13 Min. Lesezeit‘Solana Seeks to Build the Best Ecosystem for Capital’
Zug, Switzerland. This town, home to roughly 30,000 people and surrounded by mountains, was once agricultural land before industrialization took hold in the 19th century. Today, it is well known as a prime location for company headquarters. For instance, Siemens Smart Infrastructure is based here, just eight minutes from Johnson & Johnson AG’s offices, which are themselves near Landis+Gyr-Strasse. The city’s appeal is undeniable, offering employees an ideal environment for their families: hiking is just minutes away, skiing is easily accessible, and the lake provides a peaceful retreat during lunch breaks.
One might be surprised, however, to learn that this same city has become a hub for cryptocurrency-related foundations—an industry still viewed by many as flashy. Yet, this is where the Ethereum Foundation established its base in 2014, followed by counterparts such as Tezos, Parity (the entity behind the Polkadot network), and Taurus. Among the prominent names forming the Crypto Valley Association, the Solana Foundation stands out, thanks to the success of its blockchain and token, which have been among the most widely used in recent months. Naturally, Zug is where its President, Lily Liu, greeted us.
In the “Avanti Room” of our welcoming hotel, she arrived between two tightly scheduled meetings. While our videographer Brice finished setting up the lights, we took a moment to discuss her personal life in Zug. “Quiet,” she said to describe the location, a fitting adjective for a city that would surely embrace it.
At the time of this interview, Los Angeles was burning—a “heartbreak” for this native Californian. The day before, she had posted on X: “It’s angering and heart-wrenching to see half of LA obliterated by incompetence—despite the state’s unmatched wealth and resources.” However, the frustration quickly faded when she began speaking about Solana, the network she tirelessly promotes, convinced of its potential to become the bedrock of finance. This interview has been edited for length and clarity.
CoinShares: Could you explain to us why you have ventured into Solana?
Lily Liu: I started off with Bitcoin, exchange and mining, which turned into Earn.com that I sold to Coinbase in 2018. Then, I spent a couple of years advising, investing, getting involved in a number of different things and in 2021, I started using Solana DeFi. You know, every so often you just check out what's new, what's going on (...) There is the broader aspirational movement that Bitcoin introduced in advance, that cryptography gives you freedom in a digital world and there is the bigger idea. This is not just about sound money nor about store value, right? Of course, it is very important and Bitcoin does a phenomenal job at that, but in the end, there are only two calls-to-action for Bitcoin: number one, buy; number two, do nothing. But what about the subsequent vision of building, architecting, proliferating these Internet Capital markets? You need a couple of features: the community and the technology. You’ve got to have native smart contracts, and that cultural element to build the developer community because open source without a community of developers and builders is not worth all that much, right? That is the real value of open source. So, when I looked around, I thought Solana was probably the one that could deliver on that. That was in 2021.
Could you share with us why Solana was invented in the first place?
Anatoly Yakovenko came up with this idea in 2017, 2018. Back then, there was the whole ICO¹ boom. There was a huge kind of speculative fervor but, you know, behind any speculative fervor, there is always a primitiveness of something that can be very powerful in the future, right? It originally started in December 2017, with CryptoKitties² this one application which essentially broke Ethereum. It became pretty apparent to pretty much everyone that scaling to match the very large aspirations of this space was going to take quite a bit of work. So, a bunch of folks in 2017, 2018 proposed various different architectures to be able to provide, in a sort of bona fide decentralized network, greater performance to handle the anticipated demand for block space. What was distinct about Solana from the beginning and considered radical by a number of people is that you would not immediately go to some form of sharding and layer-2's but try to focus everything on having a parallelized synchronous execution environment. There were endless conversations that people have had around on the technical front, truly endless discussion but I think one of the early perspectives that is still pretty emblematic of what makes Solana special is that there's always been this view that this technology should support products that are 10x useful for people. It has become clear to me when I look at other ecosystems that there's actually a lot of folks who are still stuck on building infrastructure for infrastructure, applications products, and users are a little bit of an afterthought.
Solana is still attracting some critics, assuming the network is centralized. How do you manage to improve the different trade-offs it has done?
I think that that critique is just kind of factually untrue these days. I was hearing that from 2020, 2021 and of course, within one year after mainnet launched, it was true. I think any sort of blockchain 12 months from mainnet launch goes through earlier stages of building a validator network. Now, we've reached so many different degrees of advancement and maturity at the network level. I think that there's just a lot of people who want to believe that Solana still is very centralized and they're literally echoing a narrative from 2020 but if you actually look at the facts, it is not true.
What metrics make it decentralised?
We thought about network decentralization across a number of different factors: today, the network is about 2000 nodes distributed around the world and we don’t only look at node count, we monitor the Nakamoto coefficient, how many validators control 33% of the stake, which we could call the super minority. We look at ASN³ diversity, so you want to make sure that on 100 nodes, there are not 50 of them being run by Hetzner and the other half in AWS. You also need geographic diversity. You’re not only looking at nodes run by cloud providers but also those being run independently on bare metal. Those are the types of things that really matter. This is why I think that the critique about Solana being centralized is based off of four-year-old information, and second of all, oftentimes being advanced by folks that haven't spent time in the Solana ecosystem within basically the last four years.
