I recently sat down with Gordon Liao to discuss how his experience at the Federal Reserve informs his work in DeFi and his vision for the future of finance. Our conversation explored how traditional finance expertise can strengthen decentralized financial systems.

Our conversation shed light on his experience with the Uniswap Hook Incubator and the winning v4 hook ‘Unicast’, a forward-looking hook that accounts for predictable volatility, price direction, and differential fees, and also why he believes hooks are a powerful way for innovation to happen, potentially making finance more open & accessible, some of which he also discussed at Uniday, Bangkok. 

You worked at the Federal Reserve, arguably the most traditional institution ever. How did you transition from TradFi to crypto?
I'd say what really got me interested in crypto was the emergence of Ethereum and the ecosystem we build around decentralized finance. To me, decentralized finance is beyond just money - by decentralizing governance, it has a very real potential of solving some of the core, fundamental challenges associated with intermediations in finance.

I’ve seen financial intermediation fail amidst crises over and over again in markets. Whether this is the meltdowns in 2008, or during early parts of COVID in 2020… DeFi represents a way in which you could actually decentralize the balance sheet and create a better financial system. That's what initially motivated me to jump into the deep end and transition my career from the most centralized place [The Federal Reserve Board] to Uniswap Labs, the most exciting protocol in the space.I’ve always wanted to be at the frontier of innovation.

Currently, I am the chief economist at Circle, the issuer of USDC. More generally, I am an economist by day and a hacker at night.

Speaking of hacking, you recently joined the Uniswap Hook Incubator (UHI). What motivated you to join, and how was the experience?
Resolving friction in AMMs, making decentralized exchanges better, and improving liquidity provisioning motivated me to join the Uniswap Hook Incubator and build Unicast. The Uniswap Hook Incubator was a fantastic experience that allowed me to explore the capabilities of Uniswap v4 - software that is completely open, where anyone can participate in this ecosystem, and anyone is able to innovate on top.

What about Uniswap v4 is most exciting to you?
Through Uniswap v4, developers can come in and make incremental yet important contributions to the Uniswap ecosystem. More specifically, it enables people to solve some of the core challenges with automated market making (AMMs), and the issues with intermediary finance that I described earlier.

Hooks are a very powerful way for both innovation to occur, and for people to express their new ideas, leading to incremental improvements in the ecosystem. Through hooks, you have a very strong foundation (the Uniswap Protocol) meaning that you don't need to fork an entire code base and get the entire code base audited and start liquidity gathering from scratch every time when there is incremental innovation.

Can you tell us more about the Unicast hook, which won first prize at the Uniswap Hook Incubator’s Demo Day?
Unicast is a hook that I built alongside some of my colleagues and friends (Kaili Wang and Syed Peeran) with the goal of solving core problems with liquidity provision, especially for fixed value types of assets. The hook aims to do this through a forward-looking component that predicts both some of the expected price movements and builds a forecast of the future expected volatility. Unicast aims to provide more stable and efficient market conditions, benefiting both liquidity providers and users.

What are your future plans for Unicast?
You know, we released it as an open source project mainly because we want to inspire a new generation of web3 builders who can build on Uniswap v4. We debated between deploying it ourselves and inspiring others, but ultimately decided that making this an open source contribution could help others, both as an idea and as a foundation to build upon.

Can you share your thoughts on the future directions of DeFi?
The key lies in community-driven innovation and the deployment of new tools that enhance the scalability and functionality of decentralized protocols. DeFi has the potential to mitigate long-standing inefficiencies in financial systems, pushing the boundaries of open finance and evolving the narrative of what finance could become — more equitable, accessible, and open.