Forbes Interview with Gavin Wood: The Five Key Standards that will Determine Long-Term Blockchain Success

Original Article Title: What Makes Or Breaks A Blockchain: Gavin Wood's 5 Criteria

Original Article Author: Marie Poteriaieva

Original Article Translation: OneBlock+

Setting aside market value and hype, what exactly determines the long-term success of a blockchain? Gavin Wood, co-founder of Ethereum, proponent of the Web3 concept, and creator of Polkadot, shared his evaluation of blockchain's five key criteria.

In an interview with Forbes, Gavin Wood, a visionary in the crypto industry, explained which factors can make blockchain projects successful and which can cause them to fail. He also shared some useful assessment criteria and provided direct analysis of the most popular blockchain projects today.

His analytical approach helps us better understand the price fluctuations of leading cryptocurrencies in the blockchain space. For example, why did ETH's market cap drop from its 2021 peak of $575 billion to its current $394 billion? Why did SOL's market cap break its all-time high, reaching $115 billion, while Polkadot's DOT (launched around the same time) dropped to $9 billion? Wood not only observed the numerical changes but also identified the key reasons behind the influences driving these changes.

Gavin Wood speaking at the Decoded conference in Brussels in July 2024

Gavin Wood's Five Blockchain Evaluation Criteria

Currently, there are hundreds of blockchains, each with its unique technology, use cases, and adoption. To help us identify truly promising blockchains, Gavin Wood has outlined five fundamental criteria for assessing them.

· Resilience: The cornerstone of Web3, resilience combines cryptography, decentralization, and game theory to protect the blockchain from attacks and ensure its long-term stability.

· Performance: Performance not only refers to scalability but also measures a network's efficiency in processing and completing tasks.

· Generality: Blockchain's support for multiple applications and programmability.

· Accessibility: The ease with which users, developers, applications, and bots interact with the network.

· Consistency: The ability of a system to maintain fast and consistent communication within its network.

Resilience: Uncompromisable Standard

While blockchain can emphasize different characteristics, there is one standard that absolutely cannot be compromised, and that is decentralization and resilience. This standard is difficult to assess, requires long-term attention, but is the most important.

Gavin Wood stated: "Blockchains that overlook decentralization and resilience should not be called Web3."

He continued: "For example, we see that on Ethereum's L2 networks, there is a fixed set of validators managed by a specific company, right? This is clearly not a feature of Web3."

Evaluating a blockchain's resilience is usually summarized as assessing the degree of its decentralization. Wood proposed several questions for evaluation:

Who makes protocol decisions?

Does the governance structure have a clear or low-barrier-to-entry way in?

And then there's the Nakamoto coefficient, which measures the number of participants needed to disrupt the network.

Finally, Wood also mentioned a more overarching issue, such as whether there is a single entity that can dominate the entire project's direction and "fully control the ecosystem, suppressing other voices and viewpoints."

Gavin is satisfied with the decentralization of Polkadot and states that its Nakamoto coefficient is quite high. According to Nakaflow's data, Polkadot currently has a Nakamoto coefficient of 149, which means that at least 149 independent validators need to come together to disrupt this network. In comparison, the scores of some other major blockchains are much lower, such as Solana with a score of 19 and Ethereum with just 2.

However, the barrier to entry remains a concern.

Saudi Arabia's KAUST research scientist Maurantonio Caprolu, who has co-authored multiple papers on Polkadot with Professor Roberto Di Pietro, describes the high barrier to entry issue.

"Until 2022, to become an active validator, an average stake of around 1.8 million DOT was needed (equivalent to approximately $32 million at the time). Even now, this minimum staking requirement remains high, actually favoring institutional players who can afford the significant DOT token cost to participate."

From Gavin's defined resilience standard, Ethereum's weaknesses become apparent. Ethereum is often criticized for the significant influence of Vitalik Buterin. Particularly, a recent post of his on X—"The person deciding the new EF (Ethereum Foundation) leadership team is me"—has escalated this controversy further.

One might ask: Given Gavin Wood's significant role in Polkadot, does Polkadot also face the risk of a narrative dominated by Gavin? Wood acknowledges the weight of his name, but he emphasizes that Polkadot's governance is community-driven. He cites some successful community-led proposals, such as reducing DOT's inflation rate, as examples, demonstrating Polkadot's decentralized decision-making process.

The Polkassembly governance platform further enhances community participation and will launch an OpenGov-compliant framework in 2023. Caprolu and his team believe that OpenGov can "enhance inclusivity and reduce centralization of power." However, researchers point out: "Since this system is still in its early stages, more time and data are needed to verify whether OpenGov can successfully alleviate the centralization tendencies observed in our governance 1.0 (i.e., the governance model before Polkadot)."

Performance: What Comes at What Price?

Various blockchains have taken different approaches to enhancing performance, but they all face the common challenge of finding a balance between performance improvement, decentralization, and consistency.

Take Ethereum as an example. Wood explained, "Initially, they planned to use sharding technology to shard the EVM into the network. However, they later abandoned this plan and instead chose to support L2 solutions. In reality, they didn't do anything and just let others build chains, ensuring the security of these chains through Ethereum." This approach led to a lack of consistency, even impacting security. Wood believes that "after Ethereum is combined with L2, it is not actually the real Ethereum anymore because L2 does not provide the same level of security."

