While people were still debating how hot the narrative of meme coins was, Ethereum co-founder and Polkadot founder Gavin Wood made a stark judgment in a podcast: 'The crypto industry has strayed from its original mission.'
In the 124th episode of When Shift Happens, Gavin engages in a long and profound reflection: from the failure of governance mechanisms to the replication of financial tools; from questioning Ethereum L2 routes to examining the design intent of the JAM system; from the disillusionment with the fantasy of a 'free society' to a sharp critique of casino culture.
This is not just an interview; it's more like a declaration: as the crypto industry moves towards vulgarization, can we still regain the initial ideals? He doesn't provide an answer but proposes a direction.
PolkaWorld is introducing this three-hour interview to the Chinese community through a series of content (about five parts), and this article is the first part, mainly covering the following content:
USDT is a highly regulated centralized bank.
The more compliant, the more it deviates from its original intention?
Democracy can only be established when citizens have a sense of responsibility and awareness.
Self-sovereignty is not about escaping rules, but about escaping arbitrary power.
Are protocols like Solana, Ethereum, Polkadot 'network states'?
Continue reading to see the full content of the first part!
USDT is a highly regulated centralized bank.
Kevin: How have you been lately? Oh, that's a gold card.
Gav: Solana gold card?
Kevin: Actually, it's a card launched by a project called Cast, which can be used for consumption with stablecoins. It's a bit like a stablecoin bank, very practical, and I use it often. Although I've been using cryptocurrencies for less time than you, I now rely almost entirely on cryptocurrencies for my daily life, so this card is very convenient for me, saving me the hassle of converting cryptocurrencies to fiat.
Gav: Oh, they help you process withdrawals? How do they charge for that?
Kevin: To my knowledge, they use Visa's exchange rate, so if you consume directly with a dollar stablecoin (USD), there are basically no fees. But if it's another currency, it's about a 2% fee. Of that, 0.5% is Cast's own income, and 1.5% goes to Visa. This fee isn't low, but like most early projects, they have a points system where consumption can return 6% to 10% in rewards, effectively offsetting some fees — provided their tokens can maintain the valuation level they are promoting after launch.
Gav: 6% to 10% rebates? That's probably returned in their token form, right?
Kevin: Of course, it's a token rebate; if it were cash back, that would be great, haha. They calculate the rebate based on the valuation of the new round of financing, around five or six billion dollars. Once the token is launched, if the price stabilizes, it would be equivalent to actually receiving this cash back.
Gav: It sounds like a perpetual motion machine... Where does this 6% to 10% rebate come from? Apart from relying on the speculative value of the tokens, do they have any real use? Their only source of income now is that 0.5% fee, right?
Kevin: To be honest, I haven't fully figured out the specific mechanisms and economic models of their tokens; it seems they haven't been made public yet. But what I want to say is that the product itself is really easy to use — you just spend stablecoins directly, that's it. Right now, I mainly use it to spend stablecoins; what happens to the tokens in the future is another matter. But I recently wrote an article expressing a similar viewpoint: high fees are indeed a problem, like the 2% you just mentioned; it's quite high. I've spoken to the founder about this, and he acknowledged it, but that's set by Visa, and it might be optimized in the future.
But my point is that if something can really enhance my life experience, I'm willing to pay for it, which is completely opposite to many projects currently doing 'mining + incentives'. To be honest, I'm not interested in mining or airdrop farming; I'm more concerned about: does this product have practical value? Can it make my life easier? This card allows me not to deal with the complicated and troublesome process of withdrawing cryptocurrencies, so I'm willing to pay a little fee for it.
Gav: Indeed. If something has practical utility, it's worth paying for. But ultimately you still have to convert fiat currency to stablecoins, right?
Kevin: Interestingly, when I was talking to Raoul Pal in Dubai last week, he also said something similar. He said, 'Why still use stablecoins? Who uses stablecoins anymore?' His thoughts are similar to yours.
