Aside from market cap and hype, what determines the long-term success of a blockchain? Gavin Wood, co-founder of Ethereum, proponent of the Web3 concept, and creator of Polkadot, shares his five key criteria for evaluating blockchains.

In an interview with Forbes, Gavin Wood, a prophet in the crypto industry, explains what factors make blockchain projects successful and what factors cause them to fail. He also shares some useful evaluation criteria and provides straightforward analysis of the most popular blockchain projects currently.

His analytical approach helps us more clearly understand the price fluctuations of cryptocurrencies of leading blockchains. For example, why has the market value of ETH dropped from a high of $575 billion in 2021 to $394 billion now? Why did SOL’s market cap break through its all-time high, reaching $115 billion, while Polkadot’s DOT (launched around the same time) fell to $9 billion? Wood not only looked at these changing numbers, but also found out the key reasons behind these changes.

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

Gavin Wood’s five blockchain evaluation criteria

There are currently hundreds of blockchains, each with its own unique technology, application scenarios, and use cases. To help us see the blockchains that really have potential, Gavin Wood lists five basic criteria for evaluating them.

• Resilience: The cornerstone of Web3, resilience combines cryptography, decentralization, and game theory to protect blockchains from attacks and ensure their long-term stability.

• Performance: More than just scalability, performance measures how efficiently a network processes and completes tasks.

• Versatility: The ability of a blockchain to support a variety of applications and programmability.

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

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

Resilience: A non-negotiable standard

While blockchains can focus on different characteristics, there is one standard that cannot be compromised: decentralization and resilience. This standard is difficult to assess and requires long-term attention, but it is the most important.

Gavin Wood said: "Blockchains that ignore decentralization and resilience should not be called Web3."

He went on to say: "For example, we see that L2 networks on Ethereum have a fixed set of validators that are managed by a specific company, right? This is clearly not a feature of Web3."

Assessing the resilience of a blockchain often comes down to assessing its degree of decentralization

• Who makes protocol decisions?

• Does the governance structure have a clear or low barrier to entry?

• There is also the Nakamoto coefficient, which measures the number of parties required to disrupt the network.

• Finally, Wood also touched on the broader issue of whether a single entity can dominate the direction of the entire project and "completely control the ecosystem and suppress other voices and perspectives."

Gavin is happy with Polkadot's decentralization and said it has a high Nakamoto coefficient. According to Nakaflow, Polkadot currently has a Nakamoto coefficient of 149, meaning that at least 149 independent validators would need to unite to disrupt the network. In comparison, some other major blockchains have much lower scores, such as Solana, which has a score of 19 and Ethereum, which has only 2.

But barriers to entry remain an issue.

Maurantonio Caprolu, a research scientist at KAUST in Saudi Arabia, who co-authored multiple papers on Polkadot with Professor Roberto Di Pietro, described the high barrier to entry.

"Until 2022, the average stake required to become an active validator was about 1.8 million DOTs (about $32 million at the time). Even now, this minimum stake requirement is still high and actually favors the participation of institutions that can afford large amounts of DOT token fees."

From the resilience criteria defined by Gavin, Ethereum's weaknesses become obvious. Ethereum is often criticized for Vitalik Buterin's huge influence. In particular, his recent post on X - "The person who decides the new EF (Ethereum Foundation) leadership team is me" - has further escalated this controversy.

One ​​might ask: Given Gavin Wood's important position in Polkadot, is Polkadot also at risk of being dominated by Gavin's narrative? Wood acknowledged that his name does carry weight, but he emphasized that Polkadot's governance is community-driven. He cited some successful community-led proposals as examples, such as reducing the inflation rate of DOT, which demonstrated Polkadot's decentralized decision-making process.

The Polkassembly governance platform further promotes community participation and will launch a framework adapted to OpenGov in 2023. Caprolu and his team believe that OpenGov can “expand inclusion and reduce power concentration.” However, the researchers noted: “Because this system is still in its early stages, more time and data are needed to verify whether OpenGov can successfully mitigate the power concentration tendencies we observed in Governance 1.0 (i.e., Polkadot’s previous governance model).”

Performance: At what cost?

Different blockchains have different strategies for improving performance, but the common challenge they face is how to find a balance between improving performance, decentralization, and consistency.

