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Be sure to check the link in the description. SEBASTIAN MOONJAVA: Hello, Real Vision
people. This is Sebastian Moonjava. Today, I have a very special guest, Gavin Wood.
He is the founder of Parity, Polkadot, Web3 Foundation and Ethereum. I am so glad
to have you here, Gavin, how are you doing? GAVIN WOOD: Hi, Sebastian. I'm doing well. Thanks.
SEBASTIAN MOONJAVA: Let's start off with a little bit about your background, getting into crypto in
the first place, and then maybe a little bit about your experience with Ethereum. GAVIN
WOOD: Sure, you want me to kick it off? SEBASTIAN MOONJAVA: Yeah. Tell us a little
bit about yourself, your background, how you even got started in the space.
GAVIN WOOD: Alright.
Well, it's a long story. I went to university. I did like a
PhD in Computer Science, but I was always super into things like Game Theory, a little
bit of social science, political science. This was always on the back burner, generally,
pub conversations, but quite in-depth ones. I noticed this thing called Bitcoin back in 2011,
or something, but I only actually took a deep look into it in 2013. At around the same time, I was
actually doing a startup with an old friend, a software for lawyers to help lawyers author
their contracts, dumb contracts, paper contract. Towards the end of 2013, I got talking to a few
people in the Bitcoin community in London quite regularly.
One of the people I met was Vitalik,
who has just done this initial whitepaper for this thing called Ethereum. I was looking for a
little gig on the side, so I said, yeah, sure, I'll code it up for you. Ethereum took off quite
a lot in 2014, and 2015. I was the initial CTO for Ethereum Foundation, and it was basically down
to me to make sure the thing actually launched, which it did properly in mid-2015.
SEBASTIAN MOONJAVA: The workhorse. GAVIN WOOD: The workhorse. Yeah, that's it,
running around. I left the Ethereum Foundation late 2015 to do Ethcore, as it was called back
then, a private company operating within the Ethereum ecosystem. That eventually became Parity
when we branched out to things beyond Ethereum, we did our own Bitcoin client, and then eventually,
2016, I put forward this idea for Polkadot, which is the project that I'm still working
on that Parity is fairly wholly behind now. It's this idea for basically a chain of chains, a
blockchain of blockchains, protocol of protocols. Basically going a bit one layer down in the stack
and seeing if we can abstract and generalize over what we built before with Ethereum and Bitcoin.
SEBASTIAN MOONJAVA: The overarching goal of Polkadot is to what? Is this for interoperability?
What is the problem that it's solving? GAVIN WOOD: There's a lot of angles on
It's a very interesting one, because we are dealing with such deep tech. If
you like, I think the one that gets to the crux of it for me is innovation. We are solving the
problem of innovating fast. The problem is that if you want to innovate, you want to build a
new blockchain, you want to build new business logic, you have to do an awful lot of work
to get a relatively small amount back. What Polkadot does is it allows you to
shortcut on an awful lot of that work, it allows you to shortcut on an awful lot
of stuff that you have to do to build your own blockchain. It also allows you —
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We look forward to seeing you there. GAVIN WOOD: is it allows you to shortcut on
an awful lot of that work, it allows you to shortcut on an awful lot of stuff that you
have to do to build your own blockchain. It also allows you to shortcut on things like
building your own community, it allows you to shortcut on stuff like being able to utilize all
of the various other bits that are going on in other blockchains. It does this by connecting,
allowing to connect to those other chains. It also very crucially allows you to avoid having
to build your own base, your own security base. Blockchains, this is very important.
They have to provide their own security. Bitcoin famously has the mining algorithm.
I don't know, it uses up the equivalent of, I don't know, some small country's energy simply
in securing itself. Of course, the newer chains tend not to be proof of work, they tend to be
proof of stake so they're not using much energy, but they are using a lot of capital.
A lot of
capital allocation has to go into this proof of stake, so that the chain actually is secure,
because it's this capital that's securing it. The problem is that you've got many different
proof of stake chains, each doing their own different thing, then that capital has to be
divided between these chains to secure each of them rather than being pooled together and having
the whole capital base securing all of the chains. That's really one of the key problems that
Polkadot solves, it allows the same capital base to secure many different
domain specific blockchains. SEBASTIAN MOONJAVA: Can you
tell me a little bit more about how they get this groups together security?
I hear this word parachains coming up often, can you tell me a little bit about
how that security is different? How it's getting it's security from the main
Substrate as opposed to how Ethereum works? GAVIN WOOD: In essence, there's two
different things going on here.
One of them, you can look at it as like Polkadot
is a bunch of different blockchains, independent blockchains doing their own thing.
Then every now and again, every six seconds as it turns out, these blockchains are allowed to send
messages to each other. There's a point during a period, an interval in which they are allowed
to communicate. Other than that, they're doing their own work, a little bit like your traditional
idea of an office worker, they spend an hour doing their own thing, filling in forms, writing memos,
all the rest of it. Then at the end of the hour, they might have some communication, they might
take a meeting or have a call or whatever. It's like these blockchains, we call them
parachains, they're going off doing their own work for six seconds then coming back and
conferring with each other, exchanging messages, and catching up. Now, how do they get
security? Do they share security? Well, that essentially comes down to this one chain, the
relay chain, we call it as the heart of Polkadot. This chain has a bunch of validators.
validators, as I said before, they're bonded, so they've got this capital backing. This
capital can be lost if these guys misbehave, so they're trusted in some sense of the word.
The kind of trust that they're not really just acting in their own self-interest. Because if
they misbehave, they lose potentially quite a lot of money. Now, these guys are split. When Polkadot
is going fully, properly, expanded, and it's really going, probably in six months' time,
there's going to be about 1000 of these guys. The idea is that we split them into
100 subgroups of 10.
Each subgroup, each of these 10 validators get randomly assigned
to one of these chains, one of these parachains, of which we expect that to be probably about 100.
