The History & Future of Institutional DeFi: Luigi D’Onorio of Ava Labs

30 Jul 2022

Masters of Web3 Podcast by Transak

The cryptocurrency market has taken quite a nose dive recently. But while the market is down, new innovations are happening with blockchain so that DeFi may one day be widely adopted. 

Luigi D’Onorio is the Head of DeFi at Ava Labs on the Avalanche ecosystem. Luigi and his team are building new protocols, products, and applications in the DeFi space so that institutional adoption of DeFi will be a thing of the future.

Join us as we discuss:

  • What is causing DeFi to be so expensive currently  
  • What will bring peer-to-peer DeFi adoption to the institutional level
  • What implications Luigi and Sami see comprehensive crypto legislation having on DeFi
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What is causing DeFi to be so expensive currently

For those who have been a part of the DeFi world over the years and those who are looking to start investing their way in, the one constant truth is that it's a pricey endeavor, especially when compared to TradFi.

Because of gas fees, protocol and safety measures, there are a lot of transaction fees involved with DeFi that add up quickly. Part of the fees involve a price that users unfortunately must pay due to the inherent risk of something going wrong with the system.


“We need to make DeFi feel safer.” — Luigi D’Onorio on Masters of Web3 Podcast by Transak

Gas fees specifically are some of the fastest rising costs associated with DeFi and this is largely due to the astronomical increase in users and overcrowding on Ethereum.

However, many DeFi developers like Luigi are making efforts to change that. 


What will bring peer to peer DeFi adoption to the institutional level

As it stands today, DeFi has yet to become universally adopted despite its many perks and innovative systems. There are still many changes that need to take place before this is even a foreseeable reality.

For the time being, it is primarily a peer to peer experience. Luigi says that he foresees the institutional adoption of DeFi starting out as more retail-focused than anything else. 

“If done right, this will replace the CME and exchanges and the way we actually see DTC and all these different institutions that actually help us settle and monitor transactions,” explains Luigi.

However, there are some hurdles to get through. Working with businesses has an entirely different onboarding process and the transactions between businesses are usually much larger. On top of that, those transactions are typically done through bank transfers as opposed to systems like card, Apple Pay or Google Pay which would be easier to incorporate with DeFi. 

These are obstacles that Luigi and his team, along with other DeFi developers who are tackling the issue of institutional adoption, are willing to face.

“Sometimes there has to be cataclysmic failures in the growth of an industry for people to realize why they want certain properties.” — Luigi D’Onorio on Masters of Web3 Podcast by Transak


What implications Luigi and Sami see comprehensive crypto legislation having on DeFi

Senators Cynthia Lummis and Kirsten Gillibrand have recently introduced the first comprehensive crypto legislation in the US creating a regulatory framework for DeFi and crypto markets. This legislation was created in an effort to normalize and educate citizens on the use of cryptocurrency since the industry is so rapidly growing yet many Americans are still unfamiliar with it.

Luigi says that for the time being, there aren’t many real implications of this bill being that it has already been tabled for the whole year and he doesn’t see it being passed at least through the rest of the year. 

“We’ve had two major events in the past month. Maybe it's time to take a breath and make sure the legislation fixes some of these types of issues. I don't think too much is happening on the regulatory front, in the near term,” explains Luigi.

For the most part, it seems that the legislation is going to be a game of wait and see. Wait and see how the industry changes throughout the year as well as how those who are elected at the end of the year decide to handle the bill.

In terms of international implications, Sami Start of Transak says that running an international company means making every attempt to keep things homogenous. Therefore, if the legislation takes effect in any form in the US, it greatly affects other countries businesses and Transak specifically will have to follow suit for all of their company’s regions.

Both Luigi and Sami agreed that the legislation is a bit too up in the air to come to any conclusions on how it will affect the DeFi world as we know it, but are excited that the conversation is happening on an institutional level.

In the meantime, Luigi offers this advice to those following along the DeFi adoption journey:

“Sustain the space, keep yourself apprised of what's going on. Build useful things that have product market fit.” — Luigi D’Onorio on Masters of Web3 Podcast by Transak

Want to learn more about the future of DeFi and what the institutional adoption of DeFi could look like? Listen to Transak Masters of Web3 on Spotify, Apple Music, or wherever you listen to podcasts.

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About the Author:

Transak Team