We sat down with Lefteris Karapetsas, a leading figure in the crypto space and creator of rotki, a privacy-focused portfolio tracker. Our discussion covered challenges for cryptonatives, his early involvement with Ethereum, the inception of rotki, views on privacy, and excitement for the future of DeFi and broad crypto adoption.

PWN: Lefteris, could you share your perspective on what it means to be a cryptonative?

LK: Cryptonative is a relatively new term. It defines individuals who deeply align with the core principles of crypto, the ones integrating crypto into their everyday lives and actively advocating for its adoption.

PWN: What are some of the DeFi tools and strategies that you find yourself using?

LK: I use a lot! Take Ethereum Name Service (ENS), for example. I've registered multiple ENS domains for both personal and family use. And when it comes to ETH, I try to diversify my strategies. Some is staked, and some is deposited into DeFi protocols like MakerDAO, Liquity, and AAVE, to borrow stablecoins without selling my crypto. Not so degen but a good way to leverage DeFi’s capabilities.

Beyond that, I'd like to mention the power of paying and receiving payments in crypto. At rotki, we pay salaries in Euro or stablecoins, which might sound mundane but is incredibly powerful, especially when it comes to cross-border transactions.

PWN: What do you think are the main issues facing cryptonatives today?

LK: Cryptonatives and the entire crypto industry are grappling with a tarnished reputation. This negative image is reflected in politics, particularly in the US and EU, where crypto faces hostility. Some people simply dislike crypto, and if they're not well-informed, this sentiment can escalate into political actions, leading to exclusion from banking services or reluctance from organizations and institutions to engage with crypto-related entities.

Even well-intentioned projects can face resistance when trying to make positive contributions involving crypto, like charitable donations. Addressing this bad reputation is a pressing issue, and if we don’t take the challenge seriously, we're going to face a world of trouble.

There’s also the issue of speculation. If our industry starts getting tagged as gambling-focused, it could lead to more serious issues. Imagine not being able to open a bank account or facing difficulties in collaborating with organizations in the countries where you operate. The risk is very real.

We're working on making crypto a part of the global landscape, not just something for a bunch of crypto nerds on Twitter trading against each other.

PWN: Have you personally encountered and found ways to tackle these issues?

LK: I've faced these challenges firsthand. When dealing with traditional banks, the moment they hear "crypto," they tend to reject you straight away. It's not an ideal situation, but having open conversations and taking the time to explain the ins and outs of your crypto-related activities can sometimes lead to better understanding and cooperation.

But when institutions start rejecting individuals solely due to their involvement in crypto, it signals a worrisome shift towards a more politically motivated mindset. That’s where regulatory crackdowns and restrictions on crypto happen.

It's sad that we often find ourselves lumped together with the negative elements of the space. While there are certainly questionable projects and practices in crypto, we need to make a concerted effort to highlight the virtuous actors. As an industry, we should actively publicize the net-positive contributions we make to society.

PWN: You were working with the Ethereum Foundation back in 2014 in the very early days of the project. Can you share your experience from that time?

LK: My involvement with the Ethereum Foundation in 2014 marked the beginning of an incredible journey. At that time, everything felt fresh and exciting. I had transitioned from my role as a software engineer at Oracle to join a startup looking to launch a new cryptocurrency.

There was a lot of trading and speculation on ETH, but the devs, were laser-focused on the tech and the code. The launch of the Ethereum network in 2015 was an amazing moment, and witnessing the project we had poured our energy into going live felt truly special.

PWN: What inspired you to create rotki, the privacy-focused portfolio management tool?

LK: rotki was initially created to help me with my taxes. There were no robust tools for managing and accounting for crypto assets, and since I value personal sovereignty and privacy, I felt the need to create a solution that aligned with these principles.

Back then, I tried Bitcoin.tax, a platform that required users to share a bunch of personal data, API keys, and CSV files. It was a closed-source, software-as-a-service approach that ran counter to the ethos of crypto, where privacy should be paramount. Trusting a platform with sensitive financial data just to get a tax assessment whose accuracy can’t be audited seemed insane to me.

