Dialogue with Solana Foundation Chair Lily Liu: Investing in the Asia-Pacific market is timely, and Solana may have new moves by the end of the year

Interview, organized by: Frank, Foresight News

From Wall Street to the crypto circle, from Bitcoin maximalists to the president of the Solana Foundation, which transformation is more significant?

Perhaps Lily Liu herself cannot say for sure. After entering the workforce in early 2005 and working at top traditional financial institutions like Morgan Stanley, McKinsey, KKR, and HCA, she was originally following a conventional path as a typical traditional elite. Little did she expect that, under the constant persuasion of her friend and industry heavyweight Li Qiyuan, she would dramatically come to understand and engage with Bitcoin.

Since then, as a "veteran" who started engaging with Bitcoin in 2013, Lily Liu has now been in the crypto industry for a full decade. She has journeyed from exchanges (Bitcoin China) to one of the earliest mining companies in the U.S., 21 Inc (which later rebranded to Earn.com and was acquired by Coinbase), and then to joining a public blockchain (Solana). She has always been at the intersection of top resources, experiencing the most genuine changes in the market while also observing the industry's tremendous transformations.

• In 2013, "Bobby, you shouldn't play with Bitcoin";
• In 2021, "What attracts me most about Solana is------I press it, and it happens";

These two experiences, moving from outside the circle to inside, and from "BTC Maxi" to joining Solana, now reflect both a turning point and an advantage------it connects veteran members of the crypto circle with traditional elites in Silicon Valley, providing more people with reasons to reassess Solana, undoubtedly bringing significant potential variables to Solana.

During the tumultuous events surrounding FTX last year, the regulatory winds in the entire market also shifted. Lily Liu decided to increase investments in the Chinese-speaking regions and the Asia-Pacific market at the right time. Accordingly, Solana has taken different steps this year. Foresight News had the honor of interviewing Lily Liu on September 10, 2023, and here is the organized transcript of the interview 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:

"I press it, and it happens."

She believes that so far, only a very few blockchain projects possess both a strong community and technology, and Solana is one of them------providing a new growth model suitable for decentralized ecosystems, rather than relying solely on traditional methods from Silicon Valley or the Web2 industry.

Foresight News: Hello, Teacher 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, and in the early stages of your career, you worked at Morgan Stanley, McKinsey, and KKR, all top companies in traditional industries. What led you to learn about the blockchain industry and start your entrepreneurial journey in this field?

Lily Liu: Thank you for the interview, Foresight News. Hello to all Chinese readers, I am 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 take pride in my Chinese cultural background. I joined the blockchain industry in 2013 and currently serve as the president of the Solana Foundation. My career began in Morgan Stanley's Hong Kong investment banking division, and my first full-time job was at McKinsey, working in New York and Beijing from around 2005 to 2008. Later, I joined a private equity fund, KKR, primarily working in New York.

Through my work at KKR, I got to know the "Frist" family from Tennessee, USA* (Foresight News note: The "Frist" family started one of the world's largest private healthcare chains, HCA, in the 1960s)*, who also opened a private hospital in China. I participated in their international standard hospital project in Cixi, Zhejiang Province, which has 500 beds. So actually, my first entrepreneurial experience was not related to technology but to the healthcare industry.

In 2013, I was still living in Shanghai, and I had a good friend named Bobby Lee (Foresight News note: Li Qiyuan, co-founder of "Bitcoin China," and brother of Litecoin founder Charlie Lee). He was somewhat well-known in the Bitcoin field, and Bobby Lee and I are alumni of Stanford University, where we became good friends while in Shanghai.

One day, Bobby Lee mentioned Bitcoin to me. At that time, my understanding of Bitcoin was still shallow; I thought it might be related to money laundering or the drug market, and I even told him, "Bobby, you shouldn't play with Bitcoin." But he kept insisting, advising me not to overlook Bitcoin, which I can say was my first experience feeling a kind of religious fervor in the Bitcoin space.