They check, they make sure that the parachains are actually operating correctly, that no one's
trying to do anything bad or malicious on the parachain. Basically, they make sure the system
retains its integrity. This gets swapped out every six seconds. What that means is that
even if you compromise one of these groups, it's very difficult to get a long run, it's
basically impossible to get a long run of blocks, of six second blocks, in order
to really make any attack feasible. SEBASTIAN MOONJAVA: All have these, and
like you said, there'll be many of these over the next several months that are coming
out. They are, again, all getting their security from this central relay chain. Can
you give me an example of what some of these parachains might be doing? It can be anything,
right? Can you go into a little bit of detail about what is possible on these parachains?
GAVIN WOOD: Yeah.
The great thing about parachains, the way that I designed Polkadot
back at the beginning, was really to try and make it as general as possible. We do that in,
first lesson of computer science, we do that by making it as abstract as possible. We're really
trying to get rid of anything that's particularly concrete or more specific to what the–
SEBASTIAN MOONJAVA: This is more so than Ethereum, because usually the comparisons are like,
we've got Bitcoin, then we've got Ethereum, which made it a little bit more abstract.
Is this even more abstract than Ethereum? GAVIN WOOD: Substantially more.
Yeah. I was
that back in the day when we're trying to pitch Ethereum to the world. It's fair to say that
Ethereum is more general purpose than Bitcoin. Bitcoin has a relatively limited ability to be
scripted. You can attach certain conditions, some scripting conditions to the payments
that you make in Bitcoin, but relatively few. With Ethereum, that scripting, those conditions
that you could make became substantially greater, a lot more flexible. You could do things like
loops in them, which computer scientists will know can give rise to Turing completeness.
This allows you to do all sorts of crazy weird and wonderful experiments on Ethereum, but there's
a big issue with Ethereum. That's what's called gas, and gas is this idea that you're metering
how much computation that's being done. Every single transaction is being metered. What the
metering means is that every single instruction, these instructions are very tiny little things,
things like add these two numbers, or look this thing up in memory, these instructions, each and
every one of them being counted, being metered, and this metering is very, very expensive.
What that ultimately means is that running complex, sophisticated programs on
Ethereum is extremely expensive.
It works, don't get me wrong, but it's very expensive. You
can see this already today with defi slowly being throttled by the amount of costs associated with
the gas price. Now what we do is we say, well, actually, this level of abstraction is good in its
general purpose but it's not the lowest level that we can go to, and we go to an even lower level.
Within Polkadot, we don't have the notion of gas, we don't have the notion of accounts or account
We don't have any of these ideas that are we don't– like Ethereum has ether and every
computer program that you write and upload to Ethereum has to be associated with an account
that holds ether. Every time anyone uses that computer program, they have to have some ether
to pay Ethereum to run the program for them. That isn't the case in Polkadot.
In Polkadot, it's very simple. The team behind the program uploads that program. They do
it as a blockchain. The program is actually a very large program that contains all of the various
business logic for an application or potentially many different applications. They upload this into
Polkadot, and then they pay for that blockchain, that parachain to be there by virtue
of this deposit of a leasing system. Once it's paid, it's done.
At that point,
the users of this computer program never even have to know about Polkadot, they never have to
know about the DOT token or anything to do with that stuff. All they care about is basically
what is the business logic of this chain. SEBASTIAN MOONJAVA: Is this like– it's like lump
sum payment for a lease for a certain period of time, then they get as much accessibility to
the computing as they need. That's great. Can you maybe give a little compare and contrast of
what the parachain and maybe the initial parachain offerings that I'm hearing about. Is it like the
way that they're bootstrapping their security? Can you maybe give a comparison to the ICO things
that happen on Ethereum, where in Ethereum, they were the ICOs were trying to raise capital
maybe to build out one of these projects, which is significantly different than what your thing
is, because some of these parachain offerings, I believe, if I'm correct here, is that
they're trying to bootstrap this like payment that you're talking about for their lease for them
to be able to run this constantly.
Can you maybe go into a little bit about the differences here?
GAVIN WOOD: Yeah. We were trying to avoid that specific term, because it tends to lead
to misunderstandings with precisely what's happening. In reality, what's going on with– I've
mentioned leases. There's this idea that we have a finite number of slots, probably around 100 once
Polkadot is probably going. Parachains can occupy one of these slots when they run. There's
one of the interesting parachains called Acala, these guys are essentially trying to make
a decentralized finance chain, it's got Ethereum Virtual Machine compatibility, so people can
easily upload their Ethereum programs into it. It can also do all sorts of other things.
got a stablecoin on it, all this kind of stuff. Now, if these guys want to take a slot, then they
have to put down a lease, someone somewhere has to basically put down more DOT tokens than anybody
else in the world who is willing to deposit for the slot. Now, these DOT tokens don't go
anywhere, they just get locked. They can't be transferred out, or anything like that.
They don't go anywhere.
They stay within the account of the leaser, the person
who's putting the DOT tokens down, and six months or whatever, however
long it takes before the lease expires, those tokens are eventually freed up.
They don't go anywhere. They are all 100% stuck within the Polkadot system. There's no chance
of them being slashed or reduced in balance. SEBASTIAN MOONJAVA: As in opposition and in
difference to the ICOs that we saw on 2017, there is no swapping out. This is just to drive
home your point more that these tokens are just pretty much placed here, left alone. There's
no, oh, hey, I'm giving you this, and you're giving me that. It's just I'm providing security
or saying, yeah, these people need the security. I think it's a good project for Polkadot so
I will push this here and lock it in there. GAVIN WOOD: Yeah, it's just a way of determining
the value of one project against another. The value is just measured by many people are
willing to lock up how many DOT tokens behind this project, but that's only locked up
as long as the project's actually got an active parachain.
As soon as the project loses that
parachain, like they find an alternative means of releasing such a slot, then those tokens are
freed up and they get– not returned because that would imply that they left in the first place, but
simply placed back under normal use of the owner. Now, of course, Acala probably, and various
other parachain teams that are out there, don't have those DOT tokens themselves.
What they want to be able to do is basically say to the various DOT token holders of the
world, hey, put your DOT token– sponsor us with a deposit of your DOT tokens.
them to us, just put them behind our chain, our project, as long as it's a parachain.