That inspired me to develop a command-line interface to help with my tax reporting in 2017. Gradually, the project evolved into rotki, a privacy-conscious and open-source portfolio tracking and management tool.

PWN: Crypto is quite anonymous and privacy-oriented. Yet, you're known for sharing photos online. Could you share your perspective on this?

LK: To be honest, if I were starting fresh today with the knowledge I have, I might opt for anonymity. But it's basically too late. I would have to create another persona.

Being public also has its benefits. I'm not a fan of the term "influencer”, and don’t consider myself one, but having an audience is great. It facilitates information sharing and, interestingly, allows me to obtain answers to questions more rapidly than googling sometimes.

Becoming anon again would require building credibility through consistent dev work, primarily reflected in my GitHub commits. That would be way too much of a commitment, and I don’t have the mental capacity to start over.

Regarding privacy, I'm somewhat conscious. I do share photos now and then, but I make sure to never post pictures of my family, or at least not their faces. It's a delicate balance.

PWN: What excites you the most about DeFi in the coming months?

LK: At rotki, we're broadening our scope to include fund management. Right now, we are a portfolio tracker that also does PnL accounting, but we’re gearing up to offer tools for actively managing funds. This transition is quite exciting and aligns with our mission to provide users with more than just a tax calculator.

In the broader DeFi space, I'm keeping a close eye on the development of the Safe protocol and its potential to standardize account abstraction. Another thing is credit card payments with crypto. Gnosis Pay and Holyheld are ahead of the curve in that field. I've even ordered a Gnosis Pay card myself. However, while it's exciting, it also raises privacy concerns, as they link your wallet address to your transactions, potentially compromising your anonymity.

PWN: What are your thoughts on where DeFi might be headed in the next decade?

LK: I'm really bad at predicting stuff, and turns out I’ve become quite pessimistic. But I'll try to be optimistic here. Assuming we continue to see increased adoption, I believe stablecoin payments will become the norm. They could even eclipse traditional banking systems in the long run, given the advantages crypto has in terms of speed and simplicity.

I anticipate that yields in DeFi will decline, eventually aligning with traditional finance rates. High-yield "degen" projects will likely fade away as their unsustainable nature becomes more evident.

I also hope to see more user-friendly solutions emerge, particularly in the lending and borrowing space. DeFi’s transparency is a remarkable feature, allowing anyone to scrutinize and understand the inner workings of the system. This transparency is in stark contrast to TradFi, where you need a Bloomberg Terminal subscription to access similar information.

I hope that DeFi continues to evolve and ultimately replaces traditional finance systems. What we're building is not only interesting but also incredibly powerful and transparent. It democratizes access to financial services, eliminating the need for Finance expertise to experiment with them.

PWN: Before we wrap up, any final thoughts or comments you'd like to share with our audience of cryptonatives?

LK: Certainly. Regarding rotki, we're quite passionate about it. While it initially began as a tax accounting tool, we're actively working to shift the narrative. It's evolving into a comprehensive asset management platform. Taxes are undoubtedly important, but we want to provide users with tools that enable them to manage their assets holistically. We have an exciting journey ahead.

As far as the broader crypto community is concerned, I'd like to see more people hold onto the fundamental values that underpin crypto. Self-sovereignty, privacy, and the "don't trust, verify" motto are what set us apart.

To all newcomers in crypto, I encourage you to understand and embrace these principles—they're the essence of what we stand for. Without them, we risk becoming just another slow and clunky SQL database stuck in the passé financial world.

PWN: Thank you for sharing your valuable insights and experiences, Lefteris. It's been a pleasure talking with you.

PWN’s Cryptonatives is a Q&A series with some of the brightest minds within the web3 and DeFi space who are building and making active use of the services that today’s crypto ecosystem has to offer. Through shedding light on their experiences and lessons learned throughout their careers, it’s our team’s goal to educate the masses and further spread our guests’ wealth of knowledge.

Read through our previous Cryptonatives interview with Lukas Schor.

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