After his repeated recommendations, I decided to study Bitcoin seriously. I read the Bitcoin white paper and studied for a while, gradually realizing that Bitcoin is very profound and interesting in terms of technology, theory, and the concept of decentralization. At that time, in 2013 to 2014, there were only a few cryptocurrencies like Bitcoin and Litecoin.

In 2014, I left the hospital and joined Bobby's "Bitcoin China" (BTCC). After working at BTCC for about four to five months, I returned to the U.S. and met a person named Balaji S. Srinivasan, who ran a mining company called 21 Inc. At that time, there were only a few mining companies in the U.S., and 21 Inc was one of them. The market was gradually entering a bear phase, and many companies faced challenges due to inadequate financial planning. Balaji S. Srinivasan and I worked hard to help 21 Inc alleviate its financial pressures, and later they rebranded 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 weren't many other technical options. Many applications and use cases were seen as dreams, only discussed in Bitcointalk or articles about the potential of future decentralized technologies. Bitcoin proved that a decentralized network could exist, but it couldn't support more use cases. If you wanted to actually run some scenarios, you had to wait an hour to receive funds, which needed significant optimization compared to traditional financial systems.

Therefore, I believe that after the emergence of Ethereum, it expanded the various use cases that could be realized in the crypto space. However, Ethereum also has a problem; although its transaction speed is faster than Bitcoin, it is not as swift as our traditional financial transactions. In fact, regardless of how the underlying technology operates, both the U.S. and China have independent payment systems similar to PayPal and WeChat Pay, which still have advantages in user experience.

Foresight News: What do you think is the biggest difference between this industry and traditional industries? After experiencing several bull and bear markets, what continues to attract you to build in this industry?

Lily Liu: I think the biggest difference is the culture of entrepreneurship. Traditional companies typically do not have innovation or entrepreneurship as their core advantages; their goals are usually not innovation or entrepreneurship. In contrast, the core culture of Silicon Valley is innovation and entrepreneurship.

I believe blockchain is one of the most extreme industries in the tech field because its ultimate goal is decentralization, which is different from the centralized business models of Silicon Valley. Blockchain emphasizes the concept of decentralization. To some extent, it resembles socialism and capitalism because it has a certain controlling nature, which is 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: the ideology of blockchain, involvement in drug trafficking 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 idea of decentralization, it was hard to leave the crypto industry because there were no other places that aligned with that culture and thought. So, I felt I had no other choice but to continue working in this field.

Why Be Optimistic About Solana? "I press it, and it happens"

Foresight News: As a former BTC Maxi and early contributor to 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 optimistic about it is simple: I press it, and it happens. This is an experience we are already very familiar with in Web2------you press a button, and you immediately see the corresponding reaction, without having to consider whether the cost is one dollar or two dollars; it's almost free.

If blockchain cannot provide this user-friendly experience, large-scale applications of blockchain are almost impossible.

Additionally, since the public chain boom in 2017 and 2018, many different blockchain projects have emerged, but I believe that for a blockchain project to succeed, it needs to be very strong in two aspects: community and technology.

However, so far, only a very few blockchain projects possess both a strong community and technology. First, it must have a solid technical foundation and technical standards. Secondly, it needs to establish a complete ecosystem and attract developers.

Although there are currently many different blockchain projects, in reality, only about 4 to 5 projects excel in this regard, one being Bitcoin, another Ethereum, the third being Solana, and then there are some that may have potential, like Cosmos, Polkadot, or Near.

While I think there are many different ideas in the blockchain space, only possibly fewer than 5 projects simultaneously possess technology, culture, and ecology. In the original Ethereum-centric scaling practices, everyone may have already assumed that transactions cannot be fully placed on the main chain. For someone like me who is not technical, this challenge is very interesting------how to find some special growth models in a decentralized ecosystem. And Solana provides a new growth model suitable for decentralized ecosystems, which 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? Are there any memorable experiences or colleagues?

Lily Liu: I really like the work culture at the Solana Foundation, and I collaborate happily with everyone. I feel that most colleagues at the Solana Foundation genuinely believe in decentralization and seriously implement it, which is also a core consideration in our work.

Many of the blockchain projects that emerged in 2017 and 2018 ultimately went in two directions: either enterprise blockchain or EVM compatibility, with little possibility of re-establishing an independent technical system and community ecology.

