Oct 5, 2022 - Economy & Business

The economic tinkerer who takes the long view of crypto

Photo illustration collage of Lisa Jy Tan surrounded by abstract shapes.

Lisa JY Tan, founder of Economics Design. (Photo illustration: Maura Losch/Axios. Photo: Brady Dale/Axios)

Most people in crypto think in the very near future. They aren't investing for returns years from now. They want strong returns next week. But Lisa JY Tan, founder of Economics Design, takes the long view.

Why it matters: Tan and her team work with companies to design the economics of their token projects, which have become more complicated since Bitcoin started with its simple economic model.

What they're saying: Even the people who are really in crypto for the ideas have too short of a time horizon.

  • "Everyone wants the utopia to exist right now," she tells Axios in an interview during a visit to New York City for the Mainnet crypto conference.

Context: Bitcoin started with this idea: a fixed supply of 21 million bitcoin doled out on a predictable schedule over 100+ years.

  • Tan talks as if she's looking out a quarter century. That's unlike most folks in the space who seem to think the world economy can be re-organized by the New Year.

Of note: The hottest topic for policy makers in cryptocurrency is stablecoins. Congress keeps teasing some kind of legislation, for example.

  • "It's about substitutability," Tan says. Governments fear a stablecoin undercutting the money they create.
  • "Once we start to figure out the entire monetary policy, we can create our own asset," Tan says. Governments, as much as they don't want to admit it, fear that.
  • Money has value, she says, because you can use it pay taxes, and that gives governments a lot of power to steward society. But if government money gets used less, that diminishes that power.

Yes, but: Governments are pulling an end run on crypto with central bank digital currencies (CBDC).

  • Tan's all for them joining the fray.
  • "The government's job is to make sure the entire economy is running smoothly," she said. "CBDC is an oil to fuel the entire economy."
  • She looks forward to government experimenting with ways to stimulate the economy, such as with digital money that expires (so it can't be tucked away).

What we're watching: It is very in vogue in crypto now to mock the idea of Terra, which broke crypto in May, or any attempt at an algorithmic stablecoin, but Tan still believes there will be a functional software-powered token one day.

  • "I think in the long run," she says. "If you think about it, the current monetary policy is an algorithmic stablecoin. It's just on a different scale."
  • It might sound like reinventing the wheel, but Tan argues fiat is like a 2D perspective, and that crypto — in time — will bring more 3D.

The bottom line: The original decentralized stablecoin is MakerDAO's dai, and right now it's teasing the idea of unpegging from the U.S. dollar. If it doesn't now, eventually some big stablecoin will, in Tan's view — once crypto is huge and the models more sophisticated.

  • Until then, Tan will help with many experiments. "That's why crypto is super interesting, because you make small ecosystems where the way it's designed is aligned to your philosophy," Tan says. "Which is super fun."
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