Bear market is the best time for builders.
Interview and compilation: Frank, Foresight News
From Wall Street to the crypto circle, from Bitcoin purists to the chairman of the Solana Foundation, which transition has been more significant?
Perhaps Lily Liu herself cannot explain. After entering the workplace in early 2005, she successively worked at top traditional financial institutions such as Morgan Stanley, McKinsey, KKR, and HCA. Originally following the traditional elite path, she unexpectedly, under the continuous recommendation of her friend and industry big shot, Bobby Lee, dramatically learned about and got involved in Bitcoin.
Since then, as a "veteran" who started to get involved in Bitcoin in 2013, Lily Liu has been in the crypto industry for a full decade, moving from exchanges (BTC China) to the earliest mining company in the United States, 21 Inc (which later changed its name to Earn.com and was acquired by Coinbase), and then joining a public chain (Solana). She has always been at the intersection of top resources, feeling the most authentic changes in the market, while also observing the industry's huge transformations.
- In 2013, "Bobby, you shouldn't play with Bitcoin";
- In 2021, "The most attractive thing about Solana for me is—when I press, it happens";
Looking back at these two experiences, from outside the circle to inside, and then from being a "BTC Maxi" to joining Solana, it is both a turning point and an advantage—it connects the veteran members of the crypto circle with traditional elites in Silicon Valley, and also gives more reasons for people to re-evaluate Solana. Undoubtedly, this has brought an undeniable potential variable to Solana.
Amid the turmoil of the FTX last year, the regulatory direction of the entire market also changed. Lily Liu decided to increase her investment in the Chinese-speaking and Asia-Pacific markets at the right time. Accordingly, Solana has taken a different pace this year. Foresight News had the honor of interviewing Lily Liu on September 10, 2023, and has compiled the interview transcript for readers.
From Wall Street to the Crypto Circle, from "BTC Maxi" to Solana
From Wall Street to the crypto circle, from "BTC Maxi" to joining Solana, in Lily Liu's eyes, "Solana offers a completely different choice," just as she expressed when asked why she is optimistic about Solana:
"When I press, it happens."
She believes that so far, only a very small number of blockchain projects have both a strong community and technology, and Solana is one of them—providing a growth model suitable for decentralized ecosystems, not just relying on traditional methods from Silicon Valley or the Web2 industry.
Foresight News: Hello, Professor Lily, it's a pleasure to have the opportunity to interview you. First, could you please give a brief self-introduction? Secondly, I did some research and found that you graduated from Stanford and Harvard University, and in the early stages of your career, you worked at Morgan Stanley, McKinsey, and KKR, all top companies in traditional industries. What was the opportunity that led you to learn about the blockchain industry and start a business in this industry?
Lily Liu: Thank you for the interview, and hello to all Chinese readers. I'm Lily, and you can also call me by my Chinese name: Liu Yuanli. Although I was born in the United States, I have always had a strong connection with China and am proud of my Chinese cultural background. I joined the blockchain industry in 2013 and currently serve as the chairman of the Solana Foundation. My career began at Morgan Stanley's investment banking division in Hong Kong, and then my first full-time job was at McKinsey, working in New York and Beijing, between approximately 2005 and 2008. Later, I joined a private equity fund, KKR, mainly working in New York.
Through my work at KKR, I met the "Frist" family from Tennessee, USA (Foresight News note: The "Frist" family began creating one of the world's largest private chain of medical institutions, HCA, in the 1960s), who also established a private hospital in China. I was involved in an international standard hospital project in Cixi, Zhejiang Province, China, with 500 beds. So, my first venture was actually related to the medical industry, not technology.
In 2013, I was still living in Shanghai, and I had a good friend named Bobby Lee (Foresight News note: Bobby Lee, co-founder of "BTC China" and brother of Litecoin founder, Charlie Lee), who was quite well-known in the Bitcoin field. Bobby Lee and I were alumni of Stanford University and became good friends while in Shanghai.
One day, Bobby Lee mentioned Bitcoin to me. At that time, my understanding of Bitcoin was still shallow, and I thought it might be related to money laundering or the drug market. I even told him, "Bobby, you shouldn't play with Bitcoin." But he kept mentioning it and urged me not to ignore Bitcoin. It can be said that this was the first time I felt a religious-like passion in the Bitcoin field.
Under his repeated recommendations, I decided to seriously study Bitcoin. I read the Bitcoin white paper and studied it for a while, gradually realizing that Bitcoin was very profound and interesting in terms of technology, theory, and decentralization concepts. At that time, there were only a few currencies such as Bitcoin and Litecoin from 2013 to 2014.
