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Lily Liu

@calilyliu

Mar 6

228 is too, too half-baked

Here's my TLDR:

1/ Negative impact on SOL the asset during a critical period of growth

Blockchains are networks; they also have a native asset. The network and asset subecosystems are interdependent. Changing network parameters can be good for network security, and bad for the asset, or vice versa. We need to take a system wide view on major changes.

Most open discussion has been around creating sweet efficient markets for security, because the active participants in this public discourse across CT, Discord, forums, and Github are network engineers - not asset managers or institutions. They aren't or can't be on these forums. They are also accustomed to "defer to devs" bc they think SIMDs are big brain stuff.

That's often times the case. But when it's the first major economic policy change in 5 years that affects every part of the economy, the asset ecosystem should be front and center.

2/ Fixed rates are not "dumb and arbitrary"; they're predictable. And in capital markets, predictability is valuable

Dynamic pricing is great for allocating a resource efficiently, such as network security.

But for assets, fixed yields reduce volatility and therefore discounting.

By purpose or by accident, what the Solana ecosystem has stumbled into is an asset that has a strong growth story on the principal paired with attractive, predictable yield.

While no tradfi analogy is perfect here, it's been described to me as "it's a stock and a bond at the same time."

We're the newer kid on the block; to get people interested, high yield turns heads.

Similarly, yields don't automatically mean sell pressure. They can be reinvested without affecting the underlying.

We also can't talk about sell pressure without considering the impact of economic changes on buy and hold pressure.

If asset characteristics change, why would one assume buy and hold pressure will remain constant?

3/ This isn't just theory - it's empirically true.

In Europe, where staked ETPs are allowed, Solana ETPs are the #1 crypto product. Even bigger than Bitcoin, and certainly bigger than Ethereum.

Asset managers say the reason is clear: to buyers, it's because of the growth story on the principal, paired with the predictable, attractive yield. To managers, the yield means more margin potential which motivates them to promote the product.

Financial businesses should not be villified as "middlemen". They have distribution, willing customers, product market fit, opportunity costs, and that's how they earn their revenue.

Read 9 tweets

Lily Liu

@calilyliu

Oct 20, 2024

1/ I sat down to read the @a16zcrypto State of Crypto report this weekend. I learned a lot! I’m mostly focused outside of the EVM world, so I always appreciate opportunities to learn about innovation happening elsewhere in the world of self custody.

That said: I noticed quite some implicit EVM bias throughout the report. A few observations:

2/ The author frames the world as EVM vs. non-EVM, creating a binary that “others” ecosystems and developers who choose not to build within EVM.

For example, this visualization of active addresses is misleading. Solana has 100M monthly active addresses—more than four times @base's 22M—yet the graphic presents these as nearly equivalent. A more accurate approach would be to use a single bar chart, with EVM and non-EVM bars shaded differently (if such a delineation is necessary). Furthermore, the slide claims that “Base and Solana” have the highest monthly active addresses (MAA), but attentive readers will notice that @NEARProtocol has 31M MAA, surpassing Base. The headline should therefore read “…Solana and Near as the most active.”

3/ Let’s now discuss metric selection. Our industry often defaults to metrics like Active Addresses and Total Value Locked (TVL) as the standard benchmarks across ecosystems. However, I'd propose a more meaningful way to measure ecosystem activity, demand, and overall health: transaction fees. Transaction fees directly reflect users’ engagement in valuable economic activities; their willingness to pay for execution; and the ability for validators to turn a profit.

With the introduction of fee markets on Solana, we can now differentiate the economic value of various types of activity within our ecosystem—and apply this approach to others as well.

In terms of transaction fees, Solana has made significant progress. Before December 2023, Solana’s monthly market share of transaction fees never exceeded 1.5%. Since April 2024, it has consistently stayed above 10%, peaking at 25% in July.

When we factor in MEV tips to measure "Real Economic Value" (REV), Solana is closing the gap! The chart from @blockworksres highlights the narrowing REV difference between Solana and Ethereum.

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Lily Liu

@calilyliu

May 3, 2020

I’ve had enough of hearing folks on Twitter (mostly in tech - and even crypto!) fawn over the worlds second largest economy in its handling of Covid and fretting - or even celebrating - the decline of “the West”

The most effective government response to Covid has actually been: Taiwan, Hong Kong, Singapore, South Korea, and now Germany. None are authoritarian states. All have balanced public health and economic continuity.

Let’s talk about Taiwan for a second. They’re not part of the WHO for political reasons. Admitting Taiwan into the WHO - or even the WHO publicly lauding their covid response - would imply they’re not part of China. Too complicated; easier to ignore altogether.

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