To truly succeed, one must have technology on one hand and such beliefs on the other.

Asia-Pacific + Europe and America: Decentralized Collaboration in a Macro Sense

Lily Liu believes that the blockchain industry has only two major markets: the Western market dominated by the U.S. and the Asia-Pacific market dominated by the Chinese-speaking regions. Only these two major markets have both a strong developer community and a capital market with sufficient funding support.

She also emphasizes that the market may lean more towards Asia-Pacific, while the technology aspect may lean more towards the West. "Independent developers are the core asset of blockchain," and regardless, the developer market is the most important.

Foresight News: I understand that you are a Chinese-American but have lived and worked in various cities in Asia for many years, and your Chinese is very good. You even studied East Asian culture in college. From your perspective, what is the biggest characteristic of the Asia-Pacific market compared to Europe and America? What are the biggest advantages and disadvantages in the development process of Web3?

Lily Liu: I believe there are two major markets in the blockchain industry: one is the Western blockchain market dominated by the U.S., and the other is the Asian blockchain market dominated by the Chinese-speaking regions. Only these two major markets have both a strong developer community and a capital market with sufficient funding support.

The large market in the Chinese-speaking regions is very, very important. Although there are many restrictions sometimes due to policy reasons, it has always been attractive. In comparison, I think the large market in the West may lean more towards core technology, with many deeply developed blockchain projects leaning more towards the West, like Silicon Valley or Europe. However, in terms of the market, Asia may be stronger because it has a large population, consumer potential, and plays a core role in the operation of exchanges. In fact, about 80% to 90% of trading volume is conducted through some exchanges in Asia.

In short, the market may be in Asia-Pacific, while the technology aspect may lean more towards the West. These two markets are not completely separate; they still exist to some extent in combination, and of course, there are certain cultural differences between the two markets.

If you communicate with some American projects, at least half of them may not have a deep understanding of the role of the Asia-Pacific region. Therefore, in the blockchain industry, we need to understand more about the characteristics of each region, as different regions play different roles in international cooperation. Sometimes, projects and markets in different regions are not even aware of their collaboration. This also reflects the broader geographical meaning of decentralized collaboration in Web3, where different nodes in the blockchain industry play different roles, ultimately collaborating, even though their understanding of each other may not always be completely aligned.

We mention internally at Solana that over 80% of core trading volume of SOL is conducted through some exchanges in the Asia-Pacific region. Some of our colleagues are very surprised; they had never realized this before and never thought the proportion would be so high.

Foresight News: We observe that Solana is very active in the North American and European markets, with strong consensus among both developers and users. However, in the Asia-Pacific, especially the Chinese-speaking regions, previous exposure and activity levels have been relatively limited. This year, we have clearly felt that Solana's presence in this market is growing, with more and more discussions about Solana. Is this related to the strategic changes 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 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 opportunities. So we actually thought for a long time and waited for a long time until the end of last year and the beginning of this year, when an opportunity that could be prioritized emerged. We have been closely monitoring market changes, and the changes in Hong Kong's policies made us feel that the Chinese-speaking market seems to be showing some signs of reopening.

We have already established a relatively good ecosystem in the Chinese-speaking region, but in the past few years, due to some external factors and the FTX incident at the end of last year, we decided to increase our investment in the Chinese-speaking region and the Asia-Pacific region starting in February and March of this year.

Foresight News: How do you view the importance of the Asia-Pacific market for the long-term development of Solana?

Lily Liu: Very important. We have spent two years in India establishing a developer-centric growth strategy, and we are also expanding into international markets in Europe, especially in Germany and the UK. While these markets are all important, none are as comprehensively developed and balanced as the Asia-Pacific region------which has both developer resources and a foundation for capital market development.

One of our internal judgment frameworks is the labor market and capital market.

The labor market mainly refers to the developer market, because in the blockchain field, the core asset is independent developers, so the developer market is the most important regardless.

However, there are many such developer markets globally, such as Silicon Valley, New York, India, and Germany, but very few markets have both labor market attributes and lean towards capital markets.

