6 Questions for Alex O’Donnell about financial journalism and the future of DeFi
Umami Labs CEO Alex O’Donnell grew up on the outskirts of Philadelphia before attending Temple University to study literature and economics. That path led him to devote seven years of his life as a financial journalist at Reuters, where he specialized in M&As IPOs.
He said his academic focus created a “pretty natural synthesis” when it came ot financial journalism. However, he said he became “disenchanted” with his industry while he was cooped up at home during the Covid-19 pandemic. “There really was a three-way alliance between journalists, government officials and technology companies trying to control the flow of information,” O’Donnell said in an interview with Cointelegraph.
He began tinkering with cryptocurrency, which led to his introduction with Umami DAO — and ultimately his creation of Umami Labs.
O’Donnell and his wife, Sanjana, are preparing for a “third, smaller person” to join their family next year. In the meantime, he said he’s also gearing up for another crypto-related venture. The details aren’t fully public yet, but he said he plans to release more information the months ahead.
1) How’d you make the transition from journalism to crypto?
I’d been a journalist for the better part of a decade primarily covering mergers and acquisitions. I always had an interest in finance and tech. But I started becoming a bit disenchanted with the mainstream media around the time of the pandemic. That was the first time I started becoming a bit more cynical about my own industry’s role in the information economy. So I started paying more attention to issues like privacy, censorship and other things I had not taken as much interest in before.
his wedding in 2023. Photo credit: BR Studio’s Christian Garcia.
In 2020 I spent most of my time covering the Covid-19 pandemic. There really was a three-way alliance between journalists, government officials and technology companies trying to control the flow of information. It wasn’t even that the official line was wrong. It was that dissent was being stifled in the first place. That really peaked my interest in decentralized platforms.
At that point, I started to become meaningfully interested in crypto. Given that I came from financial journalism, decentralized finance (DeFi) in particular caught my interest. I really started actively investing in different crypto protocols as a retail investor in 2021. I was getting more involved in DeFi communities, and one of them was the predecessor to Umami — ZeroTwOhm.
2) How did that lead to you creating Umami Labs?
I got involved in ZeroTwOhm as a regular retail investor aping in as many people did. It was a pretty small community, so I was able to pretty quickly get in contact with the developers building the protocol.
But they didn’t really have a clear sense of direction about what they wanted to do next. They had bootstrapped several millions of dollars in capital that was largely just sitting there. It felt like somebody needed to step in, and the developers were, frankly, more than happy to hand responsibility off to someone else, which ended up being me.
3) What are you focused on now?
What I’m most interested in now is zeroing in on a problem that became very clear to me during my time at Umami. Essentially, as Umami Labs geared up to launch our first product in early 2023, I was meeting with a lot of crypto-focused hedge funds and large individual investors. There was this gaping need for some way to securely earn interest on USDC, USDT, and other stablecoins without having to just completely move off-chain.
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I already focused at Umami on developing another product that was designed to generate returns on stablecoins, but the real need is for something that is as secure and boring and reliable as a conventional savings account, but for people who were holding stablecoins on on-chain wallets. There have been forays into that area by other players, but I have yet to see a complete solution to that problem. It takes a combination of having the right regulated entities off-chain and seamless mechanisms for on- and off-ramping on-chain.
That is something I’m personally focused on now. I’m collaborating with some others on developing something, and getting feedback from potential early users. We’ll have more details to share within the next couple of months. But for now, it’s still in the early stages.
4) What do you think will be the biggest crypto trends in 2024?
In my personal opinion, I do think that the high point of the crypto market in 2021 really was the high-water market of this era of very DIY, unregulated, sort of community-run bootstrapped protocols. I think that going in subsequent years, including now, we’re going to see a pretty stark shift in which DeFi stops looking so much like a completely separate ecosystem. It will for all intents and purposes become a subset of TradFi.
Related: Coinbase launches regulated crypto futures services for US retail traders
I don’t think the DeFi versus TradFi distinction is going to last. Obviously, we’re seeing a number of ETFs undergoing the registration process. In the background, major players are obtaining licenses to engage in a wider array of financial activities in the U.S. Coinbase, for example has, registered as a Futures Commission Merchant and also as a Designated Contract Market with the CFTC. That authorizes them to operate an exchange and open accounts within the futures markets. Those will be focus, of course, on Bitcoin and Ether.
Coinbase and Circle are accumulating different components that will allow them to become deeply integrated operators within traditional finance. I think that is very interesting. In parallel to that, you have folks such as Fidelity and Franklin Templeton and BlackRock developing regulated crypto investment products. Franklin Templeton is developing its own tokenized Treasury Bill ETF. It’s pretty clear that will be a source of momentum for the industry over the next several years.
5) What’s the most interesting to you as an investment right now?
Really, the only thing in crypto that I’m interested in as a long-term investment is Ether and its staking and re-staking derivatives. I think we’re still at a point where the vast majority of potential investments in crypto are extremely speculative. The underlying value proposition of the tokens is still 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 paying attention to the staking protocols like Lido and Eigen Layer. Eigen allows people to take ETH they’ve already staked and re-stake it to any number of related staking protocols. That very significantly expands the range of activities that can be done trustlessly. I expect to see, over time, a lot of building on top of Eigen and other similar protocols. I think we’ll see a proliferation of investment funds and ETFs that specialize in taking ETH and staking it and re-staking it.
6) What do you think is the main hurdle to mass adoption of blockchain technology?
There needs to be a complete fusion of protocols on the bleeding edge of blockchain, and more established companies that are integrated into the traditional financial sector and capable of operating compliantly from a regulatory perspective. We need to see established players integrating sophisticated smart contracts and taking full advantage of blockchain’s potential. Then we’ll start to see blockchain becoming part of everyday financial transactions and activities.
