Lily Liu: Pioneering the Future of Crypto and DeFi

In a wide-ranging and insightful conversation, Lily Liu, founding team member of Osmosis and advisor to the Solana Foundation, shares her unique perspectives on the crypto ecosystem, decentralized finance (DeFi), and the transformative potential of blockchain technology. As a veteran in the space and former CFO of earn.com, Liu brings a wealth of experience and a nuanced understanding of the crypto landscape.

The Journey into Crypto

Liu's fascination with crypto stems from her early experiences and education. Growing up in a Chinese-American family, she was exposed to contrasting narratives about China's history and rapid economic transformation. This sparked her interest in the dynamics of societal change, incentives, and the various forms of capitalism - themes that are central to the crypto revolution.

Liu explains:

"To me, that's like some pretty core questions as to, you know, what drives people and what, you know, drives civilizations and organizations. So, and so to me, that's actually a big part of why I find crypto to be so endlessly fascinating, right? Because it's part of those same core questions around incentives, right?"

Her academic background, which includes studies at Stanford and Harvard, provided a foundation for understanding complex socio-economic systems. This interdisciplinary perspective has proven invaluable in navigating the multifaceted world of crypto and blockchain technology.

Trust, Wealth, and Reputation in the Digital Age

One of the most compelling aspects of Liu's analysis is her exploration of trust dynamics in different societies. She contrasts the high-trust environment of places like Silicon Valley with lower-trust environments in emerging markets. This comparison provides crucial context for understanding how crypto might be adopted and utilized differently across various global contexts.

Liu observes:

"The only thing that does not scale exponentially with technology really, in my mind, is trust. And so that is kind of an interesting thing, because as everything has gotten faster, families gotten smaller, right? In person, sort of, you know, interaction and the ways that you typically build trust, but like, you know, planning each other's houses and growing in the same community for 12 years, right? Those are the types of things that actually are scarcer on an absolute basis and certainly on a relative basis."

This insight is particularly relevant when considering the potential impact of crypto in low-trust environments. In such contexts, the transparent and immutable nature of blockchain technology could provide a foundation for building trust that has been historically difficult to establish.

The Promise of Crypto in Emerging Markets

Liu's perspective on the potential of crypto in emerging markets is especially enlightening. She suggests that in countries where traditional financial systems are less developed or trusted, crypto could offer a transformative alternative. This is particularly relevant for countries like India, where the adoption of crypto could potentially leapfrog traditional financial infrastructure.

"I think to me, the question is whether it is attackable, right? Because if you're, if there's something which is truly accessible to the 4 billion people, what are we going to do to turn off the internet, right? I don't think so. And so it's possible that just the force and, you know, how much sort of people want to get into crypto, going back to the whole sort of, you know, cultural revolution to art and capitalist kind of transformation, how bizarrely fast that happens. You know, that's happening all over the world with people getting into crypto as well, right?"

This observation underscores the potential for crypto to democratize access to financial services and create new economic opportunities on a global scale.

The Evolution of DeFi and Osmosis

A significant portion of the conversation focused on the evolution of decentralized finance (DeFi) and Liu's involvement with Osmosis, a leading decentralized exchange (DEX) in the Cosmos ecosystem. Liu provides valuable insights into the unique features of Osmosis and how it addresses some of the challenges faced by other DeFi platforms.

Liu explains the concept of superfluid staking, a feature unique to Osmosis:

"You can stake Osmo and also LP Osmo on Osmosis at the same time, right? Which is something you cannot do with Uniswap, where Uniswap, you can't LP your tokens and also participate whenever if goes proof of state, and you can't also proof of state validate for eat at the same time, right?"

This innovative approach to staking and liquidity provision showcases the potential for DeFi platforms to enhance capital efficiency and provide new opportunities for users to maximize their returns.

The Cosmos Ecosystem and Blockchain Interoperability

Liu's involvement with Osmosis naturally led to a discussion of the broader Cosmos ecosystem and its approach to blockchain interoperability. She provides a clear explanation of how Cosmos differs from other blockchain architectures:

"The concept there, it's is sort of more federated system of blockchains. And so everyone is an L1. And what cosmos provides is it provides an SDK, basically common tooling, that allow everyone to sort of build an L1 that is interoperable with all the other folks that have built on cosmos, right?"

This approach to blockchain interoperability could have far-reaching implications for the future of DeFi and the broader crypto ecosystem. By enabling different blockchains to communicate and interact seamlessly, Cosmos and similar projects are paving the way for a more interconnected and efficient crypto landscape.

The Role of Solana in the Multi-Chain Future

While the conversation primarily focused on Osmosis and the Cosmos ecosystem, Liu also touched on the role of Solana in the evolving multi-chain landscape. As an advisor to the Solana Foundation, Liu recognizes the unique strengths of the Solana blockchain, particularly its high performance and low transaction costs.

