Banking on the Blockchain with Calvin Li‪u from Compound‬

Feb 25, 2021

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HOST:  Hey everybody.  Welcome back to the Unstoppable Podcast.  I'm Diana Chen, your host.  And I'm here today with my co-host, Matthew Gould, Co-Founder and CEO of Unstoppable Domains, and Calvin Liu, strategy lead at Compound Finance.  Hey, Calvin.  How's it going?

CALVIN LIU:  It's going great.  Thanks for having me.

HOST:  Thanks so much for being here.  Hey, Matt.  Good to have you here as always.  So Calvin, to start off, I'm just curious, how did you get into crypto in the first place?

CALVIN LIU:  The way I first heard about Bitcoin was back in about 2013.  I worked for a consulting firm here in San Francisco that traditionally advised financial services companies, so banks and lending institutions, things like that.  And we're really lucky, we started a fintech group back in 2013, right when Bitcoin was sort of hitting a little bit of, I guess, like, mass awareness.

And so back in 2013, we had as clients Coinbase, Ripple Kraken, Bitstamp, Gemini, Andreessen Horowitz.  And that's when I first heard about Bitcoin.  I was pretty deep in, kind of, the Bitcoin world relatively in 2013 and 2014, a little bit out of it in 2015 and 2016.  And then I've been all in since 2017.

HOST:  Okay.  So you are one of the very early adopters of Bitcoin and cryptocurrency.  So when you were first hearing about Bitcoin back in 2013, how did you go about learning about it?  What were some of the best resources you found, whether it was books or blogs or Twitter accounts that you followed, or whatever the case may be?

CALVIN LIU:  Now, I think back on it, and I think even my understanding of Bitcoin at that time was not very good, at least compared to now.  And part of that is there are a lot fewer resources back then.  So I think Bitcointalk was a pretty good resource at that time, you know, the Bitcoin meetups in San Francisco were at Andreas Antonopoulos's house.  So I remember going to a few of those. 

And yeah, just trying to pick up what I could all over the place, on the internet, trying to understand what this thing was and the implications.  But certainly it wasn't easy, I don't think I even had a very good picture of really what Bitcoin was and how it worked at a deeper level, at a technical level, until even like, 2017 quite frankly.

HOST:  Yeah.  And now that you're, you know, sort of, an expert in this space, how would you explain what cryptocurrency is to somebody who's brand new to learning about crypto for the first time?

CALVIN LIU:  Well, one of the things that's changed from 2013 a lot is back then it was just Bitcoin and now it's so much more than that.  And crypto, it's just recently, maybe last year or in the past six months, gotten to the point where I feel I don't know everything that's going on.  I don't at least have a sense of everything that's going on in crypto and now there are areas I don't know anything about.  So that's kind of a caveat to say that I think it'd be really hard to put everything under one umbrella at this point.

But I think kind of the key principles are; Crypto and cryptocurrency are built on a technology, the blockchain, that enables openly accessible, uncensorable, and sort of transparent products for people to use versus what's available on web 2.0 internet today, where a lot of the most popular products are—either have some, sort of, gatekeeping or closed access, or have centralized control and are very non-transparent.

HOST:  Yeah.  So like you said, cryptocurrency is evolving very rapidly and that can be hard to keep up with.  And that can be a barrier to entry for newbies out there that are just trying to get into the space.  But what are some other obstacles that you see that are preventing widespread adoption of crypto or just preventing some of the general public from getting into the space?

CALVIN LIU:  Yeah, this is a very top of mind question because with the recent price action in crypto—I have a lot of friends and family and people I haven't talked in eight years, kind of, texting and being like, hey, how are you doing.  And they generally, I think, have some spark of interest of wanting to learn about cryptocurrency and dive in.  And there really isn't one place to point people.  I think it's a little bit of a issue with the space. 

You have to be, if you really want to get it speeded really quick in crypto, depending on which sector you know you're interested in, I feel like, you have to be so plugged into these very—you have to be very internet savvy.  You have to be on Reddit, and Twitter, and Discord, and Telegram, and operate in these like, weird, pseudonymous, amorphous communities a lot over the place, which is just to say there aren't good rails to get into crypto. 

And maybe that's the way most new technologies kind of start, like I imagined the internet or personal computers way back when, you know, you had to go find a club in a garage somewhere to find people who cared about the same things as you.  And now you kind of have to do that online. 

