Bringing best practices from TradFi to DeFi: Palash Agarwal, CPA, and finance leader @ OPLabs

Late last year, we caught up with @PalashETH—finance leader at @ OPLabsPBC, and a core contributor to the Optimism Foundation ecosystem.

Palash brings a deep well of TradFi experience to web3, which is one of the reasons he’s been so effective in his role at OP Labs...

We chatted about:

→ how he broke into web3

→ taking OP Labs’ finance division from 0-1

→ how to think about tools that “bridge the gap” between web2 and web3

→ the future of token management

Moving from TradFi to web3

Palash’s journey began in corporate finance, working for industry leaders like Deloitte and BPM, as a senior accountant.

He eventually heard about blockchain technology, and he felt inspired by "the scale of decentralized p2p transactions that were happening crypto, along ETH applications and during DeFi summer."

Managing, auditing, and moving value at this scale, in his mind, represented an amazing amount of opportunity—and uncharted waters, in terms of finance and accounting.

His deep well of TradFi experience—plus his enthusiasm and interest in web3—made him the perfect candidate to help navigate the OP token launch and build out the entire OP Labs’ financial practice.

Why is TradFi knowledge so important in the web3 world?

Because in web3 things move at breakneck speed:

"You can move so fast [in web3], and many people don’t think enough about what we should be doing—and why. Managing your token treasury in a secure, compliant way is absolutely essential."

It’s important, he said, to think critically about decisions like "spinning up a new wallet"—and to remember both the intended and unintended consequences of doing so.

Planning for long-term success

The OP token was launched in May 2022—and Palash was involved from the start.

He helped lead key projects that contributed to token launch, including overseeing the entire end-to-end process of setting up and managing a treasury.

Leading this effort included key responsibilities like:

> which custodians to choose (and why)

> how to set up wallet management policies

> standing up accounting systems

> outlining token distribution processes

In his experience, as the industry continues evolving, so does "tooling around tracking and managing the flow of tokens—which is a hard task."

In his work with OP Labs, Palash focused on "working with the right solutions and partners, staying conscious of any tooling changes, and constantly keeping up with regulations."

Now, in his current role, Palash handles both traditional finance and crypto-specific responsibilities.

And, although he faces new crypto-related challenges, "many of the frameworks and principles from traditional finance still apply," including:

> managing payroll, expenses, billing, and vendor management

> budgeting, forecasting, and financial analysis

> strategic planning with the executive team, including evaluating R&D opportunities, assessing market trends, and contributing to long-term financial planning.

> accounting and maintenance of the books including tracking, maintaining sub-ledgers, optimizing record-keeping (valuations, liabilities, unrecognized gains/losses, tax)

New crypto-specific challenges he’s faced include:

> managing, tracking, and reporting on the OP token rewards for employees, contractors, investors, and community stakeholders

> managing wallets, setting up processes, and implementing new systems to have a handle on token management

> overseeing the token rewards for ecosystem grants to protocols, including Optimism’s Retroactive Public Goods Funding program

> navigating compliance risks with legal counsel and making sure the team stays above board with all applicable laws and regulations

“We need tools that bridge the gap between web2 and web3”

For Palash, it's the disruptive nature of web3 that keeps him in the space, along with the transparency of the blockchain.

The unique nature of the technology itself changes how he approaches biz strategy & internal org design:

"Records are all on the blockchain and they can be dug up in minutes. Having a transaction hash makes things easier, and lets our team look up, at any time, what happened and when."

That said, leading finance teams and initiatives isn’t without its pain points:

> rapidly evolving tracking tools and platforms — and its often hard to keep up

> the need for constant diligence — even small mistakes lead to significant consequences

> understanding the nuances between web2 and web3 finance, and how to treat traditional cash/assets vs. tokens

> a constantly evolving regulatory landscape

> navigating web3-specific dilemmas — like the ethos of making txns cheaper, vs. the web2 model of increasing prices in line with adoption

> the need for tooling that “bridges the gap” between web2 and web3 — tools that make it easier for people who aren’t crypto experts to participate

For Palash, one of the biggest pain points—when it comes to web3 financial tooling—is that "most of today’s web3 tools cater to people already in web3, who understand it. These tools don’t bridge the gap between web2 and web3, and they don’t take into account that it's hard for people to learn from zero."

And yet, despite these challenges, Palash feels optimistic about the future of token management.

In his mind, it's still early innings — there’s always more and more room for innovation.

Building the future of web3 financial tools

Palash envisions a web3 future where advanced tools and best practices become more available and easily understood.

In a constantly evolving landscape, finance professionals play a vital role in bridging the knowledge gap between web2 and web3, by providing solutions to help crypto companies stay compliant, and maximize the use of both on-chain and off-chain technologies.

As DeFi itself matures, Palash explained, he expects web3 finance to eventually produce similar kinds of resources and industry standards that we see in TradFi:

"Crypto is still very young—and it's too early to make web3 finance predictions. Eventually, though, we’ll see traditional banks and payment rails get even more disrupted. Regulations will continue to evolve, and lots will happen on both sides."

We’re grateful for the chance to chat with Palash, and to highlight his work at OP Labs!

DM me if you (or someone you know) would be a great fit for another episode of our web3 finance expert series :)