Although she didn't provide a detailed comparison between Solana and Cosmos, Liu acknowledged the potential for coexistence:

"I think they will coexist as my instinct, but to fully articulate how I'm working on that."

This perspective aligns with the broader trend in the crypto space towards a multi-chain future, where different blockchains serve distinct use cases and complement each other's strengths.

Crypto and the Media Landscape

An interesting tangent in the conversation was Liu's thoughts on the relationship between crypto and traditional media. She predicts a contentious relationship, drawing parallels with the current tensions between tech companies and media outlets:

"I think it's going to be traditional media, right? Assuming they're still around, right, and not fully eviscerated by then, then I think it's just going to be even an even nastier battle, right?"

However, Liu also sees potential for disruption in the media landscape, with crypto potentially enabling new models of content creation and distribution:

"So maybe there's an outside chance that, you know, always starving journalists that are trying to pay off their $50,000 to your master of fine arts and journalism degree from, you know, the, from Columbia, there's actually pretty good article in the Wall Street Journal profiling a few of these masters of finance graduates in filmmaking and journalism that are basically 100,000 in debt. And then what told them that they're going to be making like $35,000 a year for like the next 10 years, right? And so, so all those folks are going to think, huh, maybe instead of, you know, writing my BuzzFeed articles, I can, you know, be a content creator where I actually engage positively with my audience, right? And, you know, big NFTs, for example, and build a community around that."

This observation highlights the potential for crypto to not only transform finance but also reshape other industries, including media and content creation.

The Global Impact of Crypto Adoption

Liu provides a thought-provoking analysis of how different countries might approach crypto adoption and regulation. She frames crypto as a "third party candidate" in the global power dynamic between the United States and China:

"Cryptocurrency, I think, is potentially the third party candidate here because it has universal appeal, right? It is not in any one place. It can relocate from point A to point B relatively quickly. And so I think that it just kind of shook up this whole sort of, you know, the world is about to settle into, there's a US and China and pick your, you know, little bit more authoritarian, a little bit less authoritarian side. And now the script, which is basically the escape route and it is kind of the check and balance against both, which, you know, are tending, tending towards more centralized forms of governance, right?"

This geopolitical perspective on crypto adoption offers valuable insights into how the technology might reshape global power dynamics and provide new opportunities for smaller nations to compete on the global stage.

The Future of Work and Crypto

One of the most intriguing aspects of the conversation was Liu's discussion of how crypto might transform the nature of work and value creation. She draws on her experience with earn.com to illustrate the potential for crypto to enable new forms of micro-work and value exchange:

"Earn, I mean, we kind of arrived at this idea with a little bit of a backstory, but essentially urn.com was imagine social profile of people could go to let'skurn.com/lily and pay me to respond to an email or do some other sort of task. The idea is that email is the simplest form of task. It's a task that it's the form of work, micro-task that we all do a thousand times a day, right, or at least like a hundred times a day."

This concept of micro-tasks and instant, borderless payments could have profound implications for the global labor market, potentially enabling more flexible and equitable forms of work.

Balancing Work and Family in the Crypto Space

In a particularly relatable segment, Liu shares her insights on balancing a demanding career in the fast-paced crypto world with family responsibilities. Her approach of treating time management as a "math problem" offers valuable lessons for anyone trying to juggle multiple commitments:

"To have young children, it is, depending on the age and how many, it's anywhere between 100 and 120 hours, because it's basically their every waking moment. That's anywhere between two and a half in three full-time drops, right? And that is basically, that's an illegal work, that's considered inhumane, right? And it's an illegal workload in every country in the world."

This candid discussion of work-life balance adds a human dimension to the conversation and highlights the challenges faced by many in the fast-moving crypto industry.

The Promise and Challenges of Crypto Adoption

Throughout the conversation, Liu maintains a balanced perspective on the potential of crypto while acknowledging the challenges it faces. She recognizes the transformative potential of the technology while also highlighting the regulatory, social, and technical hurdles that need to be overcome.

Liu's optimism about the future of crypto is evident:

"I think that crypto is kind of like the third party candidate, if you will. That's a little bit of a reference to American politics, where, you know, the recent memory, the most famous third party candidate was Ross Perot, where he basically, you know, siphoned off a number of votes, you know, he was like a Texas, you know, oil tycoon, right? So he siphoned off probably more votes from the Republicans and then, and Clinton was probably going to win anyways, but he certainly, you know, didn't hurt his hurt Clinton's chances of winning, right?"

This analogy underscores the disruptive potential of crypto and its ability to challenge established power structures.

Conclusion: A Multi-Chain, Crypto-Enabled Future

As the conversation draws to a close, it becomes clear that Liu envisions a future where multiple blockchain ecosystems coexist and complement each other. Her work with Osmosis in the Cosmos ecosystem, combined with her advisory role with the Solana Foundation, positions her at the forefront of this multi-chain future.

