Luca Prosperi, the head of M^0 Labs (a company that helps institutions create their own cryptodollars), shared his thoughts on decentralized finance (DeFi) and more in a recent interview on the Thinking Crypto podcast. He feels the connection between DeFi and traditional finance (TradFi) is awkward and that DeFi needs to adopt more TradFi values to become part of people’s everyday lives.

In the YouTube podcast, Prosperi explained that the early DeFi folks were innovators, disruptors, and risk-takers, but the industry would benefit from “some level of institutionalization and professionalization of services.”

“I think DeFi needs to expand a little bit because otherwise we are just patching different technologies at the same time, and this creates risk.”

Prosperi mentioned that in M^0 Labs’ early days, the team talked to big TradFi players like BlackRock and realized that integrating TradFi is key for DeFi adoption. M^0 is live on the Ethereum mainnet and uses the same consensus mechanism, but the stablecoin created with the protocol will “exist on every chain.”

Prosperi also touched on central bank digital currencies (CBDCs), saying they’ll mainly be used by big institutions. Banks will use these tokens to interact with other big players like commercial banks. It’s worth noting that M^0 currently only uses United States treasuries as collateral for creating its stablecoin.

Lastly, the M^0 Labs executive gave his prediction on the stablecoin market’s value in the next five years, saying “in ten years, no one will care about the specific type or brand of stablecoin.” Stablecoins will be powerful behind-the-scenes tools, and the whole industry could be worth around $2 trillion.

Prosperi also expressed amazement at how Bitcoin managed to get an exchange-traded fund (ETF) approved without any centralized entity involved. He believes the amount of liquidity flowing into the crypto space directly or indirectly through ETFs will be game-changing.