In 2014, I left the hospital and joined "BTC China" (BTCC) founded by Bobby. After working at BTCC for about four to five months, I returned to the United States and met a person named Balaji S. Srinivasan, who was running a mining company called 21 Inc. At that time, there were only a few mining companies in the United States, and 21 Inc was one of them. At that time, the market was gradually entering a bearish period, and many companies were facing financial planning challenges. Together with Balaji S. Srinivasan, we worked hard to help 21 Inc alleviate financial pressure, and later they changed their name to Earn.com and were sold to Coinbase in 2018.
During that time, I mainly focused on Bitcoin and was very interested in it because there were not many other technological choices. Many applications and use cases were considered dreams, only discussed in Bitcointalk or articles about the potential of future decentralized technology. Bitcoin proved that a decentralized network could exist, but it could not support more use cases. It took an hour to receive funds, which required significant optimization compared to traditional financial systems.
Therefore, I believe that after Ethereum appeared, it expanded the various use cases that could be realized in the crypto field. However, Ethereum also had a problem. Although its transaction speed was faster than Bitcoin, it was not as fast as our traditional financial transactions. In fact, regardless of how the technology behind it operates, the United States and China have independent payment systems similar to PayPal and WeChat Pay, and these traditional payment methods still have advantages in user experience.
Foresight News: What do you think is the biggest difference between this industry and traditional industries? What attracts you to continue building in this industry after experiencing several bull and bear cycles?
Lily Liu: I think the biggest difference is the culture of entrepreneurship. Traditional companies usually do not consider innovation or entrepreneurship as their core advantages, and their goals are usually not innovation or entrepreneurship. In contrast, the core culture of Silicon Valley is innovation and entrepreneurship.
I think the blockchain industry is one of the most extreme industries in the technology field because its ultimate goal is decentralization, unlike the centralized business model of Silicon Valley. Blockchain emphasizes decentralization very strongly. In a sense, it is a bit like socialism and a bit like capitalism because it has a certain control nature. That's why I became interested in the theory of blockchain—I think it provides a different way of thinking about social choices.
For those who participated in the Bitcoin industry in 2013 and 2014, I think at least one (or possibly two) of the following three reasons drove them to participate, including the concept of blockchain, involvement in drug trading or money laundering, and technology.
For me, I was mainly interested in the concept of blockchain. At that time, if someone truly believed in the concept of decentralization, it was very difficult to leave the crypto industry because there was no other place that aligned with this culture and ideology. So, I feel like I didn't have many other choices and could only continue working in this field.
Why bullish on Solana? "When I press, it happens"
Foresight News: As a former BTC Maxi and early participant and contributor in the industry, what led you to learn about Solana and later decide to join the Solana Foundation? What role does joining the Solana Foundation play in your career?
Lily Liu: I started using Solana in 2021, and the reason I am bullish on it is very simple: when I press, it happens. This is an experience we are already very familiar with in Web2—you press a button, and you immediately see the corresponding response, and it doesn't matter if it costs one dollar or two dollars, it's almost free.
If blockchain cannot provide this user-friendly experience, then widespread blockchain application is almost impossible.
In addition, since the public chain boom of 2017 and 2018, many different blockchain projects have emerged. But I believe that for a blockchain project to be successful, it needs to be very strong in two aspects: community and technology.
However, so far, only a very small number of blockchain projects have both a strong community and technology. First, it must have a solid technical foundation and technical standards. Second, it needs to establish a complete ecosystem and attract developers.
Although there are many different blockchain projects currently, in reality, only about 4 to 5 projects have performed well in this regard. Among them are Bitcoin, Ethereum, Solana, and then there are some with potential, such as Cosmos, Polkadot, or Near.
While I think there are many different ideas in the blockchain field, only possibly 5 projects or fewer simultaneously have technology, culture, and ecosystem. In the past, Ethereum's main scaling practice may have already assumed that transactions cannot be completely placed on the main chain. For non-technical people like me, this challenge is very interesting—how to find some special growth patterns in a decentralized ecosystem. Solana provides a growth model suitable for decentralized ecosystems, a growth model that does not rely on traditional methods from Silicon Valley or the Web2 industry.
Foresight News: In your work at the Solana Foundation, what is the biggest commonality among your colleagues? Is there anything or any colleague that has left a deep impression on you?
Lily Liu: I really like the work culture at the Solana Foundation, and I have had a very pleasant collaboration with everyone. I feel that most of my colleagues at the Solana Foundation truly believe in decentralization and execute it seriously, which is a core consideration in our work.