Maybe you do it for the good of your heart. Maybe you do it because you think this is
a really worthwhile project. Maybe you do it because the project is going to offer you
some benefit, it might give you some on- chain, I don't know, receipt or record that can be used
in the future for some gain of some sort. Now, this we call a crowd loan, because it's basically
you're taking to the crowd and you're saying, look, please loan the system some
of your tokens in order for us to be able to put forward our chain and get
one of these slots and run on Polkadot. The key difference is that these tokens
never leave the ownership of the crowd, the crowd members.
They retain ownership, it's
just that it gets placed behind the parachain. Once it's placed behind that one parachain,
it can't be used for other stuff like staking, or other parachains or obviously can't
be sent to any third party as well. SEBASTIAN MOONJAVA: That's great. I would love
to hear a bit about Kusama. Full disclosure, I own some Polkadot, I own some Kusama, but I think
this really interesting stuff especially like the Kusama society stuff is very interesting.
I'd love for you to just give us an overview of what in the world is Kusama? How does it relate
to Polkadot and the ecosystem as a whole as well? GAVIN WOOD: Sure. Kusama, we call it a canary
network, a canary chain. You're familiar with test networks, this is the idea of basically a network
that has no value. Bitcoin has a test network, there's a few others. That just sticks around in
the background, usually software that's going to eventually be rolled out to the Mainnet, that main
network of a cryptocurrency or blockchain, will be first rolled out to one of these testnets just
to make sure it's doing roughly the right thing. The problem with testnets are that they can't be
used to test the things that require some degree of a value signal.
For example, governance.
Governance, stakeholder voting, this kind of stakeholder participation, this kind of
stuff is pointless to do on a testnet, because who's going to be interested in voting
on a network that has literally zero value? It doesn't make any sense. No one's going
to dedicate their time to doing that. What we do for Polkadot, because we
really wanted to test this stuff, we're breaking new ground in terms of on-chain
governance with Polkadot, and we really needed to test it before we launched a multibillion
dollar market cap network that's governed by an algorithm.
We introduced first Kusama,
a very low value network, but still a network that in principle has scarcity and people have
given value over time. Kusama is there to make sure that our various algorithms be there for
governance, for just new features, innovations, experiments that we think might be good but
might not be good, they might not work out. These are all things that can be pushed onto
Kusama to try it in the real world with real stake albeit not as much stake perhaps as one of the
top networks but still enough stake to make it worthwhile for people to actually interact with
the test out and first, to see actually how it works with real people.
Now, in addition to that,
of course, Kusama is a fast moving no promises, expect chaos, break it attitude for a network,
which is quite different to a lot of blockchains, what blockchains really push for their stability,
robustness, reliability as Polkadot indeed does. Really, we wanted an alternative out there
that's using the same kind of technology, but with a completely different mindset.
That's really what Kusama fulfills. It's like if you've got an experiment, you want
to try a social experiment, put it on Kusama. Don't put it on Polkadot. Polkadot's there for
the production industry capable applications. Kusama is really there for interesting
experimentation, particularly social experiments. The society is one of these social experiments.
The idea is to say, well, we've got the idea of blockchain, where you've got these blocks, they're
full of transactions, the next block references the previous block, and you're building a ledger
up from nothing out of these references or the one thing referencing the previous thing. Can we do
that? Can we make it more tangible? Because blocks are not very tangible, you try and explain this
to my mother, she won't really know what you're talking about.
Blocks what? Wooden blocks?
The society is what's called also the human blockchain. This is the idea that you can make a
blockchain out of people, but rather than these abstract blocks full of transactions, you've got
literally human beings, and the human beings, as a new one is added onto the human blockchain,
they reference an old one. We've got this society, I think there's 50 members now, all around the
world, most of them don't know the others. Each of them have tattooed crazily enough onto their body,
a reference to another member of this society. It's all public, you can see the tattoos, and
every now and again, one is chosen at random, and they have to actually prove that they still
have the tattoo. They have to prove to the other members of the society that they did indeed get
It's really just a social experiment, but it's something that using to show that
blockchains actually can be used to make a fairly arbitrary difference into people's lives.
There's a few other bits that Kusama is doing. It's quite heavily supportive of the
art world. There are a few projects that Kusama is funding within the art world to try
and bring a bit more knowledge about blockchain, a bit more awareness into circles that
blockchain wouldn't otherwise get exposed to. Overall, it's like Kusama's treasury, its on-chain
governance so it hasn't fairly substantially funded treasury now.
The on- chain governance
can control this treasury and Kusama is fairly active in using these funds to support various
projects to bring about awareness and education. SEBASTIAN MOONJAVA: A couple of things that
are coming to mind as you're talking is one, can you talk to me maybe a little bit about, I'm
not sure, maybe the cadence of– I was reading about like Moonbeam is working on a Kusama
version, or they're going to launch a project on there. Then they're going to do it on Polkadot
as well. Maybe, can you talk to me about like the process that you would imagine that a team looking
to build a parachain, would they go to Kusama first, and then they would go on to Polkadot?
Can you describe how you see this process? GAVIN WOOD: Yeah. It's certainly one way of doing
I wouldn't necessarily expect all teams to go first to a test, we always have a testnet. That's
what's running at the moment. We call the testnet Rococo. It started just before Christmas I
think. It's been accepting parachain teams to be brought on over the last week or two.
The first step is really get your parachain working just on your little local computer.
The next step is to get it onto Rococo. We'd expect most people, most teams like Moonbeam
to be deploying onto the Rococo testnet. Kusama, they may also choose to do. It depends
whether it makes sense for the team to have two valuable networks going, one is a parachain on
Polkadot and the other is a parachain on Kusama. Could be that some teams don't need that for their
project as it makes sense to deploy on Polkadot. Could be like a small project, maybe a social
experiment, maybe they don't have that much funding, or they can't get that much backing,
and that they're perfectly happy with being on Kusama.
