Lily Liu Defends Solana Foundation Against Perps Kingmaking Claims as Flash Trade Exits

Solana Foundation president Lily Liu published a statement on August 10 rebutting allegations that the Foundation had acted as a kingmaker in the Solana perps ecosystem, describing the Foundation's guiding principle as "open meritocracy" and arguing the market, not the Foundation, selects winners.

The statement came after Flash Trade's wind-down announcement confirmed at an AMA on August 10 touched off a wider debate about whether the Foundation's concentrated backing of fully on-chain orderbook perps had left teams building with alternative architectures without a fair path to support. Flash Trade, which had operated for three years without outside capital, is seeking an acquirer for its tech stack, brand, and intellectual property. Any sale proceeds will go to FAF token holders on a pro rata basis; the team has excluded its own tokens from any distribution. The team distributed approximately $520,000 in USDC revenue share to FAF holders over its operating life, according to The Defiant.

Kingmaking Allegation: Foundation Backing Phoenix While Others Got Less

The "kingmaking" framing gained traction through a widely read post on August 8 by community commentator fabiano.sol, which argued that the Foundation's heavy backing of Phoenix as Solana's flagship perps product had contributed to burnout at Flash Trade, while "protocols like FlashTrade and Bulk received far less love." The post reached roughly 94,000 views.

The critique pointed to a real structural question: Flash Trade used a pooled-liquidity, oracle-priced model and ran execution through MagicBlock ephemeral rollups rather than fully on Solana's L1, a design the Foundation's public perps support program explicitly excludes. That program requires fully on-chain execution, price discovery from orderbooks or competing market makers rather than pools, and open-source core contracts. Critics argued those criteria structurally favor the CLOB (central limit orderbook) approach Phoenix pioneered.

Liu on Open Meritocracy: Market Decides, Foundation Concedes Social Media Shortfall

Liu framed the Foundation's work around two objectives: attracting top talent to Solana and attracting capital. On the kingmaking charge, she argued that concentrating support in a single winner would undercut both.

"The principle we operate on is open meritocracy: actively facilitate competition, let the market decide," she wrote. "No one is bigger than the market — for capital, for talent, or for users."

She acknowledged that the Foundation's social media activity had not reflected the full range of projects it supports. "I don't think our socials presence has fully represented the actual diversity of support or range of perspectives on perps. (This will change)." Liu pointed to two recent programs as evidence of that broader support: a public perps program and Frontier Traders, without naming the specific teams involved in each.

On architecture, Liu was explicit about the Foundation's preference while maintaining it was separate from allocation of support. "Perps are very hard to build fully on chain, and fully on chain is more valuable to the future of DeFi (and Solana) than pool trading, off chain execution, or any number of alternative architectures," she wrote, noting that dYdX first attempted fully on-chain perps in 2017 and the industry is still working toward that goal nearly a decade later. "You can be clear-eyed that not all architectures are equal and still be welcoming to everyone who comes to build here."

The Solana Foundation's official account amplified the post. Austin Federa, who previously held a communications role at the Foundation, replied agreeing with Liu's critique of "credible neutrality," writing it "was a regulatory response that got misconstrued as some moral philosophy."

xChill Pushes Back: Criteria "Only Let Builders Who Clone Phoenix" Qualify

Critics in the thread were not persuaded. Community member xChill alleged in two replies that the criteria themselves were the problem, not the principle behind them.

"Some at the SF have been making up special meritless rules to box others out," xChill wrote. "What this creates is a scenario where the only builders who can possibly meet the criteria are those who blatantly clone Phoenix." xChill called the result "pretend meritocracy" and said it stifles innovation.

xChill also contested Liu's architectural framing, arguing the pool model is "literally more on-chain than the order-book model" and that CLOB market makers are adversarial to retail traders, hunting stop losses in ways that cause frequent losses for end users. A community observer replying to the Foundation's official amplification added a narrower version of the same concern: "open meritocracy sounds clean, but the post admits the socials don't reflect the actual diversity of support. That gap is the problem, not the principle."

Flash Trade Volume Context and Solana's Perps Gap With Hyperliquid

The debate runs alongside a difficult volume picture for Solana perps builders. Hyperliquid leads the cross-chain perps market with $3.2 billion in HIP-3 open interest, according to Galaxy Research, while Solana accounts for roughly 1% of total perps volume industry-wide. Dango, another Solana perps exchange, wound down on July 29.

Imperial Perps noted on August 10 that roughly 40% of its volume had routed through Flash Trade and said it would work to ease the transition for Flash users. "For Flash users wondering what comes next, we want to make the transition as easy as possible," the team wrote.

Liu's statement closed on what the Foundation can and cannot control: "Entrepreneurship is a brutal battle. Most attempts fail, for all kinds of reasons. The presence or absence of RTs aren't high on that list. Our job is to try to attract the best talent and capital to Solana to compete. The Foundation doesn't decide who succeeds or fails — the market does."