The discussion with Lily Liu offers a comprehensive and nuanced perspective on the current state and future potential of the crypto ecosystem. From the transformative power of DeFi to the geopolitical implications of crypto adoption, Liu's insights provide valuable food for thought for anyone interested in the future of finance and technology.

As the crypto space continues to evolve at a rapid pace, voices like Liu's will be crucial in navigating the challenges and opportunities that lie ahead. Her balanced approach, combining technical expertise with a keen understanding of social and economic factors, exemplifies the kind of holistic thinking needed to realize the full potential of blockchain technology and decentralized finance.

Facts + Figures

• Lily Liu is part of the founding team of Osmosis and an advisor to the Solana Foundation.
• Liu was formerly the CFO of earn.com, a platform that allowed users to earn cryptocurrency for completing micro-tasks.
• The concept of "superfluid staking" in Osmosis allows users to stake their tokens and provide liquidity simultaneously, increasing capital efficiency.
• Cosmos provides an SDK (Software Development Kit) that allows developers to build interoperable blockchains.
• Liu estimates that having young children requires between 100-120 hours of work per week, equivalent to 2.5-3 full-time jobs.
• China has banned cryptocurrency transactions, while India's Finance Minister has made positive statements about working with crypto entrepreneurs.
• Liu suggests that crypto could be seen as a "third party candidate" in the global power dynamic between the US and China.
• The podcast mentions that some crypto startups are now raising $20 million pre-product at valuations of $45-50 million.
• Liu studied at Stanford as an undergraduate and did East Asian studies at Harvard.
• The conversation touches on the potential for crypto to transform various industries, including media and content creation.

Questions Answered

What is Lily Liu's background in crypto?

Lily Liu is part of the founding team of Osmosis, a decentralized exchange in the Cosmos ecosystem, and an advisor to the Solana Foundation. She was previously the CFO of earn.com, a platform that allowed users to earn cryptocurrency for completing micro-tasks. Her academic background includes studies at Stanford and Harvard, which provided her with a foundation for understanding complex socio-economic systems, a perspective she applies to her work in the crypto space.

What is superfluid staking in Osmosis?

Superfluid staking is a feature unique to Osmosis that allows users to stake their tokens and provide liquidity simultaneously. This means that users can earn rewards for securing the network through staking while also participating in liquidity pools. This approach increases capital efficiency by allowing users to maximize their returns from a single asset. It's a significant improvement over traditional DeFi platforms where users typically have to choose between staking and providing liquidity.

How does Cosmos differ from other blockchain architectures?

Cosmos differs from other blockchain architectures by providing a more federated system of blockchains. Instead of having a single layer 1 blockchain with various layer 2 solutions built on top, Cosmos allows developers to create their own sovereign layer 1 blockchains. These blockchains are interoperable with each other through the Inter-Blockchain Communication (IBC) protocol. Cosmos provides an SDK (Software Development Kit) that allows developers to build these interoperable blockchains easily, fostering a ecosystem of interconnected, application-specific blockchains.

What is Liu's perspective on the relationship between crypto and traditional media?

Liu predicts a contentious relationship between crypto and traditional media, drawing parallels with the current tensions between tech companies and media outlets. She anticipates that traditional media may resist or attack crypto, similar to how they've approached big tech companies. However, she also sees potential for disruption in the media landscape, with crypto potentially enabling new models of content creation and distribution. This could provide opportunities for journalists and content creators to engage directly with their audience and monetize their work through crypto and NFTs.

How does Liu view the global impact of crypto adoption?

Liu views crypto as a potential "third party candidate" in the global power dynamic between the United States and China. She suggests that crypto has universal appeal and the ability to relocate quickly, which could disrupt the traditional binary choice between more or less authoritarian systems. Liu believes that crypto could provide an "escape route" and serve as a check and balance against centralized forms of governance. She also sees potential for smaller countries to use crypto adoption as a way to become more competitive on the global stage.

What challenges does Liu identify for balancing work in the crypto space with family responsibilities?

Liu candidly discusses the challenges of balancing a demanding career in the fast-paced crypto world with family responsibilities. She estimates that having young children requires between 100-120 hours of work per week, equivalent to 2.5-3 full-time jobs. Liu approaches this challenge by treating time management as a "math problem," setting a budget for time and then focusing on putting as much quality into those hours as possible. She emphasizes the importance of outsourcing tasks when possible and recognizing that it's impossible to do everything, which can help alleviate guilt and burnout.

How does Liu see the future of work being impacted by crypto?

Liu envisions crypto transforming the nature of work and value creation. Drawing on her experience with earn.com, she discusses the potential for crypto to enable new forms of micro-work and value exchange. This could include tasks as simple as responding to emails or participating in surveys, with instant, borderless payments facilitated by cryptocurrency. Liu suggests this could have profound implications for the global labor market, potentially enabling more flexible and equitable forms of work, and allowing people to monetize small increments of their time more effectively.