But certainly I just think that there's a little bit of a gap in education around crypto.  And in lots of ways the people that know a lot about crypto don't have a huge incentive to do that education because they're able to gain advantage from having proprietary information about how the space works.

MATTHEW GOULD:  Well, I think you hinted on a lot of things there.  I'm actually kind of curious how many different slack groups or Discord—I basically have infinite slack, you know, in discord groups, like, it just goes on forever.  So just to give us, give us a sense how many you, I mean I'm currently in like, five to seven that I check regularly.  And then I have like, another—I have another like, 20 to 30 that I'm, kind of a little bit disinterested in, you know, but I'm checking it every now and then. 

But it really is a lot of information.  I think people underestimate it.  And when they're coming in, when people are coming to get crypto, like, everyone who's texting you right now cause they want to buy, cause they see the Bitcoin price is high, and it's like, how long will it take me to understand this, I'm like, whoa, it's like months, you know.  And like you're saying, it keeps changing, so, I think it's going to take—what I like to tell people is like, just don't immediately go and just buy without learning anything.  And a lot of these places are doing a better job on education.

But this actually leads into another thing because you guys over at Compound, I would say along with MakerDAO are one of the leaders in this new DeFi space, which has just made the whole thing a lot more complex, right, cause in, you know, ten years ago, it was just Bitcoin and there was nothing else.  That was your only choice.  And then, there's a bunch of Altcoins that came up, and then Ethereum happened and there's all these smart contracts. 

But then DeFi happened. And DeFi went from something where I didn't even know what it was.  I'm in this space very deeply, so just being absolutely everywhere.  And I would love to get the genesis, cause what was it like when, you know, at the very beginning when compound was out, and you're like, hey, we're going to build an online, you know, finance protocol.  People must have looked at you like you had three heads, you know, where'd that gets start—where was the genesis, and how did you get that barrier, and how do you see that far?

CALVIN LIU:  So great questions and, and fun to talk about.  So I joined Compound pretty much at the very beginning, over three years ago.  And I joined actually—my title is strategy Leads, so I work on most of our business initiates.  And I joined to sort of help with the fund raising initially, the seed round which ended up being a very successful seed round.  And so, I basically joined at a time when the goal in terms of this—of a fundraise were to—for us to figure out how to tell the story of what we were building and get people to buy into it.

And so the origin of the idea of Compound was how can we build a bank on Ethereum that does everything a bank does.  And we, and really our CEO and CTO, Rob and Jeff kind of drilled down into that idea and realized, okay, what is the actual core functionality of the bank?  Well, you can put assets in it and people—and the bank can take those assets and let other people borrow them and it generates an interest rate.  And that is like, the basic functionality of a bank and that itself didn't exist on Ethereum.

So that's how, sort of, the idea of Compound got narrowed from a bank down into this very, very, actually like narrow simple functionality, enable a pool of capital that people can put money in, and then other people can borrow money out of it.  But starting with like in creating the pitch techs and doing the fundraise over three years ago, that was a process of discovery of what we're building.  And it was a process of discovery for ourselves at what we're building, even up to launching the thing in September 2018, like, nine months after I joined. 

So it's a constant, sort of, process of self-discovery, we didn't really know, I think what the impact would be of what we're building.  "DeFi", the term didn't exist until one or two years later.  We just thought that this was some financial infrastructure that didn't exist that would generate yields on idle assets, idle crypto assets, every other asset on earth, basically every other liquid asset on earth has markets for yield.  And we thought we'd try to do that for crypto, and it obviously has come a long way since then.

MATTHEW GOULD:  Yeah.  So how did they sell you, 'cause I'm actually kind of, curious, like, when they came to you with this idea, like, hey, we're going to build, banking tools for the blockchain, you know, and—how did they pitch you on the idea?  Were you just like, yes, I'm ready 'cause you had been in Bitcoin since 2013 or I'm actually, you know, like, what sold you on it?

CALVIN LIU:  Yeah.  So back at that time, I knew I wanted to go full time with some crypto project and I talked to a lot of different crypto projects.  And the thing that struck me about Compound and talking to the team and the CEO, which is more of a general startup thing but kind of relates to your last question as well, is the extreme focus on, kind of, like, the next three months and what that looked like and what needed to be accomplished.  And then actually a little bit of hand-waving about the general direction of after that. 

