Just yesterday at the Web3 Summit event, Polkadot founder Gavin Wood once again dropped a 'thought bomb':
Polkadot NPoS (Nominated Proof-of-Stake) is dragging down Polkadot's security model. We need a fundamental replacement and reconstruction.
It sounds somewhat radical, but this is not an unfounded imagination; rather, it stems from an unavoidable reality—Polkadot pays up to $500 million in security costs every year!
This expenditure mainly comes from staking rewards, which are the DOT issued annually through inflation to reward validators and nominators. In the current structure, this cost constitutes 85% of Polkadot's annual inflation.
And where did this 85% expense go? Most of it is directly monetized by validators and nominators, flowing out of the ecosystem, and has not genuinely converted into 'network usage' or 'ecosystem activity'.
Gavin bluntly states: this is an 'unsustainable' fiscal structure; in the long run, it will not only drag down the network's fiscal discipline but also severely weaken the precision and efficiency of ecological incentives.
The alternative path he proposes is: PoP (Proof of Personhood).
A new model that takes 'who you are' as the basis of on-chain power and trust, rather than 'how much money you have'.
The essence of the problem: NPoS treats 'capital holders' as security providers.
Since the mainnet launch in 2020, Polkadot has been using NPoS (Nominated Proof-of-Stake) as its core security mechanism—an innovative model jointly maintained by validators and nominators.
The original intention of PoS design is beautiful: to encourage positive participation and protect network security through staking tokens.
For years, it has indeed shown good technical performance and censorship resistance: 0 downtime, low latency, ultra-high elastic scalability, and even become one of the few 'high-intensity mainnets' operating under PoS architecture in the industry.
But the reality is that NPoS incentivizes capital hoarding, raises the price of 'security', and creates a paradox:
You need to hold a lot of DOT to protect Polkadot; rather than receiving incentives based on what you have done for Polkadot.
Gavin's thoughts are profound. What he sees is not just a fiscal deficit, but the logical closed-loop problem behind the NPoS design—it overly relies on token capital while neglecting identity, fairness, and actual contributions.
Five years have passed, and with the launch of the Coretime model and the maturity of the ecological structure, Gavin Wood begins to reflect: Is NPoS really the ultimate solution? Polkadot's annual security cost for staking incentives reaches $500 million—far exceeding the income from core resources, far exceeding the 'security budget' of most chains, and much higher than the marginal benefits brought by this mechanism.
This number is not only shocking but also triggers a collective reflection on the essence of NPoS:
If so-called 'security' relies on inflation rewards and continuously consumes ecological resources, then is it a moat or a shackle?
Gavin Wood's answer is clear and radical. He proposes that NPoS may not be the endpoint, but merely a transitional security mechanism. It overly relies on capital, is detrimental to long-term governance fairness, and also causes significant fiscal internal friction.
Solution approach: stop bleeding in the short term, 'blood transfusion' in the medium term, and long-term reconstruction of logic.
Short-term goal: Reduce security expenses from $500 million to $90 million, cutting 80%.
In his speech, Gavin proposed a set of mechanism reforms that can be quickly adjusted by OpenGov, which may include:
Set fixed fiat salaries for validators (e.g., $5k/month); limit self-staking and excessively high return expectations; introduce a 'stable issuance model' for DOT: for example, halving every two years, with a total cap of 314 million × π; raise validator thresholds and introduce KYC, interviews, and other mechanisms.
Perhaps this is not just another 'parameter optimization', but rather cutting off the root cause of incentive abuse and redefining 'security expenditure' with a more pragmatic institutional logic.
In addition, in the short term, Gavin also hopes to introduce a 'new funding pool' mechanism—the inflation funds will no longer be directly distributed to validators, but will enter the buffer pot, with governance deciding whether to allocate them.
This mechanism is actually one of the core components of the fiscal structural reform proposed by Gavin, aimed at making 'issuing rewards' more restrained and controllable, rather than automatically distributing funds to validators.