Only two markets have both a strong labor market and a 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 the developer ecosystem; on the other hand, Solana has many ongoing innovations that are expected to show results by the end of this year or early next year.

Foresight News: Based on data from the past six months, Solana has seen significant recovery in both technological advancements and TVL increases. From your perspective, what has been the biggest change in Solana over the past six months? What is the core reason for the strong resilience of the Solana ecosystem?

Another aspect is the exposure of Solana in the media in the Asia-Pacific region. Perhaps six months ago, or even a year ago, we wouldn't have conducted such an interview because Solana had relatively little media exposure.

Lily Liu: I think the main focus has been on developers, for example, earlier this month we launched a new hackathon called "Solana Hyperdrive."

Foresight News: The current competitive landscape of public chains has changed significantly compared to a year ago. Layer 2 projects are developing rapidly, and the EVM ecosystem has a strong first-mover advantage, with new public chain projects emerging one after another. The narrative of high performance seems less appealing now. How do you view the current competition? What measures has Solana taken in terms of positioning and strategy adjustments in this competitive environment? In which specific areas will Solana increase investment and focus?

Lily Liu: First, let's talk about why we need high-performance public chains. I think this is a self-evident issue. The reason I am interested in Solana is because I hope blockchain can realize various use cases, many of which require high performance.

We are now accustomed to the Ethereum mainnet, which is somewhat like how we used to connect to the internet with a 56K modem over twenty years ago. Back then, connecting to the internet required a phone line, and downloading a song might take half an hour, which is very similar to the state we are in now when using blockchain; performance issues must be addressed.

The second question is about what kind of solutions can achieve the best user experience. I believe Layer 2 is suitable for Ethereum and is a good solution, but it still has some issues. Just like when broadband internet emerged, we no longer needed to install new modules every time we used different applications.

As for Solana's development, there will be some new advancements by the end of this year or early next year. I believe some important innovations include "Firedancer," which can achieve 1 million TPS in internal testing, and of course, in actual operation, it may reach 100,000 TPS, which can meet the needs of high-frequency trading applications.

And all of this is achieved on the Solana main chain. From a technical perspective, this will also make Solana another blockchain with multiple fully independent validator clients outside of Ethereum.

Another technical innovation is State Compression, launched in the first half of this year, which significantly reduces the cost of NFTs.

Now, if you want to mint 100,000 NFTs on Solana, it only costs $100, while on Ethereum, it might cost $500,000. This difference is enormous. This is not just a cost issue; more importantly, by lowering costs, performance is no longer just about performance; it also expands the space for innovation.

If creating 100,000 NFTs only costs $100, then NFTs can transform from an application into an infrastructure, meaning NFTs can be used for more use cases.

For example, you can use NFTs as part of a wallet, which was previously not possible. Therefore, Solana's performance and this cost reduction can turn NFTs into an infrastructure, thereby expanding their application scope.

In summary, state compression is a significant technological advancement this year that lowers 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 best independent developers in the industry to collide ideas and help generate some interesting concepts.

Foresight News: We learned that Solana's autumn hackathon has launched this year, with a prize pool of up to $1 million, which is a significant investment in such a market environment. Solana hackathons are very well-known in the industry and have 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 hackathon winners?

Lily Liu: Yes, hackathons not only provide rewards but also offer an opportunity to bring developers together for innovation and competition. It also concentrates all energy within a specific timeframe. We have been doing this successfully for the past few years, which not only helps with innovation but also aids in community building.

We usually divide the time into two parts: one half for development and project training, and the other half for community activation and collaboration among developers. This helps encourage creative collisions among independent developers and provides them with a conducive environment to explore interesting ideas together, promoting broader community interaction and cooperation.

Foresight News: Do you have any advice for builders in the industry?

Lily Liu: This is the third bear market I have experienced since joining the industry. I believe bear markets are the best time for builders. Although people's emotions may become very pessimistic, it is also a great time for innovation and thinking about future opportunities.

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 application. It is a valuable time to think about problems, propose new ideas, and build valuable projects.

Although it is unclear how long the bear market will last, the market will change sooner or later.