It could be that another team just jumped
straight to Polkadot. They know that their stuff works. They've tested it locally, they tested on
the Rococo testnet. They don't need to bother. For them, maybe the security of Kusama isn't
sufficient or maybe just that the other parachains on Kusama are not going to give them a sufficient
value add for them to be connected into them. Instead, they just jumped straight to Polkadot.
SEBASTIAN MOONJAVA: Related to this, one, the governance of these protocols, and I pretty
much already know the answer this question, but I want to ask it anyways, who is in charge of
Kusama, who is governing Kusama? Is it Polkadot? GAVIN WOOD: No.
Actually, the funny thing here is
that, if anything, it's the other way around. No, there's about 19 people like that, it was 19 that
are– it might be 17, one or the other governing, in principle, the Council, the Kusama Council,
and they don't have any actual real power, but they have some degree of executive power. It's
a little bit similar to the UK political system, some people might be familiar with
it. Basically, any legislation has to be still put through the full chamber or
the referendum, as it is in Kusama as we call it. The Council, which is a little bit akin
to the executive body like the government, are the ones that most of the time put forward
the things to be voted on. It's like they say, yeah, we think this is a good idea. Please
vote for it. Then it goes into the referendum to be voted through.
The interesting thing here
is, though, that Polkadot, the DOT tokens, we originally mentioned that we're going to
be giving 10 million DOT tokens to Kusama, one way or another. We hadn't decided back when
we announced it like a year and a half ago. The likelihood now is that we will literally be
bestowing 10 million DOT tokens under the control of the Kusama governance mechanism.
It'll be fully decentralized. In reality, Kusama or the Kusama governance mechanism
will have a voice in how Polkadot is run. SEBASTIAN MOONJAVA: Because I've talked
to other people about this relationship between Kusama and Polkadot, and because of
this governance thing, that's why I asked, is that Kusama can become its own thing. One
of the main differentiators and maybe you can talk about this as well, I wanted to touch
on treasury stuff too. If you can touch on, again, the main differentiators, you can
call it whatever you want. You can say, oh, this is a testnet, or it's a whatever you want to
call it, but in reality, it's governed by itself. It's beholden only to itself.
over time. This relationship can really be different later. Can you tell me some of the key
differences? One of the ones I know off the top of my head is like, for decision making, or let's say
unlocking of staked DOT takes 28 days or a month, and then unlocking of Kusama is seven days.
There's a significant difference in some of these things. Can you talk about why those decisions
are made, or what are the implications of some of these differences between Kusama and Polkadot?
GAVIN WOOD: Yeah.
Primarily, Kusama is this live fast, die young kind of network. It's pushing
the limits a little bit harder than Polkadot. It's giving up some of the– potentially some of
the robustness and reliability, but in exchange for the very latest technology, for the ability
to change, for the ability to adapt a lot faster. Ultimately, these, to a large degree, are
a tradeoff. Now, you can argue maybe they can add some cleverness and have both very fast
changeability and extremely high reliability, but I would say in general, it's a tradeoff between
Kusama is trading off the reliability. Other things that are like this, probably like
the auction, the parachain lease slots on Kusama are going to be probably four times shorter.
Instead of six months, there'll be only six weeks. This means there's going to be probably a
lot more parachain churn, and they'll come and go. The governance in general for Kusama has shorter
term limits. The council is reevaluated– is it once a day still? I think it's
still once a day, but in Polkadot, it will eventually become once a month. In
Kusama, it might eventually become once a week, but there's generally this four to one ratio.
If in Polkadot, it takes four months, in Kusama, it only takes one month.
It takes four days.
SEBASTIAN MOONJAVA: Again, it's much faster. Kusama is able to mobilize, add
additional technology features, make decisions about governance and maybe treasury
at four times the speed that Polkadot can. Let's talk a little bit about treasury, which
I think is like a really interesting thing. DOT Kusama, again, whenever I talk to
people I say, the DOT Kusama ecosystem. In this space, talk to me a little bit
about how the treasury works or like, because DOT does have a little bit of inflation
depending on how much is staked, is that correct? Can you talk about the decision making behind
this? I assume that this is so that you can develop faster, make more– because I know
Decred had worked on like a treasury system that's taken from some of the miners and stuff and
that helps develop and build a robust ecosystem. Can you talk to me a little bit about how the
treasury works? How they're getting funds for the treasury and how they deploy that capital?
GAVIN WOOD: Sure.
The funds, actually, they come from a few sources. The source– but one
of the sources that you already mentioned, this is essentially the suboptimality of the staking
system. What we do is– I don't want too deep down into the math, but essentially, we named
an optimal amount of the total issuance of the DOT token to be staked. At the moment, it's 75%. We
say, we the governance of Polkadot declare that we want 75% of the DOT tokens issued to be locked
under the staking system. If it's any more, or if it's any less, then we consider it suboptimal.
Now, as part of the algorithm by which we determine how much rewards each of the validators
should get, each of the stakeholders should get, it turns out happily enough, that that 75%, to
make 75% be the perfect number for everybody, it turns out that only at 75% do we need the
maximum amount of rewards of total costs of the network.
Now, we say well, for that for the
moment, it's 10%. We say 10% per year is the inflation. We inflate the token base by 10%, and
that 10%, we allocate to the staking to rewards. Here's the thing, if there is anything other
than 75% of tokens staked, then it means we're not going to use the whole 10%, we'll use less of
it, that's just the way that the math works out. This means that what we do is we send the rest of
it, we could just not use it, we could burn it, we could never inflate the token based
higher. Instead, we take the more progressive approach, and we put it in the treasury, in
the Polkadot treasury, or the Kusama treasury. Once it's in the treasury, then it's open to being
spent by the delegated Council, these 19 or 17 people in Kusama. I think it's
still 11 people in Polkadot. Now, these guys can basically, a majority
vote from them can basically spend what's in the treasury. This is all super
in the open, it's all on-chain. You can go to chat rooms and see what's going
There's forums and all the rest of it. Now, if for some reason, the council choose not
to spend it, or there's nothing good to spend it on or whatever, so basically, if there's
an overrun, if there's a treasury overrun, a budget overrun, we're running a
surplus, and then we actually burn it. We took it in the incinerator and the DOT tokens
just go out of the system, the issuance drops. There is this additional deflationary pressure,
it's not just we inflate 10% per year regardless, but we inflate up to 10%.
