Gavin Wood Talks About the Essence of Cryptocurrency: Surpassing the Two Eras of Ethereum and Polkadot

Gavin Wood is a rare thinker in the blockchain industry. As a co-founder of Ethereum, he led the early stages of the cryptocurrency revolution, and later created Polkadot to explore new possibilities in blockchain technology. He is known not just as a technologist but as a promoter who embodies the vision of Web3. In a recent in-depth interview, Gavin Wood was surprisingly honest and insightful about his career, his candid assessments of two iconic projects, and the fundamental technical challenges facing the industry.

A Decade of Ethereum: Between Success and Disappointment

When Gavin Wood first joined Ethereum, he was captivated by the project. In 2014, he decided to become a co-founder and chief technology officer of this emerging initiative. His reasons were simple yet compelling. According to him, “It was an innovative project that appeared at the right time, with a talented team and a small but passionate community interested in new things.” Additionally, the ideals of contributing to social change based on Enlightenment liberal principles also drew him in.

However, Gavin Wood’s current assessment of Ethereum is surprisingly cautious. When asked, “What is Ethereum’s greatest achievement?” he gave an unexpected answer: “CryptoKitties, maybe. Honestly, I’m not very sure.” There’s a sense of resignation and irony in his words. He further pointed out that Ethereum has produced the most millionaires in history, mainly because of the early fundraising and subsequent significant price increases.

“To be honest, it’s hard to judge how much real utility has been achieved. It’s far from the expectations I had ten years ago,” — Gavin Wood’s statement vividly illustrates the gap between initial dreams and reality. His success metric is “utility”—whether new things that weren’t possible before are now feasible. He explicitly states he judges based on whether something new can be done now that couldn’t be done before. From this perspective, Ethereum has clearly fallen short of expectations.

Gavin Wood admits that Ethereum has achieved financial success. But not all of his success criteria are met, and he self-critically suggests that only some may have been fulfilled.

Why Gavin Wood Left Ethereum: Exploring New Possibilities

At the end of 2015, Gavin Wood made a pivotal decision. He was convinced that it was necessary to explore new paths to broaden Ethereum’s adoption. One of the most feasible ways to raise external funding was to launch startups related to Ethereum. This decision was made jointly with Vitalik Buterin and core engineer Jeff.

However, subsequent developments led each of them down different paths. Jeff did not adapt to entrepreneurial life and soon left Ethereum to pursue video game development. Vitalik remained with the Ethereum Foundation, aiming for a more academic role. The new company Ethcore, led by Gavin Wood, took over about half of the Ethereum core team and focused on developing Ethereum clients.

Nevertheless, Gavin Wood’s complete departure from the Ethereum ecosystem occurred at the end of 2017, when he launched an entirely new concept: Polkadot.

The Innovative Technical Foundation of Polkadot: Shared Security and Sharding

The simplest way to describe Polkadot is that it’s a system integrating different blockchain architectures, making them compatible and coexisting under a shared security framework. This approach is highly cost-efficient. Properly designed, it can protect hundreds of chains at the same cost as one. This is fundamentally different from Cosmos, where each chain is independent and responsible for its own security.

However, Gavin Wood does not shy away from criticizing his own creation. Looking back, he admits that describing Polkadot as a “multi-chain system” is less accurate than calling it a “sharding system.” This change in terminology is crucial for understanding its core. Especially with recent technological advances, the understanding of Polkadot’s role has evolved.

With the introduction of JAM (Join Accumulate Machine), Polkadot is shifting towards a new direction. Developed by Gavin Wood, this technology functions as a highly optimized rollup hosting chain. Compared to optimistic and zero-knowledge rollups used on Ethereum, the technology designed for Polkadot offers significantly better efficiency.

In the future, Polkadot is expected to transition from a multi-chain model to a more general computational resource model. Just as Ethereum expanded Bitcoin’s basic value transfer function into a general-purpose computing platform, Polkadot will evolve into a large shared computer supporting diverse use cases. Its ultimate form will be a system that always operates as expected, allowing program uploads, execution, and cooperation among multiple services.

The Fundamental Problem of Sharding: Complexity and Inefficiency

Interestingly, Gavin Wood states that the greatest achievement of Polkadot is the realization of sharded blockchains, but simultaneously, the biggest challenge it faces today is precisely sharding itself. This seemingly paradoxical statement is rooted in serious technical issues.

He explains the concept of sharding using a vivid analogy from database design. Imagine a doctor’s clinic in the 1960s. Patient medical records are stored in drawers. When there are few records, a single drawer suffices; as records grow, multiple drawers or even file cabinets are needed. Each drawer or cabinet corresponds to a shard, functioning independently. Searching one drawer doesn’t require opening others.