Many of the blockchain projects that emerged in 2017 and 2018 eventually went in two directions: either enterprise blockchain or EVM compatibility. There were not many possibilities to rebuild an independent technical system and community ecosystem.
To truly succeed, a project needs both technology and belief.
Asia-Pacific + Europe and America, Macroscopic Decentralized Collaboration
Lily Liu believes that the blockchain industry has two major markets: the Western blockchain market dominated by the United States and the Asian blockchain market dominated by the Chinese-speaking region. Only these two major markets have both a strong developer community and sufficient capital support from the capital market.
She also emphasizes that the market may lean more towards the Asia-Pacific, while the technology aspect may lean more towards the West. "Independent developers are the most core asset of the blockchain," and in any case, the developer market is the most important.
Foresight News: We understand that you are a Chinese-American, but you have worked and lived in various cities in Asia for many years, and you speak Chinese very well. You even studied East Asian culture in college. From your perspective, what is the biggest characteristic of the Asia-Pacific market compared to the European and American regions? What are the biggest advantages and disadvantages in the development process of Web3?
Lily Liu: I believe the blockchain industry has two major markets: one is the Western blockchain market dominated by the United States, and the other is the Asian blockchain market dominated by the Chinese-speaking region. Only these two major markets have both a strong developer community and sufficient capital support from the capital market.
The major market in the Chinese-speaking region is very, very important, although there are many restrictions at times due to policy reasons, it has always been attractive. If compared, I think the major market in the West may lean more towards core technology, and many deeply developed blockchain projects may lean more towards the West, such as Silicon Valley or Europe. But in terms of the market, Asia may be more powerful because Asia has a huge population, consumer potential, and plays a core role in the operation of exchanges. In fact, approximately 80% to 90% of the trading volume is conducted through some exchanges in Asia.
In short, the market may lean towards the Asia-Pacific, while the technology aspect may lean more towards the West. These two markets are not completely separate, and they still have a certain degree of integration. Of course, these two markets also have certain cultural differences.
If you communicate with some American projects, at least half of the projects may not have a deep understanding of the role of the Asia-Pacific region. Therefore, in the blockchain industry, we need to understand the characteristics of different regions more, and different regions play different roles in international cooperation. Sometimes, different projects and markets in different regions are not even aware of their own cooperation. This also reflects the broader geographical decentralized collaboration in Web3, where different nodes in the blockchain industry play different roles, and ultimately they collaborate, even though their understanding of each other may not always be completely consistent.
We have internally mentioned that over 80% of the core trading volume of SOL is conducted through some exchanges in the Asia-Pacific region. Some of our colleagues were very surprised by this, as they had never noticed it before and had never thought that the proportion would be so high.
Foresight News: We have observed that Solana is very active in the North American and European markets, and there is a strong consensus among developers and user communities. However, in the Asia-Pacific region, especially in the Chinese-speaking region, the exposure and activity levels were relatively limited before. This year, we have clearly felt that the volume of Solana in this market is increasing, and more and more people are discussing Solana. Is this related to a change in the strategy of the Solana Foundation itself? What role do you play in this transformation?
Lily Liu: I joined the Solana Foundation in 2021 and have always hoped to have the opportunity to help Solana develop in the Asia-Pacific region.
In the past two years, many things have happened globally and in the crypto industry, and we have not found the right opportunity. So, we have actually been thinking and waiting for a long time, until the end of last year and the beginning of this year, when a priority opportunity appeared. We have been closely monitoring market changes, and the changes in Hong Kong's policies have made us feel that there seem to be some signs of openness in the Chinese-speaking market.
We have already established a relatively good ecosystem in the Chinese-speaking region, but in the past few years, due to the influence of some macro environments, and the FTX incident at the end of last year, we began to decide to increase our investment in the Chinese-speaking and Asia-Pacific regions starting in February and March this year.
Foresight News: How do you view the importance of the Asia-Pacific market for the long-term development of Solana in the future?
Lily Liu: Very important. We spent two years building a growth strategy primarily focused on developers in India, and we are also expanding the international market, especially in Germany and the United Kingdom. Although these markets are important, none of them have developed as comprehensively and balanced as the Asia-Pacific region—having both developer resources and the foundation for capital market development.
One of our internal judgment frameworks is the labor market and the capital market.
The labor market mainly refers to the developer market, because in the blockchain field, the most core asset is independent developers, so in any case, the developer market is the most important.
However, there are many such developer markets globally, such as Silicon Valley, New York, India, and Germany, but few markets have both the attributes of a labor market and a bias towards the capital market.
Only two markets have both a strong labor market and capital market, one is the U.S. market, and the other is the Chinese-speaking market.