If it turns out that
the staking is suboptimal, and the treasury can't spend the funds, then those tokens essentially
never get issued. What's it being used for? There's a bunch of– Kusama has quite a lot of
crazy stuff that it's using it for. Actually with Kusama, rather than just being about the Kusama
network, it's also trying to raise, as I say, awareness in more general circles, so there's
a few artistic endeavors going on within that are being funded on their own, fairly small bits
of funding, but still being funded from Kusama. Polkadot does tend to be a bit more focused.
Obviously, the Polkadot treasury has more notional capital funding, owing to it being a widely
more valued network. The stuff that goes on is running infrastructure within the community,
so one of the first things that the Polkadot treasury was used for was running a very widely
used explorer, a blockchain explorer, a website where you can check the history of transactions.
Also, development, various projects have had their technology been funded by the Polkadot treasury.
Of course, this is all open source, so everyone can benefit from it, and there's a few other bits.
SEBASTIAN MOONJAVA: These people that are wanting to get funding, let's say, your example of a block
explorer, this person would put in a proposal right to the treasury to say, hey, I
think I can add value to this network, can I get some of this inflation or this treasury
funding? Then the group of people, the Council would be making a vote to say, yeah, we think that
that is worthwhile for us to use those treasury funds to build out this infrastructure.
GAVIN WOOD: That's exactly right.
Now, the interesting thing there's actually three
ways that the treasury can be used. Three methods. One of them is precisely that. Someone
comes forward, they say, hey, I've got a proposal, please give me some funds because I did this
cool thing, or I want to do this cool thing. It's great for Polkadot. It's great for
Kusama. If the Council votes on it, fine. There are two other ways. One of them is that is
what we call the bounties. This is the opposite way around. This is where the Council says, we
want this thing doing, and we will pay this much. We're delegating this curator to make sure that
it's actually done, and they basically are in charge of making sure that the funds are properly
spent. We want this goal achieving, who out there would like to achieve it? They put out a call to
action or a request for proposals or something. Then the other thing is what
we call on-chain tipping. This is where basically, someone has done
something, usually a very small thing, but still something that is a nice thing, it's
like maybe they've written a little blog post or done some nice pottery, or something, somehow
made more people aware of the network or done some useful educational technology for it.
Basically, someone will report this is a nice little good thing, and then the council,
rather than having a specific spending proposal, each of the members will say, yeah, I think
this should be tipped one and a half Dots. Then as each of the council members fill in
what they think it's worth, if it's worth a tip at all, what tip it's worth, there will
eventually be a quorum of council members, I think it's usually half of them, maybe half
At that point, there's a countdown, and there's like 24 hours in case any other
council members want to chime in and put what they think. Then after that, it's just the median.
The median tip is chosen, and it's given to whoever reported that or split between
whoever reported and whoever actually did it. This this really just allows a much faster
moving process rather than having to, well, I'm thinking of doing this blog post, I
would like to be paid such and such for it, and all the rest of it. It's just much faster.
SEBASTIAN MOONJAVA: Also, related to governance and treasury and stuff, there was this
thing that I read about Polkadot, Kusama, they're trying to be like forkless blockchains,
is that correct? Can you explain what that means, and what the benefits are to that?
GAVIN WOOD: Yeah.
This is something that I personally worked on. It was my little
baby that I did when I started. I worked on it three years ago now. It was the first
thing I worked on with regards to Polkadot. Essentially, Polkadot does things differently to
almost every other protocol out there, including the very well- known ones. It's what's called
a meta protocol, a blockchain meta protocol. What this means is that the protocol, the
thing that people associate with Polkadot, so parachains and governance and balances and DOT
tokens and all that stuff, that's not actually part of the underlying protocol. That's the
underlying thing that runs on the network. That's actually a business logic that sits on top
of the protocol and it's entirely programmatic. What that means is it can be swapped out
at any point in Polkadot's future for some other business logic, alterations to it.
The actual protocol, the thing that is defined as being Polkadot and is very difficult to
change is actually very, very thin. It's all the underlying consensus, which are called BABE and
GRANDPA, that is a hybrid consensus but two bits. A bit similar to Ethereum 2's consensus and a
fairly substantial move forward from all the existing consensus mechanisms.
A layer on top of
that that just says how to execute business logic. We explicitly chose the most general industry,
widespread industry adopted language, if you like, format called WebAssembly, it's backed by Google
and Firefox, and Microsoft and all the big ones. It's very well understood, it's got a lot of big
tech backing. It's simple. It's well designed. It's very highly performance, very efficient,
lots of good implementations. It's got this big community around it.
Basically, we just said,
like, we don't need to invent our own thing. We're not going to reinvent EVM, the Ethereum Virtual
Machine, like we did back in the day. This is going to be industry standard, WebAssembly sorted.
We basically just plugged WebAssembly into the blockchain consensus and a database and
stuff. That's what we call Substrate. Now, this is what Polkadot runs on. All the stuff to do
with Polkadot pretty much runs on top within this WebAssembly thing. That means we can switch it
out. What this means is that we can do upgrades to it without having to do these horrible hard forks,
where we're actually altering the underlying protocol, and because these hard forks are really
messy and if there's ever any disagreement over whether they should be done or not, it's like,
oh, no, I don't think this upgrade should happen. I don't think it's– maybe it's political,
you're going to get people disagreeing, then you're going to end up with forks
of the networks, you're going to end up with another Ethereum Classic or whatever.
SEBASTIAN MOONJAVA: Can you walk the audience through what is a hard fork in general, and
why do we want to avoid it? Maybe you can talk about Ethereum Classic, or just give an
example, so our audience understands what is a hard fork, why do we want to not do that?
GAVIN WOOD: Sure.
Basically, blockchains are consensus systems. They exist as a way of allowing
people, many different economic interests, often around the world and the different jurisdictions
that may not be especially easily compatible. They allow all these economic actors to
participate under the same economic rules. Now, this is a fundamental innovation. It's why people
are so excited about blockchain because it allows for this consensus to happen independently of any
of the legal systems that exist in the world, any of the financial systems that exist in the world.