Gav: To put it bluntly, the issuers of stablecoins are essentially banks. Like USDC and USDT, they are increasingly resembling banks — those highly regulated centralized banks.
Kevin: You're absolutely right. I actually think the reason these projects are easier for ordinary people to trust is that they are regulated. Although it's not that extreme 'crypto punk' belief, it's indeed more acceptable for most people.
Gav: But I know quite a few ordinary people whose bank accounts have been frozen as well; this isn't something only crypto geeks encounter.
Kevin: Yes, especially some tech entrepreneurs often encounter this kind of situation, right?
Gav: Yes. I know some people who were just randomly buying a bit of Ethereum back in 2014 and got caught up in it.
Kevin: I feel the same. In 2019, it wasn't even 2014 yet, my Revolut account was frozen — didn't Revolut just start providing crypto services? At that time, I only transferred a bit of money to Coinbase, about £10,000, and they said it was too much and froze my account. It still hasn't been unblocked, it's permanently banned now.
The more compliant, the more it deviates from its original intention?
Gav: Yes, it's ridiculous, but that's the reality of 'regulation'. The more crypto projects start to accept regulation and comply with compliance processes, the more they resemble a part of the traditional banking system. To some extent, this is actually slowly undermining the original intention of crypto, absorbing it into the old financial order.
Kevin: So what do you think would be a suitable 'balance point'?
Gav: It depends on what kind of 'popularity' you want. This question is hard to clarify because it depends on what 'people' really want. But for me, what I pursue is 'less trust, more truth'. I don't want my life to be influenced by opaque, arbitrary, or even unreasonable decisions. And these are precisely the essence of regulation.
When you trust others, they have the opportunity to exploit you. And if you don't know these people, they have no obligation to consider you, so once they can gain a little benefit from you, they are very likely to do so. This is one of the core ideas of the (Web3 Declaration) I wrote. It states quite directly: as long as we live in a world dependent on these opaque institutions and individuals, as long as they have the opportunity to profit from it, they will certainly do so, and we are almost powerless.
Kevin: So is the world you envision still achievable?
Gav: It really depends on people's choices. As the current post-war global order gradually collapses, perhaps people will start to change their attitudes and no longer want to rely on institutions that don't care about user interests at all.
Kevin: So what if the world ultimately heads in a direction you don't want? Would you choose to leave?
Gav: I don't know. But for me, a large part of the motivation comes from curiosity — it was curiosity that led me to Ethereum in the first place. At least my curiosity is still there now, but satisfying curiosity and leading a project are two different things. I'm not sure if I will still lead a project, but it's impossible for curiosity to disappear. This field is still full of interest, and my desire to explore has not yet been satisfied.
Democracy can only be established when citizens have a sense of responsibility and awareness.
Kevin: If you were to explain to someone who completely doesn't understand 'sovereignty' or 'Web3' what you are doing and why, how would you say it?
Gav: This question is actually quite difficult to answer. To put it simply, I would say — 'less trust in others, more truth of what you see with your own eyes'. In other words, make people no longer rely on others to 'kindly' decide their lives for them, but rather empower them to see the truly important things in life for themselves and make their own choices. This is 'less trust, more truth'.
If I had more time and someone really wanted to understand deeply, I would explain it in more detail. I would say that many of us are trapped in a misconception that society is free, but if your life must rely on those who act arbitrarily and without accountability to move forward, then that is not a free society at all.
This is actually a form of disguised authoritarianism. If someone thinks this is how society should be, or just wants to live like this, then they must accept that they are in an authoritarian system. Of course, perhaps they are willing to do so, but as this system becomes increasingly opaque, unreliable, and unstable, maybe their thoughts will gradually change. But I want to emphasize that this way of life is essentially an authoritarian environment. And I always believe that living in a free society is far better than living under an authoritarian regime.
Kevin: You've always been a staunch supporter of 'self-sovereignty'. Ultimately, what we're discussing is this. Why do you think the free world is better than the authoritarian world? Many people may not have thought about this question at all, or rather, most people are unwilling to take responsibility and prefer to hand over power to others — for instance, with retirement, most people don't want to take charge themselves.