So to add a little bit more context, what I mean is they knew what they wanted to build right then, and they kind of knew that it would be hard to answer every possible question that could arise about the product that they were building in the future.  So, they had this very narrow focus on, like, what are we going to accomplish.  And we know all the questions that we don't know the answers to and we'll deal with them when we get to them.  And we, sort of, generally have an idea of how we'll deal with them.  But right now, they're not the focus.

And what I really liked was, it was really easy to see with like, the high focused that they are really like, get-stuff-done team.  And then two, I really liked, and hadn't really thought about this, never having worked at a small startup really before this, the idea of not needing to solve every problem right now and knowing very, very well, which problems you can punch till later, even though they're really important problems.

So I just like that this hardcore focus with still like, an assessment of every problem that they had to deal with.  It wasn't—I like that sort of operation, I guess.  So it was more of a general startup thing that attracted me to — to Compound.

HOST:  So Calvin, who are the types of people that are using Compound so far and who do you envision using Compound in the future? 

CALVIN LIU:  Over the past two and half years since the first version of Compound launch, the kind of story the types of people who have used Compound.  Every six months, I would say kind of the, the borrower and supply—the user types changed basically.  Initially, it was just Ethereum Whales, like, wallets that you could trace back to the Ethereum ICO, very crypto native, very willing to sort of use risky platform and experimental platforms with lots of assets.  Overtime, that evolved into crypto hedge funds, small crypto hedge funds, like $5 million, $10 million or less of assets. 

A little bit after that, applications started being built that integrated Compound.  So like in Instadapp launch that was like an interface for Compound that attracted a lot of users themselves.  After that, we had a big effort to talk to crypto financial institutions so custodians, exchanges.  And we started seeing integrations of Compound with Binance and OKX and other exchanges and custodians. 

And then now, some of the largest trading firms in crypto use Compound.  So like the Celsiuses , and Three Arrows, and Alameda are moving around tens or even hundreds of millions of dollars in Compound.  Where we're going after this is actually hopefully non-crypto financial institutions.  So challenger banks, neobanks and tech startups who actually don't have any crypto association today, but want to earn like, the stable coin interest rates on protocols like Compound.

HOST:  Okay.  And so that raises an interesting point.  I just want to back up my second for our listeners who are newer to this space.  Can you just more broadly talk about what's the difference between a bank that's built on the blockchain versus a traditional bank that everybody knows about today?

CALVIN LIU:  Compound is not a bank, it's sort of like—one way you might analogize it to what exists in traditional banking is, it's kind of an API for interest rates.  It's like you got a technology that creates this marketplace for interest rates and then anyone can build on top of it or integrate with it in sort of an API way.  So like, your actual bank, whether it's Charles Schwab or Wells Fargo could theoretically integrate with hot Hand and let you earn interest from Compound. 

But some of the key differences between something like Compound and a Wells Fargo is Compound is this technology where the code is public, auditable and heavily audited where any user can come and look at the code that makes up Compound and sort of verify that it works.  And there's been probably about $50 billion in assets that have moved to Compound at this point without ever any loss of funds.  So we're pretty— I'm pretty confident that it that it works.  It's —

MATTHEW GOULD:  So if I take it back up for everyday users, this is actually like you're saying, it's an API endpoint so wallets are already integrated with Compound.  And I think—hat are some of the wallets that you guys are already, I think Argent maybe One, you tell me, who are some of the guys you are working with already?

CALVIN LIU:  Argent has an integration with Compound, imToken—In these wallets, you can literally, I know it's crazy for people, but you can just have money inside that wallet and it's just sitting there right now cause you have your cryptocurrency or whatever.  And then you just press a couple of buttons and then boom, your money is deposited inside these smart contract protocol and you're actually earning an interest rate like, today. 

And it's crazy because we're looking at this, you know, just as a company, we have checking account, were earning zero percent interest, like 0.1, you know.  And then you saw—if you look at some of these interest rates that you can make on some of these sites like DeFi rate or these other places where you can go and check these out, you're making single digit interest rates, then sometimes double digits depending on the level of risk you're willing to take.  And as someone who's trying to manage a corporate treasury, we're not there yet. 

But you know, if I'm earning 0.1% on the $500,000 in our business checking and I could be earning six percent, you know, with a stable coin, through the interest rate protocol, like, Why wouldn't I want to do that?  We just saw Elon Musk put, $2 billion of Bitcoin on the balance sheet, right, and what if he could be earning, you know, 4% interest on his Bitcoin, you know, wrapped BTC on the blockchain, 2% of—or 5% of $2 billion.  That's a lot of money that he's just sitting on the table there. 