Solana is preparing some killer moves
On one hand, Solana continues to focus on hackathons and developer ecosystems, and on the other hand, Solana has many innovations in progress, which are expected to start showing results by the end of this year or early next year.
Foresight News: From the data of the past six months, Solana has seen significant recovery in both technological progress and TVL. From your perspective, what is the biggest change in Solana in the past six months? What is the core reason for Solana's ecosystem to maintain strong resilience?
On the other hand, there is also the exposure of Solana in the media in the Asia-Pacific region. Perhaps six months ago, or even a year ago, we probably would not have had this kind of interview because Solana had relatively little exposure in the media.
Lily Liu: I think the main focus has been on the developer side, such as earlier this month when we launched a new hackathon called "Solana Hyperdrive."
Foresight News: The current competition landscape for public chains has changed significantly compared to a year ago. Layer2 projects are developing rapidly, the EVM ecosystem also has a strong first-mover advantage, and new public chain projects are emerging constantly. High-performance narratives seem less appealing now. How do you view the current competition? What measures is Solana taking in terms of positioning and strategic adjustments in such a competitive environment? In which specific areas will Solana increase investment and attention?
Lily Liu: First of all, why do we need a high-performance public chain? I think this is a self-evident question. The reason I am interested in Solana is because I hope that blockchain can achieve various use cases, many of which require high performance.
We are now accustomed to the Ethereum mainnet, which is a bit like using a 56K modem to access the internet in the past. Over twenty years ago, we needed to connect through a telephone line to access the internet, and it could take half an hour to download a song, similar to the state of using blockchain now, where performance issues must be addressed.
The second issue is about what kind of solution can achieve the best user experience. I think Layer2 is suitable for Ethereum and is a good solution, but it still has some problems, just like when broadband internet appeared, we no longer needed to install new modules every time we used a different application.
As for Solana's development, there will be some new developments by the end of this year or early next year. I think some of the important innovations include "Firedancer, which can achieve 1 million TPS in internal testing, and in actual operation, it may achieve 100,000 TPS, which can meet the needs of high-frequency trading applications."
And all of these are achieved on the Solana mainnet. From a technical perspective, this will also make Solana another blockchain with multiple completely independent validator clients outside of Ethereum.
Another innovation is also at the technical level, which is the State Compression introduced in the first half of this year. Its most obvious effect is the reduction of costs for NFTs.
Now, if you want to mint 100,000 NFTs on Solana, it only costs $100, while on Ethereum, it may cost $500,000. This difference is huge. This is not just a cost issue; more importantly, by reducing costs, performance is no longer just performance, it also expands the space for innovation.
If creating 100,000 NFTs only costs $100, then NFTs can transition from an application to an infrastructure, which means that NFTs can be used for more use cases.
For example, you can integrate NFTs as part of a wallet, which was not possible before. So, the performance of Solana and the reduction in costs can turn NFTs into infrastructure, expanding their application scope.
In summary, state compression is a significant technological advancement this year, reducing the cost of using blockchain, thereby expanding the space for innovation and helping blockchain technology to be more widely applied in various fields.
Bear markets are the best time for builders
Lily Liu believes that hackathons provide a place for the industry's best independent developers to collide with ideas and also help generate interesting ideas.
Foresight News: We have learned that Solana's autumn hackathon has already started, with a prize pool of up to $1 million. This is a significant investment in such a market environment. Solana's hackathon is well-known in the industry and has produced many star projects. From your perspective, what is the biggest difference between Solana's hackathon and other hackathons? What resources will Solana provide to the winners of the hackathon?
Lily Liu: Yes, the hackathon not only provides rewards but also an opportunity to gather developers to innovate and compete together. It also concentrates all efforts within a specific timeframe. We have been doing this for the past few years, and it has been very successful, not only promoting innovation but also community building.
We usually divide the time into two parts, with half for development and project training, and the other half for community activation and developer collaboration. This helps encourage creative collisions among independent developers and provides them with a beneficial environment to explore interesting ideas together, promoting broader community interaction and collaboration.
Foresight News: What advice can you give to builders in the industry?
Lily Liu: This is the third bear market I have experienced since joining the industry, and I think bear markets are the best time for builders. Although people's emotions may become very pessimistic, it is also a good opportunity to innovate and think about the future.
In a bear market, people have more time and opportunities to delve into the essence of blockchain technology, understand why this technology is so important, and explore the potential for innovation and applications. It is a valuable time for thinking, proposing new ideas, and building valuable projects.
Although it is unclear how long the bear market will last, the market will eventually change.
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