In the current PoS design, Polkadot's inflation issuance is 'automated': the system prints new DOT each year based on the set inflation rate, and then directly distributes it to validators and nominators as 'security incentives'.
This process is simple, but there is a serious problem:
Distributing money without asking for demand, regardless of whether validators have truly provided valuable security;
If network demand declines and core resources are not fully utilized, the system will still distribute funds;
The result is: a lot of money spent, but there is little use or growth on-chain.
Thus Gavin proposes a new structure:
Future newly issued inflationary DOT will not be directly given to validators, but will first enter a 'buffer pot'.
The use of this 'new funding pool' is determined by governance, for example:
Does the current network indeed need more security investment? → Allocate to validators;
Is there a more urgent ecological funding need currently? → Allocate to developers, projects, events, etc.;
Is the current network over-incentivized? → Stay in the pool as future reserves;
It can even be used to offset future inflation, buy back DOT, or support stablecoins.
The essence of this mechanism is to turn the 'automatic money issuance mechanism' into a 'governance decision-making mechanism'.
That is to return the 'right to use inflationary currency' to community governance rather than defaulting to be fully distributed to validators.
The national treasury will no longer directly allocate new tax revenues to the military but will first place them in the treasury and then decide whether to build bridges, schools, or expand military preparedness based on the overall development needs of the country.
Gavin believes we should seriously consider how much security Polkadot really needs. He thinks that the security costs we need in the early stages are actually far lower than our planned issuance.
Therefore, it is better to keep the excess part as reserve funds rather than overpaying the security budget. This 'buffer pot' is designed to cope with 'rainy days': whether it is a security demand, insufficient transaction fees, or weak core time sales.
Some may question: since we once shouted the ideal of 'extremely low block space costs', why are we now discussing using a buffer fund to cope with weak core time sales? Is the vision of zero-cost block space still alive?
Gavin's response is: 'This is not betrayal, but evolution. To achieve an extreme state, we must first become practical.'
Polkadot currently has only about 40 cores being effectively used, and many chains have a core utilization rate of less than 20%.
Under this premise, rather than talking about 'each transaction approaching zero cost', it is better to be pragmatic—first build real demand, then welcome the day when marginal costs decrease.
Mid-term strategy: Introduce PoP and Individuality, initiating an identity-driven security model.
If the short-term goal is 'stop the bleeding', then the medium-term path is 'blood transfusion'—exploring a new security structure based on PoP (Proof of Personhood) and Individuality. Shifting security determined by 'money' to be determined by 'people'.
In this architecture:
You must be a 'real, independent' person (not a robot, not multiple identities);
Your voting support for validators determines whether they can participate in block production;
The number of votes each validator receives is limited to prevent centralization;
Supporters of low-quality validators will be identified and removed by the system; if a validator performs poorly (for example, downtime, malicious behavior, poor performance, violations, etc.), then not only will the validator be punished or removed, but also their supporters (those who voted for them, also known as 'voters') will bear responsibility and may even be excluded from the voter pool or face weight reduction.
Staking still exists, but it is no longer 'making money', but rather a combination of money + identity + voting support.
This is a typical anti-sybil security mechanism that attempts to build a more equitable and sustainable governance structure through 'decentralized digital identity'.
Mid-term supplementary tools: close ineffective resources + introduce native stablecoins.
In the medium to long-term system design, Gavin also plans to introduce:
1. JAM Core Disabling: If a certain core block space is invalid, it can be 'closed' directly, and no longer continue to burn money for maintenance.
'Core' in JAM refers to the minimum execution unit for block production—similar to parachain 'slots' or execution threads (Execution Core).
In Polkadot, or in the future in JAM, each Core will be alternately responsible for block production and endorsement by validators, even if the chain or service on that Core does not truly operate business, it will still occupy validator resources; thus, validators will still receive incentives for participating in the maintenance of these Cores, which means obtaining inflation from staking. This leads to 'ineffective core expenses'—you are spending money maintaining a piece of land that no one uses.