What happens if you need to agree something that isn't a part, isn't within this consensus,
isn't within the scope of forming a consensus? Bitcoin allows you to form a consensus
over who was paid Bitcoin in the past and who to, but it doesn't
allow you to form a consensus on how Bitcoin should be upgraded.
That's not within the
system of a Bitcoin system. The system of Bitcoin only considers account balances, and whether a
particular transaction has been spent on them. Same with Ethereum. Ethereum is very good at
forming consensus over certain little computer programs, but it can't form a consensus over how
Ethereum itself is going to adapt to changes in the future. That's outside of the system that's
outside of the scope of Ethereum's consensus. The same is true basically, for every blockchain
out there, apart from Polkadot. With Polkadot, the entire system, the business logic of Polkadot
itself is contained within the Polkadot consensus. Now, if you don't have this, then you have to
find another way of achieving consensus outside of the system. You have to find a way of all of the
participants of the system, all the stakeholders forming a consensus. Now, this might be done by
having a benevolent dictator who just says, this is what we're doing. It might be done by having
a vote, and everyone committing to the outcome of that vote.
As we've seen in recent history,
it's not always so easy to even agree upon the outcome of the vote, let alone get everyone
to agree to commit into it in the first place. What we end up with is the problem that Bitcoin
and Ethereum have gone through in the past, where we see Bitcoin was forked off into
Bitcoin Cash, and Bitcoin Satoshi's Vision and Bitcoin gold and Bitcoin diamond, and
all the rest of the [?] Bitcoin, because this consensus couldn't– there was no way
of forming a consensus long term over how the protocol should be changed, should be adapted
and evolved. The same with Ethereum. There was a political decision to be made in Ethereum back in
2016, when there was this big hack, the DAO hack, whether the funds of the DAO that were hacked in
the DAO hack should have been, basically rescued and returned to the original owners or not.
This basically caused the split in the community. There were those that said, no, code is law,
these funds must remained hacked.
The rest of the community said, no, actually, we should just try
and fix things. It was early on and made excuses. These two different political viewpoints
led to the two different blockchains that we now have, Ethereum and Ethereum Classic.
Now, the big issue is that these hard forks, there's always going to be contention. People
will always make something political about them. Because they're not governed by any automated
consensus mechanism, it means that we're beholden to soft forms of consensus,
humans interacting, and that's without any authority governing them or any economic system
that they've all bought into.
That leads to these problems. Polkadot explicitly avoids that by
making the protocol part of the consensus. SEBASTIAN MOONJAVA: Polkadot, Kusama, it's more
of alive, it's an alive protocol that has its own meta governance. Because it's governance, and
so are there risks with this? Because I have heard previously, I've been in this space since
2013 and I've heard that hard forks can be good, because it's two communities doing what they
want, or how they want? Is there any concerns from having a forkless protocol?
GAVIN WOOD: It's not an argument without merit. There are good reasons to
try lots of different things. However, schisms in a community are, as we've seen in
the past, they're toxic.
They ultimately lead to negativity on every side, and that is
generally against the happy innovation that we see in a well-functioning
community. I accept and actually believe in running experiments, running multiple different
potential ways forward at once, and then competing them and somehow picking the best
one and running with that, but then it needs to be under some sort of order. It's no good just
having explosive ways of trying multiple things, because there's no path to getting back
together again, and that's a big problem. Whereas how we– actually, Polkadot is one of the
very first things that came to mind with Polkadot, because it's a heterogenous sharded multi-chain.
Because it's got these different shards, these different parachains, and they can each
be their own thing, they can each do their own individual thing.
It's a little bit like a
critique of the United States that I read in a few years ago in The Economist. It's
basically this idea of a federated system can run many different policy experiments in each
of the different states, and the ones that work can be elevated to federal status, and the
ones that don't work can just be dropped. It's the same in Polkadot. We can actually do
the best things that are caused by hard forks, which is to say, policy or protocol experiments,
but we can do them at the level of parachains, and we can run them all in parallel, one in
each parachain, and the ones that tend to work, we can elevate into Polkadot, the ones
that don't work so well, we can just leave these parachains or drop altogether.
SEBASTIAN MOONJAVA: To make sure I'm understanding this, you're saying that Polkadot
acts a little bit like the federal government, whereas each of the parachains are being like
They're getting like their meta governance, they have their own rules. Say
this again, you said they're heterogenous– GAVIN WOOD: Sharded multi-chain.
SEBASTIAN MOONJAVA: Basically, again, this means as opposed to Ethereum, each of these
projects building on top of Ethereum, that they are required to use the same blockchain logic
as each other because they're uniformed things. Whereas when we talk about parachains, they're not
as uniformed. They're just getting their security from this standard thing.
They each have their own
blockchain logic, their own rules, their own rule sets, just like the states have their own rules
and deciding if this is legal or that's legal. That's one of the big differentiators between
Polkadot and its heterogenous shards, meaning that they have their own blockchain logic and anything
happening on Ethereum, the projects happening on– the coins built on Ethereum, they're
still beholden to the same type of logic. Can you tell me the benefits of utilizing
different logic or having the capability to use different logic? I'm just unsure
about how much more expansive that world becomes by having the heterogenous chains.
GAVIN WOOD: Sure. You can think of like a smart contract network like Ethereum, and there's
a few others, they build in roughly the same architecture, a little bit like the
civil law system of the modern world. You can get lawyers and they can make
you have a contract, and this contract can do lots of different things.
I mean if you
talk to a lawyer, you can generally get into basically write whatever you want in the contract,
there will be certain statutory requirements that the overarching legal system places upon
you, and it'll be different between legal systems. For example, companies law in the UK, it
makes it very difficult to give different shareholder rights or restrict shareholder rights
within a company. In the U, shareholder rights are a lot more– certainly in some states–
are a lot more flexible, you can basically kill all rights or give all the rights
to just a single shareholder or whatever. That's not the case in a lot of other countries.