How does Solana compete against other blockchains in terms of technology?
There are no other blockchains that have both the performance, as well as the community, and the roadmap for improving the network substantially over time. Improving the network is not just about TPS (transactions per second) like that node count is a very high level metric, which matters, but it doesn't tell you the whole story, right? The way that we look at metrics thus far in the industry as we focus on a couple of things: node count and TVL. They're part of the story but they actually leave a good bit about how you actually build a robust industry. First of all, competition is great. It is what makes everyone better. We seek to build the best infrastructure, the best ecosystem for capital. As we look around, we see some of the innovations that other folks have been able to advance and how can we actually improve the Solana, either the chain itself, or the tooling on top of that to improve the experience for validators for developers and all who are deploying capital. That's something which is very much top of mind for us. By the end of year, we became the number one in terms of real economic value capture, in application revenue and also the fastest growing developer ecosystem, right. Those are all sort of very positive metrics. We're lucky enough to have a lot of demand for our block space, that's why we've been making huge investments into something like Firedancer, our second core client, into Anza (software development firm) and the introduction of Agave (a validator client).
Could you tell us how Firedancer will improve the network?
It is a big thing that's going to happen in 2025: the integration of both Firedancer and Agave into the mainnet. A big challenge for our network. In a pure Firedancer environment, they (developers) have been able to get to one million TPS with about 100 nodes running. That's pretty cool. To my knowledge, there aren't other live blockchain clients that are able to deliver that degree of performance right now. Now, running mainnet and integrating Agave and Firedancer will be a significant additional kind of level of work, so I don’t know whether 2025 is going to be reflecting that performance.
“Some of the brightest institutions are seeing the potential of Solana”
Private institutions are coming into Solana: BlackRock, Securitize, Société Générale… What does it tell about Solana?
Going back to the original edition of blockchain that Bitcoin gave us, there is this idea of a global accessible financial infrastructure, where if you can access the internet, you could access some form of financial infrastructure, rather than today, where our financial systems are all based on analog technology used since way before the internet. The potential scope of Internet capital markets is definitionally broader than what we define today: fiat money, money market funds, securities instruments… What has been articulated for at least 10 years is the ability to issue those assets on a blockchain and if it is some form of a public blockchain, then you have access potentially to the liquidity of 5 billion people, 5 billion consumers. That's kind of like the Grand Vision. And so I think it's great that some of the best, brightest and most respected institutions are seeing that potential and seeing this as being complementary to their business.
I can remember seeing Solana Pay in action during a French conference. What kind of role do you think Solana will play as a payment ecosystem?
If you look into the economy, there's no economy that is just purely speculation. Ultimately, people want to use money. They want to pay. They want to save and they want to invest. And one of the things that we get with digital finance, with open finance, and with programmable money, is this idea that you can start to collapse these functions down together. The segmentations that we kind of have inherited in the more traditional world where, you know, as I remember being in the US, I would have Venmo for payments and then Wells Fargo for savings and Charles Schwab brokerage account for investing, those are three totally different experiences, highly walled off from one to another. By the way, moving money between them is actually quite difficult. Whereas, if you have a self-custody wallet with stablecoins, then you can pay, you can save and invest in a very even just one fluid motion, right? So, those are some of the new consumer type of experiences when it comes to using money that I think are unique. People want more integrated experiences. I think the closest core layer we have is probably the super apps that you have in Asia from WeChat to Grab. Those are actually kind of like the Envy of the Western Tech world as well. Solana Pay, which was built about three years ago, was one of the first primitives to allow merchants to use crypto rails to accept payments. That is one part of a broader perspective we have on why cryptos are important for payments. I'm super excited about what we can do with stablecoins, payments and programmable payments. We call it PayFi: this broader vertical category, which is not just a sort of merchant payments but an integrated experience with payments, savings and investments. Stablecoins are fast, cheap, and constant: 24/7 settlement, you don't have to wait for Swift during US working hours or correspondent bank where you throw a wire into the Ether and kind of wait for a couple of days depending on where you're sending it to. It is really about creating these value-added primitives that create these integrated fintech experiences that allow anyone anywhere to spend money, save money, earn money and grow their assets over time.
Solana has become a major player in the DePin ecosystem. How do you explain this evolution?
It comes down to many of the elements that are the same over and over again: a performant technology with a robust ecosystem of builders, really focused on building useful products. That is expressed in many different ways. We’ve known the Helium team for quite a while. They were a darling of the last cycle (2021-22) and have been building amazing things for a long time. They came to Solana, recognizing that they would build a better product rather than trying to develop the blockchain alongside it. When you build your own blockchain, you not only have to develop the technology but also the community, attract builders, and so on. That is a lot of work and there might actually be a better use of that team's time. That's the trade-off Helium has made. Their token is on Solana and they are building amazing products. They were the first DePin project to come over Solana and we will always embrace Helium for that. In regards to other projects coming, it starts off with the need of having a token on a blockchain which is performant. As a DePin project, I would want thousands of nodes to have a secure network and a built-in ecosystem with builders, users and when you add all that together, it's really not a huge set right now.