Furthermore, Gavin believes that Solana sacrificed decentralization.

"Solana's strategy is to make its validators more powerful and ensure good connectivity among these validators. To achieve this goal, Solana reduced the number of validators. Because to improve connectivity between two validators, it usually requires reducing the number of participating validators. The result of this approach is that Solana's Nakamoto coefficient has decreased because fewer validators mean fewer participants can control the network, thus reducing the level of decentralization."

Gavin Wood referred to Solana as "a highly synchronous scaling strategy," where its speed is limited by the processing power of a single machine and the speed of syncing data. Although this approach can achieve rapid scaling in the early stages, it will ultimately be bottlenecked by hardware and network limitations.

For Wood, "many other proof-of-stake chains are similar. They don't have a consistent scaling strategy. To handle more data, they simply reduce the number of validators and increase speed."

Polkadot's approach is different from Solana's; it achieves network scaling and optimization by adding more validators. Specifically, Polkadot enhances decentralization by increasing the number of validators rather than decreasing them. With more validators participating, Polkadot not only maintains decentralization but also allows the network to operate faster. In other words, Polkadot optimizes performance through "scaling" without sacrificing decentralization for speed.

Universality: True Turing Completeness

Gavin Wood defines blockchain universality by measuring the ease with which Web2 applications can transition to Web3. More specifically, he measures universality based on how many different types of computational tasks a blockchain can support and the complexity of these tasks.

Ethereum introduced the concept of Turing completeness, meaning it can execute any computable task. However, as Wood pointed out, Ethereum has not fully realized this. This is because it is subject to gas limits and block size constraints, and computation must fit within these limits, restricting the range of complex problems it can solve.

Polkadot aims to eliminate these constraints through its parachain model. Parachains execute their own logic in a WebAssembly environment, as long as the computation completes within seconds. This setup allows parachains to handle larger datasets. Currently, Ethereum allows about 15 million EVM gas per block, while for Polkadot, this number is equivalent to 18 billion gas.

Nevertheless, Polkadot's generality, like Ethereum, is still quantitative, not qualitative. It extends computational capacity but does not fundamentally change the scope of computation. With the upcoming JAM upgrade, this scenario will change. The JAM upgrade promises to enable "continuations," where computation can pause and resume between blocks.

Soulla Louca, the head of the University of Cyprus Blockchain Initiative, believes that removing the limitation of single-block computation could be a significant breakthrough. She explains:

"While other blockchains have mechanisms for processing complex computations (e.g., layer 2 solutions, optimistic rollups), no other blockchain currently offers a built-in continuations mechanism similar to what JAM proposes. This capability could provide Polkadot with a significant advantage, supporting more complex and general-purpose applications, especially advanced applications like complex financial instruments, large-scale data processing, on-chain AI/ML, and more."

Consistency: Overcoming Barriers

Consistency is a key challenge facing the blockchain ecosystem. Both Ethereum's L2 and Polkadot's parachains encounter difficulties in this area. As Wood described, they operate in isolated environments, and cross-chain interactions are often slow, expensive, and potentially insecure unless a co-ordination system is introduced. However, such a system also poses its own challenges as it requires supercomputing to perform coordination, inevitably leading to centralization.

Wood acknowledged that consensus is not Polkadot's primary focus. Although some integrations and bridging have taken place over the past year, parallel chains still face consistency issues.

This issue was also highlighted by OriginTrail founder Tomaž Levak. His company has developed a DeSci (Decentralized Science) protocol aimed at structuring and connecting real-world data for AI and enterprise applications, running on its own Polkadot parachain. Levak stated that while "the performance and customization capabilities brought by Polkadot's technical design are very unique in meeting demands," he hopes to see "enhanced bridging infrastructure with other blockchain ecosystems."

Accessibility: Usability Testing

In the blockchain space, the general perception is that Polkadot technology is very powerful but hard to understand. However, Wood pointed out that due to upgrades to the XCM (Cross-Chain Message) system and ecosystem wallets, Polkadot's accessibility has significantly improved over the past year. Similarly, Tomaž Levak also stated that OriginTrail's end users "rarely interact directly with the blockchain layer, as a user-friendly interface ensures a smooth experience."

However, despite this, consistency issues still exist, hindering accessibility. Wood stated that JAM will address this issue by providing shared data availability storage, where services can be built to completely hide the consistency issues users face.

In terms of developer engagement, Wood proudly pointed out that Polkadot has had many "serious" full-time developers. In fact, Electric Capital's developer report ranks Polkadot's tech stack third in the crypto space. Currently, Polkadot has 467 full-time developers, second only to Solana (599) and Ethereum (3562). However, Wood believes the actual number is higher, as the 35 teams working on JAM are in a closed-source environment and not included in the report.

Overall, currently, no blockchain has been able to master all five of these benchmarks perfectly. As Gavin Wood stated:

"Some blockchain systems have great performance but lack consistency, like Polkadot. Others, like Ethereum, perform well in terms of consistency but have lower performance. If you look at Solana, it does well in terms of consistency but lacks resilience and decentralization. Therefore, currently you can choose some of these features, but no blockchain can meet all these requirements simultaneously."

The real winners will be those who adapt to change in the blockchain space without compromising on the core principles of Web3. The question is: Which blockchain will be the first to find this balance?

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