Gav: Such people are foolish. They are gambling with their own future — even the future of society. Because democracy can only be established when citizens have a sense of responsibility and awareness. If people are completely indifferent to their environment, lifestyle, and government actions, democracy will collapse very quickly. I believe many people are already ignoring these issues, and this attitude will eventually lead to the collapse of the entire system. I have little patience for such people.
Kevin: Was there a moment in your life that made you realize 'no one will come to save you', or in other words, 'I have to take control of my own life'?
Gav: I seem to be naturally distrustful of authority. Growing up, I never felt that much authority was really looking out for me. Of course, that doesn't mean I never met good people; for example, some of my teachers were quite good. And in Western society, teachers are among the most common authorities in children's lives. My parents also didn't treat me poorly. But I just can't believe that strangers would deliberately profit for me — why should they? Even now I can't figure it out, maybe it's just innate.
Kevin: Actually, thinking about it this way is quite rational.
Gav: So why should I trust a system that assumes 'authority will be good for me'?
Self-sovereignty is not about escaping rules, but about escaping arbitrary power.
Kevin: When you mentioned teachers, it reminded me; I found it strange when I was a child: some teachers had never left the school gate in their lives, yet they were teaching me about business and life's principles — they had no persuasive power. Later, at the end of 2018, I read (The Bitcoin Standard), and it all clicked. Ten years ago, I started a business because I felt the existing system was untrustworthy and always wondered if I could do better. This book made me see many things clearly. It's like saying, 'If you are inherently distrustful of the system, then look at this.' And I thought, wow, finally someone understands me.
Gav: Indeed. Although I haven't read that book, I agree with the conclusions you've drawn from it.
Kevin: That book is actually written for people like me who don't understand technology and are more ordinary readers; it's very easy to understand. He spends about 80% of the book not discussing Bitcoin but telling the history of the evolution of money, such as what is 'hard currency', 'sound money', what is 'unsound money', why we once used feathers, stones, silver, gold as money, but ultimately none of them could last. Then he leads into why Bitcoin is significant in this context, so I resonated with it deeply, as if I had found my kind — those who are inherently distrustful of the existing system. So what do you think is the most basic condition for a person to truly achieve 'self-sovereignty'?
Gav: In principle, it's the ability to control your own destiny. But I don't think it's a black-and-white issue; it's more of an attitude. Some people may never truly achieve 'self-sovereignty' — even including ourselves. Because sometimes the environment imposes too many limitations, like if you're in North Korea and say you want 'self-sovereignty'? You can only wish for the best. So I think it's more about the willingness to pursue it as an attitude. Just like Oscar Wilde said: 'We are all in the gutter, but some of us are looking at the stars.' I don't think any of us can truly achieve perfect 'self-sovereignty', but some people are willing to strive for it, especially when there are some 'low-hanging fruits' available.
Kevin: Like what?
Gav: Use cryptocurrencies. Even just stablecoins will do. Although we have to admit that stablecoins are still a distance from 'self-sovereignty'. The rules behind stablecoins may not be as capricious as banks, but fundamentally, you still have to trust a centralized institution to operate it well. However, compared to banks, your stablecoins might be slightly more secure, but we shouldn't be too optimistic.
And Bitcoin, of course, represents the typical model. Other cryptocurrencies also have their advantages, but you have to be careful of those so-called 'decentralized' projects — in reality, they are just decentralized in name, while still controlled by centralized teams, and holding those coins does not allow you to truly achieve economic autonomy.
This is not much different from putting money in a bank and saying 'I control my assets'; it's all self-deception. But I do believe there are some opportunities to seize now, like Bitcoin, where the protocol clearly limits the total supply, and wealth distribution is relatively transparent — no founder is holding a massive amount of tokens.