And that's what you're saying.  Do you think you're going to see—so everyday people could do this too, just download any one of these wallets that are already plugged in to one of these interest rate protocols, and you can start doing it yourself and you'll be earning higher interest than Elon Musk is earning on his Bitcoin.

CALVIN LIU:  Yeah, yeah.

MATTHEW GOULD:  So another thing I want to, kind of, talk about cause I thought it was interesting is actually like, in the news today, did you see this tweet, and I'm going to see if I can share my screen here and it's actually from MetaMask.  So for those people who aren't watching, who are listening to this on the podcast, I'm just taking a look here at a tweet about MetaMask. 

And MetaMask is one of the wallets that a lot of people in the Ethereum space use.  And this is from Tom Schmidt, so shout out, Tom, and it says, "While no one was looking, MetaMask just started printing money, making 170,000K a day in fees or at 20 million a day in volume."  Most of this is DeFi.  If you look over here, there's all sorts of DeFi protocols listed on the right hand side.  So this is printing real money for people out here in the Defi space.  That run rate right there, $150,000-plus a day, it's $50 million a year in profits. 

So I think this is pretty substantial and people are underestimating this.  What do you think, how far along are we from companies like Tesla starting to use this?  Ten years ago people said Bitcoin, the balance sheet was crazy, now, Tesla's got it.  How far are we away from companies, I don't think it's gonna take 10 years, from starting to use this type of technology?

CALVIN LIU:  So it's a lot of what I spend my time on is trying to figure out how to build these rails for these companies to use it.  I would say like, from a technical perspective, the tools aren't quite there yet.  They're being built.  But even a MetaMask I believe is working out sort of, like an institutional enterprise version of its product.  And its product today is really designed for everyday users. 

That type of tooling, institutional level of custody in crypto needs to be built, like, Elon Musk doesn't keep his Bitcoin, in MetaMask or something like that, it's probably in like, an extremely secure and compliant custody solution. 

There are some regulatory sort of, issues that need to be ironed out, not obstacles but just like the regulatory landscape hasn't seen products like cryptocurrency before so it needs to establish the standards that they want to have going forward around cryptocurrency.  I think though, like, in terms of time, it should be definitely less than five years, I hope less than two.  I spent time talking to some challenger banks and neobanks today who are extremely interested.  If the—if kind of those things I mentioned, like the regulatory path was clear and the tooling and technology existed that made it easy for them to use these types of DeFi and other products today, I think they would use it today, but—

MATTHEW GOULD:  And what's a Challenger bank?  Because I'm playing devil's advocate here for the user.  Just real quick, what does that mean?  And then how would like, a normal person see that interaction?

CALVIN LIU:  You know, earlier on this cast, I'd sort of got really deep into the way as a little bit of how blockchain works, how compound works.  What the hope is, is that something like a challenger Bank, which is basically a startup bank, that's online only versus you know, your Wells Fargo or your Chase have all these physical aspect.  But really like, these days, banking just needs to be online for most people. 

Yep.  So the hope is that their businesses are built around integrating Internet services already for their customers.  So if you're a customer of Current bank, or One or Monzo, or N26, you have like an app, and a website and that's how you manage your checking account, your savings accounts.  And that and they have integrated all these services into their platform, that let you have a checking account, a savings account, do wire transfers, things like that.  And the hope is that one of these types of companies decides to integrate something like Compound, where through their platform, you could then start earning interest on Compound. 

And they can kind of abstract away all the complexity of the blockchain for you.  You don't really need to worry about auditing the code, even though I said it's auditable, because they've done it for you.  You don't need to worry about like managing your own Meta mask and sending Ethereum transactions, they make it really easy for you, click of a button, to access these types of DeFi projects.

MATTHEW GOULD:  I think you're absolutely right.  Like, anyone who doesn't think that traditional banking infrastructure are going to come in here and use this stuff are kidding themselves.  And I also think it's going to start obviously, with the startups, at the SF.  So Compound is a, you know, SF, Valley, a company just like Unstoppable Domains.  There's a lot of innovation happening there that I think other people, they don't see, but it's happening quick [sic].

HOST:  When speaking of that, Calvin, where do you see the market developing in the future, do you see more and more companies like Compound rising up in the next five—10 years?  And kind of to backtrack on that, what does the competitive landscape look like for you guys, right now, are there already other companies like Compound out there right now or are you sort of one of the front runners in the space?

