Robby Greenfield IV on Founding Umoja: Bridging Traditional Finance and Web3 with a Decade of Expert

Welcome to our enlightening session of the "Behind the Startup" series. Today, we're thrilled to host Robby Greenfield IV, the visionary founder of Umoja, a trailblazing platform at the intersection of blockchain technology and financial innovation.

With a rich background in financial engineering, product management, and a remarkable journey through giants like Goldman Sachs, Amazon, and ConsenSys, Robby brings a wealth of experience and insights. Umoja, born from a passion to democratize financial services, stands out as a beacon of innovation in the crypto world. Join us as Robby shares his inspiring journey, the genesis of Umoja, and how it's shaping the future of hedging in the cryptocurrency market.

Revolutionizing Crypto Hedging: How Umoja Guarantees Market-Loss Insurance Without Liquidation Fears

Ishan Pandey: Hi Robby, delighted to welcome you to our "Behind the Startup" series. Can you share insights into your background, and your involvement in prior ventures also what inspired you to found Umoja?

Robby Greenfield IV: Absolutely! Glad to be a part of the series. I’ve been a financial engineer & product manager for over a decade, and started my journey in crypto in 2011. I started my career at Goldman Sachs, and have since worked at Cisco Systems, Amazon, and ConsenSys. At ConsenSys, I was their Head of Social Impact, and deployed over a dozen dApps & blockchain initiatives across 17 emerging markets globally, having worked with the likes of the U.S. State Dept., the UNOPs, Oxfam International, Harvard, and the World Bank.

Umoja actually spun out of ConsenSys originally as ConsenSys Social Impact, focused on enabling digital humanitarian aid on-chain for the underbanked by offering digital wallets compatible with WhatsApp, NFC Cards, and feature phones. After disbursing over $3M to tens of thousands of beneficiaries across 6 countries, we pivoted into hedging after realizing many of our customers and competitors greatly struggled with FX hedging due to the international nature of their organizations. Given that we know fiat, and all RWAs will come on chain, and the fact that our team has decades of Web3 and TradFi experience,  it made sense to capture this opportunity and protocolize hedging.

Ishan Pandey: How does Umoja address the unique challenges of the crypto market through its hedging solutions?

Robby Greenfield IV: Umoja enables anyone to hedge their crypto losses like a hedge fund without the fear of liquidation. To put it simply - it’s like a market-loss insurance plan to lock in your gains with zero technical knowledge. We do this by creating synthetic options replicated through the algorithmic trade of leveraged, perpetual futures. In this way, we don’t need LPs and can offer option-like exposure more flexibly and affordably than nearly every other options protocol and exchange in crypto - all while making it easy to use and understand by retail investors.

Ishan Pandey: How does Umoja's automated hedging solution stand out in the market, especially in comparison to other options exchanges?

Robby Greenfield IV:

1. We don’t require any LP liquidity, we’re up to 30x more affordable on up-front costs.

2. We’re much more flexible to use (can opt out anytime from a hedge).

3. We’re the simplest to use.

4. We’re more customizable - able to create DeFi-niche hedges like that for Uniswap LP positions, or de-peg derivatives.

   
   

This is particularly true for non ETH/BTC markets, where the options markets are very illiquid. What we’re creating is DeFi’s first risk primitive - enabling tokenized investment strategies with strong downside protection - rather than just something that generates yield on a declining asset.

Ishan Pandey: Can you elaborate on how Umoja provides more flexibility in terms of the duration of hedges and strike options than any other options exchange? How does it enhance user experience?

Robby Greenfield IV: When you purchase a traditional option - whether in TradFi or in Crypto, you have to purchase it at a standardized strike rate and term (e.g., 5% at 1 Month). This is because crypto options markets are much more illiquid than TradFi options markets, and because options have attributes like strike rates and terms, liquidity has to be concentrated into separate, standardized bands. Too much flexibility will cause even more illiquidity - and thus it is not currently possible to hyper-customize your strike and terms with crypto options in the traditional market. Additionally, traditional crypto options face much higher counterparty risk, as there has to be someone who wants your exact option in order for you to get out of that position.

In contrast, since Umoja replicates the value of options through algo trading perpetual futures, our counterparty risk is much lower. No one needs to buy an option from Umoja hedgers, because they didn’t purchase one in the first place. The counterparty is the underlying asset’s future’s market. For example, BTC’s future’s market monthly trading volume for January 2024 was $1.29T, whereas its monthly options trading volume for that same month was $43.34B. That means Umoja’s synthetic options are nearly 30x more liquid. Additionally, we can hyper-customize strikes and terms because - again - it’s a synthetic option not bound by the standardized liquidity constraints of the traditional options market.

Our UX is the best in crypto derivatives. Inspired by Uniswap, you can literally hedge your market losses in less than 20 seconds. By simplifying the options experience by making them more customizable and attaching them to a useful context - protecting one’s money & locking in your gains - it doesn’t make sense for any trader or retail investor to go anywhere else.

Ishan Pandey: Can you walk us through the process of how users can select the right fund, pay a fee, provide collateral, and receive Hedge Tokens? How does this process make it easy for users to interact with the platform?

Robby Greenfield IV: Hedging on Umoja takes 5 simple steps:

1. Choose a token you want to protect.

2. Choose how much of that token you want to protect.

3. Choose the date up until you want to protect it.

4. Choose a price at which your protection should start.

5. Put down 10% collateral and pay a small fee to Umoja.

   
   

That’s it. Hedgers are never liquidated and can opt-out the hedge at any time without suffering from high counterparty risk. Hedgers may, however, need to top-up their collateral from time to time depending on the length of their hedge and market volatility if they want to maintain their full coverage. If they decide not to, their coverage will gradually decay over time.

Ishan Pandey: Can you discuss the significance of your partnership with the first Crypto Hedge Fund and Chainlink, and the pending partnerships with Avalanche, Gogopool, and Benqi?

Robby Greenfield IV: Though I don’t want to spill the beans too much - let’s say that there are some exciting developments coming to DeFi. ‘Zero-Loss’ staking via hedging-embedded, liquid-staking tokens, crypto hedge funds leveraging the protocol, and LP position hedging via price feeds are some of those developments.

Ishan Pandey: With your background in blockchain and social impact, how do you see Umoja contributing to financial inclusion?

Robby Greenfield IV: Retail traders lost $1.8T over the last bear market - mainly due to not being able to protect themselves and buying the downside of whales and hedge funds. According to Pew Research Center polls in 2021 and 2022, some 20% of Black, Hispanic and Asian U.S. adults have bought, traded or used cryptocurrency, compared with 13% of white adults. This means that bear markets disproportionately affect communities of color, and having a way for those communities, and quite frankly, everyone to protect themselves from losses in a way that’s easy to use is an essential public good.

Ishan Pandey: In your opinion, how can widespread hedging positively impact the crypto ecosystem?

Robby Greenfield IV: It will create a world where people can opt to take on downside risk of a native asset. You can choose to either holde hedged ETH (uETH) at a premium, or normal ETH (and take on losses). Simply put - this makes DeFi and crypto at large more financially responsible. No more betting the mortgage or the dichotomy between WAGMI and going broke.

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