What else can be done? Find a country that respects sovereignty as much as possible to move to, find a group of like-minded people, and establish reasonable rules. This idea is quite old-fashioned in the crypto circle, but it has clearly become more popular recently, with the concept of 'free cities' everywhere. Several such projects are being promoted in the US, and there are signs in other less free places, like Dubai, which has set up a mixed system with service counters for foreigners to handle things they find unfair or bureaucratic. So I think there is a desire for this way of life among people.
The key to 'self-sovereignty' is not whether you completely escape the rules, but whether you are no longer subject to arbitrary and illogical power. It doesn't mean you can ignore the rules, but that you need to know what the rules are, understand them, and not have to obey some power you don't even know and cannot be held accountable for. Some rules are unavoidable, like physical laws, economic laws, principles of mathematics and cryptography; these are things you must comply with. It’s not like today some official is in a bad mood and freezes your account — that’s the 'arbitrariness' we want to escape.
Are protocols like Solana, Ethereum, Polkadot 'network states'?
Kevin: You previously mentioned some people who are promoting these ideas. You and your friend Ed Hess are among the 50 to 60 founders who gather in Patagonia every year to discuss topics related to 'sovereignty'. I'm quite curious, have any particularly crazy or exciting ideas emerged from these gatherings?
Gav: I don't remember very clearly; to be honest, my mind gets a bit fuzzy after every gathering, haha. But from what I recall, many ideas actually sound quite 'reasonable'; at least I think they make sense. The nation-states I'm familiar with are mostly built on a bunch of outdated logic, either from events hundreds of years ago or arbitrary decisions made by some people, mixed with religious factors. Many laws have long been outdated yet still lie in books, and the government pulls them out whenever it feels like it. We now need to completely rethink the social contract because the social environment we are in is completely different from the world when those old laws were created. The internet and AI have transformed the world into something entirely different from a few decades ago — these technologies have made our lifestyles and those of our grandparents almost incomparable.
But you will find that people seem to think that laws and social contracts should remain as they are or not change too much. I completely disagree. I think this is also at the core of our discussions in Patagonia: can we redesign a social contract applicable to modern society in this technological context?
Kevin: You previously mentioned 'building a country yourself', so what do you think of Balaji's ideas in (network states)?
Gav: I know that book, but I'm not sure if they've actually advanced it. The concept is quite interesting, but I'm more neutral in my stance. After all, we now have the internet and more and more network-based self-sovereignty systems that have started to transcend the boundaries of traditional state sovereignty. But in the end, true sovereignty still relies on 'physical security guarantees' — that is, territory. For example, even if you are a network state, if you don't have a piece of land, it will be very difficult to truly enforce your own rules. The Catholic Church is an example — it can also be considered a long-standing 'network state' with a very large network of followers. But it still wanted a small piece of land — the Vatican. Although it's small, it realized: to truly possess some kind of 'sovereign status', even if it's symbolic, territory is indispensable. So I think if we really want to build a 'network state' that transcends the current forms of DAOs or crypto communities, we need to face the importance of 'territory' — you must have a physical space that can support the rule system you set up.
Kevin: So would you also consider protocols like Solana, Ethereum, Polkadot as 'network states'?
Gav: Well... I didn't invent the term, so I'm not sure if they fit the definition mentioned in (network states). But in my view (although it might be a bit 'heretical'), even a cryptocurrency can be considered a very 'weak' prototype of a network state. For example, Bitcoin; anyone who joins must follow the rules, and if you tamper with the client to inflate your currency, you'll be kicked out of the network — because that tampered client cannot sync with the real Bitcoin network. This is the most basic form of a network state. As the rule systems and iteration mechanisms become more complex, along with a clear membership system, the architecture of network states will become more refined.
But the key is that a network state doesn't necessarily require everyone to live within it; that's what distinguishes it from a traditional state. But people need a sense of belonging, right? Besides food, language, and friends, one of the most important sources of belonging comes from the social contract you participate in — whether it's formal laws or unwritten social expectations. Without a tangible piece of land to go to, this sense of belonging is hard to realize on a physical level.
Original video: https://www.youtube.com/watch?v=jyMxSIFyXwo