CALVIN LIU:  Well, I think we're one of the front runners, but it's certainly very competitive.  There are other projects that are like more directly have overlapping functionality like Aave is one, MakerDAO, which was mentioned earlier, has like slightly competitive functionality, in some ways.  Interest rates are a huge market.  So I think we'll keep seeing competition here and keep seeing like different evolved takes on the problem that we're trying to solve. 

And I think the Compound protocol kind of has a first mover advantage or brand advantage, but it will have to keep evolving and getting better and better.  I think we've seen in DeFi that liquidity, the amount of users and volume for any given protocol can move very, very quickly to better solutions if they think another solution is better.  But hopefully, this competitive landscape just makes everybody sort of build better and build better products, and which ultimately benefits the users. 

Now, where do I think these things are going?  I think, a really succinct way of putting it, I actually saw Balaji’s tweet, this sort of investor thought leader, and I thought it was a very simple way of putting it, which is a lot of fintech startups, like actually some of the challenger banks that I mentioned, what they're doing is trying to build these new front end interfaces like shiny online experiences on top of the existing financial rails. 

So like, when you still write a cheque or send a wire or—to somebody through your regular bank, you're using these payment rails that are decades old, and that weren't built for the internet.  And so these fintech startups are trying to build like these new shiny surfaces on top of it, but what DeFi is actually trying to do is replace those old rails entirely.  So kind of take out the back end and switch it out for something that's better, more transparent, faster, more trustworthy, and better engineered for the internet.

HOST:  So as much as you're able to, can you give us a little sneak peek into what Compound has in store for 2021, you know, it could be anything related to the company?  Also, how big is your company, now, by the way?  I know you talked about being the second employee, but that was years ago.

CALVIN LIU:  Yeah, it's 15 people.  It's actually not very big.  I think we would have probably hired more if there wasn't a global pandemic over the last year.

MATTHEW GOULD:  That doesn't make it hard to do in person interviews.

CALVIN LIU:  Yeah.  So we recently announced a few months ago, our team, Compound Labs next product, Compound Cash, and Compound Chain, which is its own blockchain for Compound Cash.  So we have this Ethereum based interest rate protocol that has, I think, close to $8 billion in it right now.  And that's working really well.  And it's governed by its users. 

So if you're a user of Compound, you get COMP token.  And you're able to use this token to sort of like, create proposals and vote on proposals for how you think the system itself should change.  And so that is separate from Compound Cash.  Compound Cash is now what our team is mostly focused on building and developing and launching. 

Compound Cash will be a crosschain, interoperable interest bearing unit of accounts.  So what that means is it'll be able to move across many blockchains not just stuck on Ethereum and it will be used for value transfer across these different block chains.  And the idea is that in the future, it'll connect not just Ethereum with Solana and Polkadot, other blockchains like that, but also private blockchains like Corda, a bank consortium or on a Facebook DM, or one day—

MATTHEW GOULD:  Hyper-ledger, yeah.

CALVIN LIU:  Yeah, hyper ledger or some Central Bank digital currency one day.

MATTHEW GOULD:  Yeah.  Well, I think that—I mean, so that was a word salad of insider terms there for people listening.  So like, we're going to have to unpack those and go through those at some future point in time.  But just safe to say Compound is deep in the mix for banks, 100%, your wallet, like that you download your app that you're downloading to your phone, can 100% function for all the financial products that you want already.  And like, significantly lower cost than you're currently paying all those guys at scale. 

So can your wallet be a bank, 100%?  And we've hit this, we've talked about this a couple of times on the podcast.  And of people like Calvin are making that happen.  And you also mentioned Bolaji and MakerDAO team, we're going to have them on here in the near future, so people can tune in if you want to know who those luminaries are in the crypto space and kind of get, get more information about this space 'cause it's actually a lot to cover in a short period of time. 

I want to do a couple of fun ones, though.  I'm actually just kind of curious.  So you know, like this past year in DeFi, there was an entire food category.  I don't know how else to say it.  So there was a lot of people in DeFi and on crypto Twitter, they like to have fun, just like they have the Secret Santa on the blockchain in December. 

And DeFi over the summer, a lot of different groups were launching different like, games, I would call them, they're like little money games, and they would create all these little food tokens.  So I remember one was yams, right, and I don't remember what all the other ones are.  So Calvin, I was going to pass it to you like, what were some of your favorite food tokens over this past summer?  And then you know, how many yams are you currently holding, if any?