Now that you can think of Ethereum's generality as being the generality that you
get within a particular jurisdiction over what kind of companies, what kind
of civil law it has. It will exist within that jurisdiction, and it won't be able to
call upon civil law in other jurisdictions. It will have the costs and the benefits of
whatever the civil law is in that jurisdiction. What Polkadot gives you is the ability to
have basically whole other jurisdictions. You're not required to exist just under one
particular country's legal system, jurisprudence, court system, lawyer framework.
You can choose,
you can make your own. You can say actually, this blockchain is only going to have financial
laws and the laws are going to be extremely heavily regulated. You might have another
blockchain that says, we have zero regulation. Now, the Ethereum architecture, I should say,
can't really do this because it's beholden to the same underlying blockchain logic. It's a smart
contract chain, it has particular definition of what gas is, it has a particular definition of
ether, it has a particular definition of how ether and gas interact, it has a particular definition
of how smart contracts, these different computer programs interact. Though each of these things
cannot be changed, they're baked into Ethereum, and if you want to use Ethereum you have to buy
in to this legal system, this crypto legal system. With Polkadot, you can define your country however
You can define your laws however you want. You can define your economy however you
want. You're not going to have to buy into any of this preexisting stuff. That leads to a huge
amount more experimentation that's possible. For example, if you don't want your users to have
to hold your tokens in order to interact, but instead only provide a verified Facebook identity
to be able to interact, let's say once or twice a day, you can do that.
That's fine. You just
write your blockchain logic so that instead of verifying that when a transaction comes in, it's
from a particular account that has some tokens, that you're going to deduct in order to pay for
the transaction to execute as Ethereum does, you check to make sure that the account is
referencing something that's on Facebook, that the Facebook account is active, that it's
been verified by Facebook or has a certain number of friends or whatever it is you want, and that it
hasn't made more than a few transactions already. That's entirely possible, and it opens up like
a whole new way of designing your applications economics. To put it another way, you can
implement Ethereum inside of Polkadot. You can make a parachain. Indeed, there is a
parachain, it's called Moonbeam. That is, to all intents and purposes, the same as Ethereum.
You can't make a smart contract in Ethereum that does the same as Polkadot.
be able to pay the gas costs. It would just be impossibly expensive. That's the key difference.
Polkadot exists lower in the stack. Ethereum, we call it a layer-one blockchain because it's
notionally the first, and you build layer two applications on top of it. You can think of
Polkadot as a layer zero blockchain because it sits underneath the level of Ethereum. Things
like Ethereum, like Moonbeam and Acala are built on top of Polkadot. Polkadot sits as a foundation
layer that's just there to give security and interoperability between its constituent
chains. Doesn't do anything more than that. SEBASTIAN MOONJAVA: I've heard you say this
before, and this is basically what you're talking about. You said like Polkadot is a bet
against maximalism? That's what you're touching on right now, because you're saying these
different jurisdictions have different rules, but we're uncertain about what the best rule sets
are, what the best jurisdictions are. Because of this, because we know we're not certain yet what's
the best rule set is, Polkadot allows you to experiment with all the rule sets.
I don't know
if you want to expand on that a little bit more about this idea of it's a bet against maximalism.
GAVIN WOOD: Yeah. There is definitely that thing that we don't know what the best one is. I think
even still, even if we didn't know what the best one is, there isn't really a best one.
maybe a best one for a particular application. There's maybe a best one for a
particular industry or domain, but I don't think there's a best one, period.
This idea that has been sold that there's one blockchain for every application has been pushed
certainly by elements of the Ethereum community. I don't think it exists. I think
Ethereum is a great chain for prototyping blockchain experiments on, but I definitely–
if I were doing, for example, a supply chain infrastructure, then why would I build it in smart
contracts that have to be metered, that have this really inefficient metering system? I know that
what these contracts are. I know how long that may take to execute. Why am I, every time a user
is using them, re- measuring how long it takes? Now, of course, if there are many different
contracts, and you can't predict ahead of time which one is going to be used, and anyone
could introduce any contract at any time, like a very general purpose, very prototype heavy system,
then of course, metering is probably the only way that that can happen, but for so many domain
specific applications, it's just not needed.
It's too heavy duty. It's much better to actually
make surprise, surprise, a domain-specific blockchain. The problem is with domain-specific
blockchains, they're time consuming to build. Because they exist only as a blockchain,
they can't talk to other blockchains very easily. They don't integrate well. You
can't compose them with each other very, very easily. That's where Polkadot comes in.
It's like Substrate, which is our blockchain development toolkit, and makes it super easy
to build your own blockchain. We're seeing some great news articles about people building
their own blockchain in various industries. The one that I read most recently was this Korean
music publisher that's building a blockchain for Korean pop bands non-fungible tokens. Brilliant,
lovely. Yeah, we're seeing these domain specific blockchains come out, because they're just so
much more efficient and much more performant than doing things in a general purpose environment.
Then of course, Polkadot allows these domain specific blockchains to be deployed into Polkadot
and talk to each other and share the security together, again very important, so you don't
have to pay your own validators or otherwise have a very centralized proof of authority.
This is where the really interesting performance benefits come from.
It's not just about
parallelizing all of it, which is already great, because we've got for one, the Polkadot
relay chain is a [?] of different blockchains, each wearing away processing transactions all at
the same time. Each of these chains, each of these shards is domain specific. It's optimized to be
highly performant for its specific use case. Now, this is something that you don't get in a typical
homogenous sharded system like Ethereum 2 where each of the shards, although there might be 64
of them, or whatever, but they're each doing the same thing, each general purpose and that means
that none of them are going to be very performant for any of the tasks that they're doing.
SEBASTIAN MOONJAVA: I see. Very interesting stuff. I'd love to hear about your thoughts
on what's happening in the space, in Polkadot, Kusama, specifically over the next let's say
a year or so.
What are you anticipating? You touched on the launching of these parachains,
is that supposed to be happening soon? Tell me a little bit about the future of Polkadot, Kusama.