Do you think Solana should try to distance itself from memecoins and platforms such as Pump.fun?
Should the internet distance itself from, let’s say, Onlyfans? And first of all, who is the internet? Certain people within the internet distance or embrace, whatever, this full spectrum of the different opinions and that's what it means to be an open platform now. It is a daily constant point of debate. Of course, that's going to exist in any open system. I think memecoins are on that spectrum of different financial content. We have the full spectrum, with at one end money market funds from some of our most respected institutions and then, at the other end of the spectrum is going to be memecoins that people have mixed opinions on. I expect that in an open system. We as the foundation certainly have no control over it. We as the broader ecosystem have a diversity of different opinions and that's just the way it's going to be in the same way that we have quite a variety of opinions as to posts on Twitter, Facebook, certain applications that exist on the internet that you may or may not like.
On a podcast hosted by Laura Shin, you said that Base could not compete with Solana. Are you doubling down on that opinion?
Yeah. That's always been my long held position. Now, to provide a more nuanced view about that, the reason why is the beating heart of Bitcoin blockchain and crypto from the beginning has been exploring the spectrum around individual and community ownership. I have, of course, a lot of respect for the people who are building anything in this ecosystem. It's really hard. Social media fireworks aside, the specific points I am making is that a chain like Base is an L2. This is apples and oranges to begin with. Ultimately, it is corporate owned and there's nothing wrong with that. The thing is that the future development of Base as a network is going to be strongly influenced by its stakeholders and I don't mean this in a critical way, I am just pointing out the obvious which is that Coinbase’s L2 called Base has a strong corporate aspect to it. There's nothing controversial about that comment, We are talking about a product which I think they've done an excellent job on but has a different set of stakeholders.
How do you explain that Solana bounced back that way after FTX’s fall?
The truth is it's both a good story, but also a really boring story. After the collapse, Sol token went down to 8, 9 dollars and a lot of people left Solana for dead. But within the community, from the top and the bottom, what never really changed is no one left and everyone was building when it was the all-time high and everyone was building at the all-time low. Yes, there was more stress, right, the emotions were a little bit different, but no one left, and no one ever even had the intent to leave. So, from that perspective, it actually felt very consistent, and we all just kind of thought : “Okay, well, it's time to rebuild”. It really tests the character of individuals and of a community. It was very dramatic at the time, this really speaks to the character of so many people in Solana. Actually, a lot of people were excited at that moment: there was an opportunity to build new things. Anytime there is a moment of crisis, some people will fold and some people will double down.
Could you detail the role of the foundation within the network?
This role of a foundation is kind of like a unique thing in crypto. That doesn't really exist elsewhere. The most classic role of a foundation is to fund the development of public goods: the most critical public good that we have is validator clients because without that, there's no blockchain, there's nothing for developers to do. The most important thing that we can invest in is network health and the tooling to make Solana better, more efficient, faster, more delightful for developers. Now, there's a number of things that we don't want to do such as building ourselves products that are for profit. That's not for us to do, so when it comes to investing in projects that are building on Solana, our preference is always that private capital make those investments. The closest corollary to the way we think about it is not actually companies, it’s not how people build Google or Uber or Facebook, but rather how Singapore builds itself over time, how the UAE had been building itself over time into a very robust economy.
Inflation related to the token issuance is often discussed in relation to Solana. Is it a challenge when it comes to bringing value to token holders?
Inflation is programmatically decreasing over time and I think this is an interesting point of discussion as well, because going back to the different sub-economies within a blockchain ecosystem, there is the validator network, the application builders and the token holders. In a healthy ecosystem, you want all three of these to be robust and making money right now. That said, because they are integrated economies, there will be times when you have to think about trade-offs, in the same way that the network architecture of Solana from the very beginning made some trade-offs. So, the economics might not sort of be optimized over time but there's some part of the investor ecosystem that looks at crypto as an emerging asset class and many investors see that inflation as yield, which is actually very attractive to capital deployers. There's been a tremendous amount of interest in liquid staking, with this additional economic opportunity at the validator level, that comes with Jito bundles, MEV, that becomes very interesting from a capital markets perspective.
What do you see for the future of Solana?
It has always been about building, open finance. Bitcoin itself has gone after being a store value. So, in my mind, everyone outside of Bitcoin is building the rest—technology platforms and a medium of exchange to enable open finance and Internet Capital Markets. That has always been the vision. When I think about how far we've come over the last five years, I think it's still quite early because you have to build the blockchain network first, otherwise there's nothing for anyone to do. Now, I think we're kind of at the next phase to really capture what I think is a third network effect around attracting capital.
1) ICO: a token sale to fund a cryptocurrency project
2) A collectibles-based game
3) ASN: autonomous system number, the number which identifies devices network.