CALVIN LIU:  Right.  I don't have very many yams left.  But I think I had a lot of yams at one point.  let me even see how many foods I can name.  Sushi is one that's stuck around and become kind of a very good project.  Pickle still around, Sashimi, there's sashimi, there's mushrooms, there's various—but yeah, I think like, you put it exactly right as money games.  And it's really interesting—

MATTHEW GOULD:  Yeah.  And all of those are different things that you can look up.  So if you're at home, if you—and I don't know how you would query that, you'd like look up yams blockchain, sushi block chain, you know, pickle block chain, and then you'll be able to find it home.  And these are all these money games that people are playing and it was kind of like, I don't know exactly how to characterize it, but they're—it seem like they're having a good time.  And you know, the block chain was just completely congested and with all these people playing with these things.

CALVIN LIU:  Exactly.  But they're—each one of them was kind of a game and an experiment that some developer or a set of developers wanted to make.  And I actually think what happened with the food naming thing is it made it really easy to name your project.  Like normally, if you create something or found something, you'll probably spend so much time thinking about what's the perfect name for it, but this way you could just pick a food and you have a name.  And we saw this explosion of experimentation that was really the start of DeFi summer.  Last year, DeFi really kind of blew up in a good way, starting in the summer.

HOST:  Wait.  So just to backtrack, I know, Matt, you gave some background into this food token thing, but for listeners that are like, why is Calvin just rattling off names with foods, this sounds fun, but also what the heck is this?  Can you sort of explain in very simple terms to somebody who's not familiar with this, like what you're talking about?


CALVIN LIU:  Yeah.  Yeah, essentially, there were a, a bunch—so DeFi are these like, financial products built on block chain so that  you could do things with assets, you can earn interest on them, or you can trade them.  Essentially, to record things.  And there was a whole class of new projects that came up that allowed you to do different things with your assets.  Each one of these projects had their own token that you could buy or use. 

And for some reason, everybody started naming their tokens after foods.  So you can think of it as like, yeah, there are just like 50, or 100, different new projects that sprung up.  And they all chose the food that they wanted to call their project.  And it's really just a fun name thing.

MATTHEW GOULD:  And these tokens for people at home, so we've talked about tokens before on here.  But the tokens were actually serving a purpose in that they were helping to ensure liquidity in the lot of cases.  It was one of the use cases that they found as an incentive mechanism. 

So imagine, just like the New York Stock Exchange has a bunch of stock brokers on the stock exchange, so this way, if you go to New York Stock Exchange, you know, whenever the stock exchange is open, if you want to sell your shares of Tesla, or sell your shares of Apple or buy shares of whatever it is that you want on the S&P 500, IBM, Big Blue, right.  So if you want to do that, there's a broker sitting their end, so he can take your order, like immediately, right. 

And then there's a thing in finance called slippage, and that basically says like, if you want to make a really big order, or you want to sell a lot, you could see the price of Tesla is at 700 or something, and then if you sell you know, $10 million worth, the price may drop and so you only get to sell them for 698.  Or if you try to buy a lot, the price may slip up, so you pay 702.  And, and that's actually not that bad of slippage on a very large order like that.  You have the same thing on the block chain, though and there's not a broker from Goldman Sachs sitting there willing to take the orders out of your trade. 

So the question was in blockchain circles, how do you make sure that there's somebody there to take those orders at all times?  And the answer is you provide them with liquidity.  And just like the New York Stock Exchange, if you want to be on the New York Stock Exchange, you get a seat license.  And then you have certain responsibilities for trading, buying and selling stocks on the stock exchange there.  And then so you get responsibilities and you also get the benefit of being the one who gets to be the broker so you get to make some money.  It's usually a good deal. 

Same thing on the blockchain.  Now, you have people who want to be this broker, providing the orders for buy and sell flow, and what they're providing is called liquidity.  And so how do you reward them?  Well, you're not going to give them a seat license on the New York Stock Exchange.  Maybe someone will build a DeFi protocol with seat licenses, that would be pretty interesting, in my opinion, but instead, they decided to award them with a token that they created.  And these were these different types of governance tokens or what have you. 

And they started naming these tokens after food.  And I think Calvin, I think you're onto something.  I agree with you.  I think that they named them after food, because it was easy, right, 'cause like picking a name for your project takes forever.  Like you could like use a spreadsheet and you try to come with 300 different names.  But whoever was the first person, I don't remember, they named their project after food.  And then that was just what all the liquidity pool tokens were. 