This means the system is continuously paying for 'useless security'.
And 'JAM Core Disabling' means that in the future under the JAM architecture, when a certain Core does not produce actual value, the system can close it and stop allocating validator resources and block production opportunities for it.
Gavin proposes this mechanism to address the problem of 'disconnection between resource use and inflation expenditure': we cannot treat security incentives as a mechanism for 'universal salary distribution'. We must only pay for the 'parts that truly generate value'.
JAM Core Disabling embodies this concept.
2. Native stablecoin payment structure: shift treasury expenditures from DOT/USDC to Polkadot native stablecoins, improving capital internal circulation efficiency;
I think this mechanism should be quite significant! Let's first take a look at what Gavin refers to as the 'native stablecoin payment structure'?
In the current operation of the Polkadot treasury, most expenditures (such as event funding, team salaries, development rewards, etc.) are usually paid in common cryptocurrencies like DOT or USDC.
But there are two problems with this:
Expenditures easily flow out of the ecosystem: many teams, after receiving DOT or USDC, will immediately exchange them for fiat currency, making it difficult for funds to form a cycle within the ecosystem;
DOT, as a payment token, is highly volatile: DOT is a circulating asset, making it too volatile for settling project expenditures, making it difficult to stabilize budgets.
Therefore, one of the reforms proposed by Gavin is:
Launch a Polkadot native stablecoin and shift the treasury expenditure structure towards this stablecoin settlement.
The benefits of doing so are:
Avoid frequent sell-offs of DOT, protect the token market;
Increase the 'secondary use' rate of funds within the ecosystem (for example, a project receives stablecoins and is willing to use it to hire another ecological developer);
Facilitate governance system budget management, making settlements more stable and predictable;
Build a closed payment loop system within the ecosystem to enhance 'economic endogeneity'.
In summary:
Exchanging DOT or USDC for 'the ecosystem's own stablecoin' to pay expenses is to ensure that money is spent as much as possible 'on our own people' and not continuously flowing out.
Just like a city's government subsidies are not given in dollars but in 'local consumption vouchers', this can encourage citizens to spend money on local businesses, thus promoting internal circulation.
Security is not a bidding game, but a social contract.
In the paradigm of Polkadot NPoS, security is a transaction of 'paying for services'. But in the logic of PoP + Individuality, security is a system agreement maintained jointly by individuals.
This reflects Gavin's shift in political philosophy: from incentive-driven mechanisms to a return to 'social trust structure' driven.
He no longer attempts to explain everything with capital logic but rather acknowledges: identity, trust, and individuality are the key variables for building order on-chain.
NPoS → PoP, it's not just a technological evolution, but a paradigm revolution.
Gavin does not completely deny NPoS. He acknowledges its historical role and admits it still has value in the short term. But his goal is to gradually weaken its dominant position and replace it with a more human-centered mechanism.
This is not a light update but a deep institutional reconstruction.
It challenges the industry's consensus that 'capital equals security' and reignites the idealism of blockchain technology.
PoP is not just a simple 'identity verification'; it is a redefinition of the Web3 social contract.
Polkadot's reforms are still worth looking forward to.
In this era filled with Ponzi narratives and false on-chain data prosperity, Polkadot's self-reflection and structural reform are particularly valuable.
It does not rely on hype around NFTs, nor chase the L2 craze, but quietly builds the foundational logic for the next era.
This reform may be slow and imperfect, but it deserves the attention, participation, and even contributions of all of us.
You may not yet have a PoP identity, but you are already a witness to this new narrative.
PolkaWorld Note: This article interprets the materials and PPT left from Gavin Wood's latest speech. More precise information will be organized by PolkaWorld when the Web3 Summit event video is released! If there are any inaccuracies in this article, please feel free to point them out! Additionally, this article is for information sharing and should not be considered as investment advice; please view it rationally!