GAVIN WOOD: Yeah. I mentioned Rococo, the testnet for parachains has been launched in the last
month and they are slowly onboarding each of the parachain teams. I think we have about 15 of
them or so, 15 or 20, they've already got their stuff together, their software, their parachain,
and they're ready to put it onto the testnet, onto Rococo. Once we're happy that that code is running
reasonably smoothly, then we will roll it out onto Kusama, alongside of course the Kusama auctions,
these slot auctions and the crowd loaning system, so that people across the Kusama stake holding
ecosystem can back their favorite parachains and maybe reap some of the rewards that the parachain
teams are offering them for their backing. That's probably coming in the next month
Once we're happy that Kusama has– everything's working as we expect in Kusama,
and once the external audit is completed, we have an external audit firm on retainer
that's just basically churning through all of this new code as we develop it. Once
they're happy that this is safe and secure, then we will be deploying it onto
Polkadot. Our tentative goal for that is by the end of this quarter, so
fingers crossed that that comes through. Once that is done, there will
be an initial version of XEMP, this cross chain message passing protocol. This is
a way that these parachains can send messages to each other, can communicate, as I mentioned,
every six seconds, they can send messages. That will be also within this first delivery,
this first scope of delivery at the end of Q1 hopefully. Then over this first half of the
year, we'll be optimizing this XEMP into a more or less off-chain version of it, which
basically dramatically increases the efficiency, increases the number of messages that they
can send to each other, decreases any of the costs associated with it, and so on.
There are a few additional technologies. One of them is called SPREE.
is a very exciting technology. It stands for Secure Protected Runtime Execution
Enclaves. What it basically means is that you can have little programs that run inside these
parachains. They all run separately, they all run with the parachain in parallel to each other, so
like you're managing 100 copies of this program all running within the scope of the parachain, but
it's the same program. It's like the best of both worlds. You get heterogenous domain- specific,
industry-specific blockchain sharding, but you also get a little bit of the computer program in
the shard that is the same across all the shards. It can do things like handle token balances, and
you can send things like certain tokens or assets between the shards with a guarantee that the
code on the other side of the message is going to execute correctly, execute as you imagine.
token, a very simple execution, reduce the balance of one account, increase the balance of another
account by the same amount, very simple transfer operation, but we can imagine there might be a few
more of these different little snippets of code that have their own protected storage associated
with them so they can maintain the balances. This is very important so that parachains
that don't trust each other's logic, they might trust that their logic is
executed correctly by Polkadot because they will run into the same validator
umbrella, but they don't necessarily trust the logic itself is doing what they expect it to
That when they said, hey, transfer this asset, please, that it's actually going to reduce the
balance of one account and increase of another. What SPREE does is it gives them that guarantee.
It allows the best of both worlds, your homogenate sharding and your heterogenous sharding.
SEBASTIAN MOONJAVA: We expect that in the near future? When do you expect this SPREE to come?
GAVIN WOOD: That, I expect to land Q3, I would say. Probably Q3 this year.
SEBASTIAN MOONJAVA: Do you imagine that most of the fruits of your labor will be going by
the end of this year? You're saying this the SPREE thing you're talking about, all these parachains,
do you expect to see defi basically existing on Polkadot by the end of the year?
GAVIN WOOD: Yeah, I would hope so. There's already plenty of defi chains. We've got
some amazing teams, some really great talent out there developing parachains. The great thing is
that I think for me, it's out of my hands. Our job here is to develop Polkadot and deliver parachains
and make it as efficient and stable as possible. It might be that when that's done that we will
start playing around with developing a few parachains of our own, and maybe developing
some of the core technology on parachains, but basically, our job is to deliver
Polkadot as an application platform. It's a wonderful ecosystem of, I said, about
340 projects and counting that are developing the layer-ones, these platforms.
Polkadot is a
platform of platform, or platforms themselves that are providing the infrastructure for
doing things like decentralized finance and supply chain and registry tracking,
NFT's and all this crazy imagine stuff. That is some of which is going to be really well
changing. Yeah, it's great. I have a huge amount of confidence in many of these teams.
SEBASTIAN MOONJAVA: Perfect. Well, thank you so much. Do you have any final thoughts, any last things you'd like to say to
the audience about Polkadot or how you see the future, the ecosystem in general?
GAVIN WOOD: I think we're in an interesting time for the ecosystem, particularly
with Polkadot. Obviously, most of my time and efforts have been focused on Polkadot.
It's rare that I actually got a chance to look up and look around and see what the rest of the world
That's even more so in the last year with the no conferences, and all
the rest of it. I do think it's really a great time to be in this ecosystem. We
are entering Blockchain 3.0 slowly but surely. It's important to look behind the claims to
work out where the true actors in this golden age are, and who were the maybe the ones that
didn't quite make it into Blockchain 3.0 and they're still at 2.5, because I think on the
face of, it's not always so easy to distinguish. It's really important to, if you're trying to
make any judgment and evaluation, it's really important to get a proper, developed a lead
technical evaluation of where the protocols at, and maybe also a proper game theoretic evaluation
of what the protocol does, and not buy too much into a lot of this hype surrounding it.
The only other thing I'd say is be aware of the distinction, the difference between evolution
I know, as having done Ethereum, we brought a new architecture into the world
with Ethereum, this idea of the Ethereum Virtual Machine, the idea of smart contracts. Proud as
I am about that, it is ultimately a technology that's now six, seven years old. We're still
seeing blockchains sticking to the architecture, sticking to this very smart contract, gas
consuming, dynamically metered architecture that we introduced in Ethereum way back then.
That's all very well, and you will see evolution on that. You will see people improving
performance. You will see some changes to things like transaction propagation, just trying to eke
out that improved level of transaction throughput. Ultimately, if it's using the same architecture,
it's probably not going to be a revolutionary difference in a revolutionary innovation.
You've got to look beyond that architecture to really find the gems in this golden age.
SEBASTIAN MOONJAVA: Great. Hey, thank you so much. I really appreciate it. Great advice.
Great knowledge. Thank you so much, Gavin Wood. GAVIN WOOD: Thanks for having me on the show.
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