So it doesn't matter what you name them, but just think about it as these people are getting paid to provide the service of allowing you to buy and sell whenever you show up to buy and sell your stock on the blockchain essentially.  So that's kind of the analogy that happened over the summer. 

And it was interesting 'cause a couple of them failed, right.  So Calvin, there were definitely a couple of like, that just didn't work 'cause they broke.  And that's why it's usually this early Ethereum people that go in and play with them.  And you know, 'cause people are learning on the fly.  That's just kind of how it's kind of where we're at.  So you know—

HOST:  Well, I like the food naming too, because now you can walk around and say like, hey, I got some yams— 


HOST:  —and some sushi.  What do you have?  You have some sashimi over there?  And you can get, you know, people in the general public more interested.  They're like, wait, what are you talking about, are you talking about, like lunch or—so that—yeah, I think that's smart.  I like that.


HOST:  All right.  Well, Calvin, I want to get into our next segment, explain your tweet, but before we do that, Matt, do you have anything else for Calvin?

MATTHEW GOULD:  I think we can go on.  I'm actually kind of curious to see some of these tweets from Calvin.

HOST:  All right.  Yeah, Calvin, you're an avid tweeter, so lots of great stuff here.  I'm going to try to keep it down to, you know, three—two or three tweets, but there's a ton I want to call out.  The first one I'll call out, this is a recent tweet from January 23rd.  You said "in 2012, I interviewed at a firm 41 floors above in Occupy Wall Street protests.  My interviewer walked to the window and asked what I thought, I said their goals were good, but they'd be more effective changing the game from within.  I discovered crypto in that job.  Crypto is within."  Can you explain what you mean by that?

CALVIN LIU:  Actually, the job I mentioned earlier, when I was introducing myself where I kind of discovered Bitcoin, and we had these crypto clients.  But I remember, I graduated college in 2009, a major recession was still just ending basically, in Occupy Wall Street was in full swing.  And here I was trying to interview for like, these very sort of corporate financial services jobs.  And even the main reason I first took to Bitcoin was actually a little bit for its more anarchist ideals, which it has, I think, basically completely lost.  Now, it's just kind of a—like an investment asset for large institutions.

MATTHEW GOULD:  Which is just new tech.

CALVIN LIU:  Yeah, yeah, that's right.  But so at that time, I had a lot of ideas in my head about, like, how the financial system obviously was broken in some ways coming out of this large recession.  And like, the complaints of people in Occupy Wall Street were very valid, like, these were people who are very hurt by the powers that be in finance. 

And that experience was just a really, really good sort of, like, microcosm of it to have, you know, like this my white haired interviewer who'd worked in finance his whole life in a suit, walked to the window and looked down at these protesters from 40 floors above them, well, to - - this awesome view. And to comment on it, is I think it might—

MATTHEW GOULD:  Yes, he's a little out of touch.

CALVIN LIU:  Yeah, yeah.  But I got the job is the funny thing, even saying that.  Yeah, what I meant is really that like, I agreed was going on right for me at the time was I kind of agreed with Occupy Wall Street, but clearly here I am interviewing for like a corporate financial services thing.  So I think I'm trying to reconcile, you know, those two things with an explanation that you'd be better off trying to actually change the financial system, if you work in it, like you're never going to change it from the outside, it will be very, very hard. 

Just like with most things, you're not going to change anybody by, sort of, like forcing them to do anything.  You need them to convince themselves really, to change.  And what I see happening with crypto actually it has back to a little bit about what I said about Bitcoin starting as very anarchist and not being very anarchist anymore is—that's the way that it's, sort of, becoming a pillar of traditional finance now. 

And hopefully, there's still a little bit of it that's, you know, a little bit out of the box that will eventually come out and slowly change traditional finance from within.  This is kind of the thoughts that I was expressing.

HOST:  Yeah, I think that's really true and, and it's really insightful.  Thank you for explaining that.  All right.  The next tweet I found, this is from December 28th, 2020.  This is actually a tweet thread.  I won't read the whole thread, but the first tweet was "NFTs add new magic to Internet content/media, social tokens/DOAs add new magic to Internet communities.  Hypothesis, a critical missing pieces tooling that enables Internet communities to co-create Internet content social/media squad creation to get squad wealth."  So lots of pieces in here.  I guess to start, we have talked about NFTs on a past episode, Episode 7 with Devin Finzer from OpenSea.  You can go listen to that to learn more about NFTs.  But we haven't really talked about social tokens or DAOs, so maybe give some context into what that is, first of all, and then explain more of what your hypothesis is that you tweeted.