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Sir Keir Starmer and Rachel Reeves have hinted at tax rises to come when the chancellor delivers the budget later this month.
In a Downing Street speech this morning, Ms Reeves will address “speculation” that an increase in income tax will be announced during the highly-anticipated statement on 26 November.
Politics Hub: Follow chancellor’s speech live
Sky News political editor Beth Rigby said it was “highly unusual” for the chancellor to make such a speech, but the Treasury believes she must “try to prepare the ground and make the argument for another big tax-raising budget”.
“I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come,” Ms Reeves will say.
Last night, Sir Keir gave Labour MPs a taste of what’s to come by warning of the need for “tough but fair” decisions.
Speaking at a party meeting in Westminster, he said the budget “takes place against a difficult economic backdrop”.
“It’s becoming clearer the long-term impact of Tory austerity, their botched Brexit deal and the pandemic on Britain’s productivity is worse than even we feared,” the prime minister said.
“Faced with that, we will make the tough but fair decisions to renew our country and build it for the long term.”
It comes after Sir Keir refused to confirm at Prime Minister’s Questions last week that the budget would honour his party’s manifesto pledge not to raise income tax, national insurance or VAT.
Having raised taxes in last year’s budget, notably national insurance on employers, Ms Reeves has also previously promised not to “come back for more” during this parliament.
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Will Labour raise taxes?
The PM and chancellor’s warnings come after reports suggested the Office for Budget Responsibility is expected to downgrade its productivity growth forecast for the UK by about 0.3 percentage points.
That would leave Ms Reeves with a larger than expected fiscal black hole to fill, possibly up to £30bn.
She is said to be considering a proposal from The Resolution Foundation, a left-leaning thinktank close to the government, to raise income tax by 2p but cut national insurance by the same amount.
The thinktank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would raise vital cash while protecting working people.
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A promise-breaking budget?
Reeves to prioritise NHS and cost of living
Giving a further flavour of what to expect, Ms Reeves will this morning vow to make “important choices that will shape our economy for years to come”.
“It is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country,” she will add.
Ms Reeves will say her priorities are cutting national debt, easing the cost of living and protecting the NHS.
“It will be a budget led by this government’s values,” she’s set to say.
“Of fairness and opportunity and focused squarely on the priorities of the British people: protecting our NHS, reducing our national debt and improving the cost of living.”
Strangulation pornography will be banned following a review which found such images have helped to establish it as a sexual norm.
The possession and publication of images depicting strangulation and suffocation will be criminalised under the Crime and Policing Bill, which is currently making its way through parliament.
Non-fatal strangulation is already an offence in its own right, but it is not currently illegal to show it online.
Conservative peer Baroness Bertin warned earlier this year that there has been a “total absence of government scrutiny” of the pornography industry.
Baroness Gabby Bertin carried out a review of the online pornography industry
Her independent review, published in February, referred to worrying anecdotal evidence from teachers about students asking how to choke girls during sex.
People acting out choking in their sex lives “may face devastating consequences”, she said in the review.
On Monday, the government confirmed it was putting forward amendments to the Crime and Policing Bill, which is due to come back before peers in the House of Lords for further scrutiny next week.
As well as making strangulation or suffocation in pornography illegal, duties will be placed on online platforms to stop the spread of such images, the Ministry of Justice (MoJ) said.
Another amendment will extend the time limit for victims of intimate image abuse, which can include so-called “revenge porn”, to come forward to report such crimes.
Currently, victims have six months to do so, but this will be extended to three years.
Victims minister Alex Davies-Jones said the government “will not stand by while women are violated online and victimised by violent pornography which is allowed to normalise harm”.
She added: “We are sending a strong message that dangerous and sexist behaviour will not be tolerated.”
Of strangulation pornography, Technology Secretary Liz Kendall said: “Viewing and sharing this kind of material online is not only deeply distressing, it is vile and dangerous. Those who post or promote such content are contributing to a culture of violence and abuse that has no place in our society.
“We’re also holding tech companies to account and making sure they stop this content before it can spread. We are determined to make sure women and girls can go online without fear of violence or exploitation.”
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From June: ‘He was going to kill me’
The government said if the amendments were accepted, possession or publication of strangulation or suffocation in pornography would become a priority offence under the Online Safety Act.
Technology firms would be legally required to take steps to stop such violent content reaching internet users, rather than simply waiting for it to be reported.
The government suggested this could be done through moderation tools, stricter content policies or automated systems being used to detect and hide images.
The British Board of Film Classification (BBFC) welcomed the planned changes, but said they must “mark the beginning of broader reform to ensure parity between online and offline content standards”.
Its chief executive David Austin said: “Harmful depictions of non-consensual, violent and abusive activity continue to be readily accessible to UK users.”
The BBFC said it stands ready to take on “the formal role of auditing online pornography”, which would be “a natural extension of the role we have carried out offline for decades”.
Bernie Ryan, chief executive of the Institute For Addressing Strangulation, welcomed the proposed ban, saying the “serious risks posed by unregulated online content, especially to children and young people” must be recognised.
She added: “Strangulation is a serious form of violence, often used in domestic abuse to control, silence or terrify.
“When it’s portrayed in pornography, particularly without context, it can send confusing and harmful messages to young people about what is normal or acceptable in intimate relationships. Our research shows there is no safe way to strangle.”
The advocacy organization filed a brief opposing prosecutors’ arguments that two brothers presented themselves as “honest validators” to allegedly pull off a $25-million exploit.
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