2) How did you come to create Umimi Labs?

I participated in the regular retail investor Zero Thomas, as many people did. It was a pretty small community, so I was able to quickly connect with the developers building the protocol.

But they didn't have a clear direction of what they wanted to do next. They put in millions of dollars in capital and mostly just sit there. It felt like someone had to step in, and the developers were, to be honest, more than happy to give the responsibility to someone else, which ended up being me.

3) What is your focus now?

What I'm most excited about now is zeroing in on a problem that was so obvious to me when I was at Umami. Basically, as Umami Labs is set to launch our first product in early 2023, I have been meeting with several crypto-focused hedge funds and large investors. This loophole required a way to earn interest without earning USDC, USDT, and other stablecoins. It's just completely off the chain.

Ihavealready developing another product that was designed to generate returns on stablecoins focused on Umami, butthe real needisfor but safe and boring and reliable as a normal savings account, but people who were holding stablecoins on on-chain wallets. There have been prompts by other players in that area, but I haven't seen a full solution to that problem yet. A combination of properly controlled components and seamless mechanisms is needed to move the chain forward and off.

It's something I'm personally focused on right now. I'm collaborating with others on developing something and getting feedback from other early users. We'll have more details to share over the next couple of months. But now it is still in the early stages.

4) What do you think will be the biggest crypto trends in 2024?

In my personal opinion, I think the peak of the crypto market in 2021 was actually the high water market of today's extremely DIY, unregulated, community-driven bootstrapping protocols. I think that in the coming years, including now, we will see a very positive shift where DeFi will stand out as a completely different ecosystem. It will be a subset of TradFi anyway.

Related: Coinbase Launches Regulated Crypto Futures Services for US Retailers

I don't think the distinction between DeFi and TradFi will last. Clearly, we are seeing a number of ETFs in the registration process. In the background, major players are obtaining licenses to conduct a wide range of financial activities in USCoinbase, such as being registered as a Futures Commission Merchant and also as a designated contract market with the CFTC. This allows them to trade and open accounts in the futures markets. Those focus on Bitcoin and Ether.

Coinbase and Circle are stacking the various components that allow them to become deeply integrated operators in traditional finance. I think that's very interesting. In parallel with that, you have people like Fidelity and Franklin Templeton and BlackRock developing regulatory crypto investment products. Franklin Templeton is developing its own tokenized Treasury Bill ETF. It is clear that it will be a source of strength for the industry over the next several years.

5) What is the most exciting investment for you right now?

In fact, the only thing in crypto I'm interested in as a long-term investment is Ether and derivatives of stocks and re-stocks. I think we're at a point where most potential investments in crypto are highly speculative. The initial value of the tokens is still unclear. I think ETH is one of the few exceptions. So I hold ETH, and am comfortable with it as a long-term investment.

I pay attention to stacking protocols like Lido and Eigen Layer. Eigen allows people to take ETH they have already deposited and redistribute it into any number of different staking protocols. This greatly expands the range of activities that can be performed safely. I expect to see more builds on Aigen and other similar protocols over time. I think we will see a proliferation of investment funds and ETFs focused on taking ETH and incorporating and re-incorporating it.

6) What do you think is the main barrier to mass adoption of blockchain technology?

At the bleeding edge of blockchain will be a complete integration of protocols and more established companies operating in the traditional financial sector that are integrated and regulated. We should see players integrating sophisticated smart contracts and taking full advantage of the potential of blockchain. We will then begin to see blockchain become part of everyday financial transactions and activities.

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Cointelegraph magazine writers and reporters contributed to this article.