CALVIN LIU:  So NFT social tokens and DAOs are three different ideas.  NFTs, as you know, are these non-fungible tokens that represent like, digital property, usually digital media, like crypto art on the blockchain.  Social tokens are—to date, I think humans are issuing, kind of, these tokens, like, there's an Alex token, a Julian token for people named Alex and Julian, and they're sort of using it to create a fan club around them.  People buy the token, and like, you might be able to redeem some of the token to spend like an hour with Alex or to like, redeem some service of his.  So it's sort of like, yeah, I think fan club token, isn't that inaccurate of a way to describe it. 

And then DAOs stands for Decentralized Autonomous organization, which is a mouthful, but what it really is, is like a community of people who generally each hold a token that allows them to be in this community.  And the goal of DAOs is actually to be able to have like organizations and companies where like, everyone that's part of this organization owns a little bit of the company or the organization by virtue of holding his token, the organization tries to accomplish something together. 

Now, so these are three separate ideas, but they've come together a lot, I think people who are interested in one of them tend to be interested in all of them.  And there are like, people with social tokens, who have formed the DAOs and make NFTs and sell them and things like that.  So what I'm saying in that tweet is, there's a lot of—there's something magical about each of these three things. 

NFTs, a lot of people have a hard time wrapping their head around them 'cause it's like you're buying this digital image file.  People are spending hundreds of 1000s of dollars on them for a token that represents it, you don't even get a physical thing.  And yet, there's like fervor around it, people love this idea, people are spending really millions and millions of dollars on it. 

Social tokens also, like very smart people are spending a lot of time on these things.  But what I what I think is really missing is to make it really like, some of what I'm calling magic, is there's like, this very human element to it. 

Like when artists creates an NFT, how do you really value the thing?  Well, it depends on like, there's no like quantitative or financial way for you to value this thing.  And when a person makes a social token, and they say, like, oh, you can redeem this token for an hour of my time, it's still just a social contract.  It's not like technology that's making it happen.  You just like, basically send them an e-mail, and like, can I redeem some of my social tokens for this. 

So, what I'm really getting at there is like, what are really technology-enabled ways for these three things to interact?  And I think a cool thing that could exist that doesn't exist, is allowing, for example, like a group of people that all own a token to make something together in a technology enabled way. 

So a really simple idea would just be to like, craft a tweet together.  Like imagine this DAO, a community of people who each have some social token were able to actually directly interact with like, the Twitter API, and generate a tweet for Alex or Julia, or whomever.  Right now, that doesn't happen.  You might be able to like call up Alex and be like, hey, I'll spend a bunch of tokens if you tweet this thing.  But I think these things aren't that cool, unless they're really technology-enabled.

MATTHEW GOULD:  I think I can imagine like, Minecraft, like you could imagine getting a group of like 12 people together, and then they build a world together.  And then they could sell that as NFT or—right, and then they can split the proceeds from working on that concept together.  So I think it's going to happen.  We are getting there.  And it's just going to take time to get there. 

So Calvin, I guess before we—we're going to wrap it up here, we'd love for you to plug yourself.  How can our users use your products, you know, and what are the most easiest [sic] first things for them to do?  How would you suggest for the people listening at home than go and start playing with this world of DeFi from their cell phone?

CALVIN LIU:  If you're starting out and you want to try Compound, probably the easiest way is to go through Coinbase and actually use Coinbase wallet.  Coinbase itself has some tutorials and they're earned product about how to use Compound.  And I think they'll actually even give you like $3 or $10 or something to try Compound out.

MATTHEW GOULD:  Free money.

CALVIN LIU:  Yeah.  And their Coinbase wallet product has a direct integration with Compound as well, where you can just very easily go in and out of Compound with your assets.  Otherwise, our website's at  We have a chat group at  And if you go there, we're always happy to talk to you and help out.

MATTHEW GOULD:  Perfect.  Yeah, join another discord.  So you need to make sure you have at least 30, or else you're not really in crypto.  And Calvin, again, it's been a pleasure having you on the show, and thanks for talking DeFi with us today.

CALVIN LIU:  Thank you.

HOST:  Thanks Calvin.  Thanks, everybody for tuning in.  We'll be back again soon with another episode of The Unstoppable Podcast.