But this structure contains serious problems. When a drawer becomes full, records must be redistributed. For example, changing records from A–E into A–D and moving E’s records to another drawer. If that drawer is also full, further adjustments are needed. This process is complex and tedious, requiring label updates and reorganization each time.

In the blockchain context, these issues are even more complicated. Smart contracts, unlike static data, interact frequently and change. When smart contracts on different shards need to interact, both shards must be opened simultaneously. This means connecting two drawers, executing all interactions, then separating them again. This process is extremely complex and inefficient.

In applications requiring frequent cross-shard interactions, this inefficiency becomes critical. As interactions across multiple shards increase, the entire system becomes more complex and less efficient.

Gavin Wood uses a metaphor of multiple playgrounds to clarify this core problem. If there are several independent playgrounds playing hide-and-seek, no problem. But if you try to play hide-and-seek across two playgrounds, it becomes very difficult. One playground must send messages like “I am the ghost now. If you enter this area, I will catch you.” Complete understanding and synchronization are hard, and the game quickly descends into chaos.

Polkadot uses XCM (Cross-Consensus Messaging) for shard communication. But this method cannot support close, efficient, and flexible interactions. It only supports asynchronous communication, suitable for slow games like chess, but fundamentally unsuitable for real-time applications like hide-and-seek.

Decentralized exchanges (DEXs) exemplify this challenge. During trading, current prices must be checked, and trades decided accordingly. When multiple shards are involved, multiple message exchanges occur, and prices may fluctuate during the process. Messages bouncing back and forth can cause conditions to change, invalidating the trade. As a result, trades need to be completed almost synchronously, which is very difficult in a distributed system.

JAM as a Breakthrough: New Possibilities for Dynamic Resource Allocation

Gavin Wood proposes JAM (Join Accumulate Machine) as a solution to these fundamental sharding problems. Its core idea is to eliminate fixed shards and enable dynamic, flexible resource distribution.

Using the hide-and-seek analogy: previously, there were four fixed playgrounds, and players were confined to each. With JAM, the playgrounds are no longer fixed. Instead, a vast playing area exists where playgrounds can be quickly formed and dissolved as needed.

The key is that the system dynamically constructs temporary playgrounds based on the proximity and interaction potential of players. It gathers players who are “likely to catch each other” into temporary groups, allowing them to continue hide-and-seek. When some players leave a playground, the system readjusts the scope based on new proximity relations. Distant players are temporarily excluded, remaining in a “game outside” state until they approach again.

Translating this to smart contracts: all contracts are placed in a shared “furnace,” which is dynamically partitioned. The system extracts groups of, say, ten, fifty, or two contracts, synchronously interacts and executes them, then separates them again. It then reevaluates and selects another set of contracts, repeats the process, and separates again. This approach allows multiple groups of smart contracts to be processed concurrently, each group executing synchronously.

This parallel processing significantly enhances the system’s interaction capacity. Compared to traditional methods, it can support hundreds of times more interactions, potentially achieving true scalability.

The Industry-Wide Challenge: Gap Between Imagination and Reality

Interestingly, Gavin Wood sees these technical challenges as not limited to Polkadot but as industry-wide issues. Between 2014 and 2015, the industry proposed many grand ideas. They aimed to unlock economic domains previously inaccessible, all without trust.

One example Gavin Wood favors is supply chains. Imagine a supermarket where every product has a QR code, and scanning it reveals ingredients, manufacturing date, location, quantity, etc. Consumers want to know where their cotton came from. Achieving this in a centralized model is difficult and costly. But he believes a non-centralized approach could make it possible.

However, such applications have not been widely deployed. While there are cryptographic projects related to supply chains, they are niche and limited to specific markets. The promise remains unfulfilled.

According to Gavin Wood, the main reason is not technical but a disconnect between imagination and practical execution. The crypto industry has great imagination, but turning those ideas into real-world applications is extremely challenging. The underlying technology needs significant improvement. He recognizes this and is working to improve foundational tech through JAM, supporting valuable ideas, and helping the industry play a larger role.

But technological improvements alone are insufficient. People must understand the value. This is a difficult task, partly because of competition for limited social attention. Conveying the importance of practical, innovative applications requires advanced communication strategies beyond traditional marketing.

Gavin Wood’s Vision: Toward the True Realization of Web3

Summarizing Gavin Wood’s perspective, the evolution from Ethereum to Polkadot and now JAM is not just a series of technical improvements but a staged realization of the Web3 vision. Ethereum demonstrated the potential of programmable blockchains. Polkadot presented an architecture capable of integrating different systems. JAM aims to provide a true solution for scalability and interoperability.

His ultimate ideal is simple yet grand: to build a large, unified shared computer that always operates as expected, where programs can be uploaded and executed, and multiple services cooperate harmoniously. He envisions this as a “unified system without division or isolation,” a seamless, integrated platform. Until that future becomes reality, his pursuit continues.