Take Ethereum as an example. Wood explained: "Initially, they planned to use sharding technology to add EVM shards to the network. But then they abandoned this plan and chose to support L2 solutions. In fact, they did nothing but let others build chains and use Ethereum to ensure the security of these chains." This approach led to a lack of consistency and even affected security. Wood believes that "Ethereum combined with L2 is not really Ethereum because L2 does not provide the same security guarantees." In addition, Gavin believes that Solana sacrifices decentralization.

"Solana's strategy is to make its validators more powerful and ensure that there is good connectivity between these validators. To achieve this goal, Solana has reduced the number of validators. Because if you want to improve the connectivity between two validators, you usually need to reduce the number of participating validators. As a result, Solana's Nakamoto coefficient has decreased, because fewer validators mean fewer parties can control the network, thereby reducing the degree of decentralization."

Gavin Wood calls Solana "a highly synchronous expansion strategy" whose speed is limited by the speed at which a single machine can process and synchronize data. While this approach can achieve rapid expansion in the early stages, it will eventually be bottlenecked by hardware and network limitations.

For Wood, “The same is true for many other proof-of-stake chains. They don’t have a consistent scaling strategy, and in order to handle more data, they just reduce the number of validators and increase the speed.”

Polkadot is built differently from Solana, and it scales and optimizes the network by adding more validators. Specifically, Polkadot increases decentralization by increasing the number of validators, rather than reducing them. With more validator participation, Polkadot not only maintains decentralization, but also makes the network run faster. In other words, Polkadot optimizes performance by “scaling” rather than sacrificing decentralization for speed.

Universality: True Turing Completeness

Gavin Wood defines the universality of a blockchain by measuring how easy it is to convert a Web2 application to Web3. More specifically, he measures universality by how many different computational tasks a blockchain can support, and how complex those computational tasks are.

Ethereum introduced the concept of Turing completeness, meaning that it can perform any computational task. But as Wood points out, Ethereum doesn't quite achieve this. This is because it is constrained by gas limits and block sizes, and computations must be completed within these limits, which limits the range of complex problems it can solve.

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

Nevertheless, Polkadot's generality, like Ethereum's, remains quantitative rather than qualitative. It expands computing power, but does not fundamentally change the scope of computing. This will change with the upcoming  JAM  upgrade. The JAM upgrade promises to enable "continuations," where computation can be paused and resumed between blocks.

Professor Soulla Louca, head of the blockchain initiative at the University of Nicosia in Cyprus, believes that removing the limitation of single block calculation could be a major breakthrough. She explained:

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

Consistency: Removing Obstacles

Consistency is a major challenge facing the blockchain ecosystem. Ethereum’s L2 and Polkadot’s parachains both struggle with this. As Wood describes, they operate in isolated environments, and cross-chain interactions are often slow, expensive, and potentially unsafe unless a co-ordering system is introduced. However, such a system also brings its own challenges, as it requires supercomputers to do the ordering, which inevitably leads to centralization.

Wood admits that consistency is not a major focus of Polkadot. Although some integrations and bridges have been made in the past year, parachains still face consistency issues.

This problem was also pointed out by Tomaz Levak, founder of OriginTrail. His company has developed a DeSci (decentralized science) protocol designed to structure and connect real-world data for AI and enterprise applications, and runs on its own Polkadot parachain. Levak said that while “the performance and customization capabilities enabled by the Polkadot technology design are very unique in meeting needs,” he hopes to see “strengthening of the bridging infrastructure with other blockchain ecosystems.”

 Accessibility: Usability Testing

In the blockchain space, the general perception is that Polkadot technology is very powerful but difficult to understand. However, Wood noted that Polkadot’s accessibility has improved significantly over the past year, thanks to upgrades to the XCM (cross-chain messaging) system and ecosystem wallets. Similarly, Tomaz Levak said that end users of OriginTrail “rarely interact with the blockchain layer directly, as there are friendly user interfaces that ensure a smooth experience.” Still, consistency issues remain, hindering accessibility. Wood said JAM will solve this problem by providing a shared data availability store, where services can be built to completely hide the consistency issues faced by users. In terms of developer engagement, Wood proudly pointed out that Polkadot has always had a lot of “serious” full-time developers. In fact, Electric Capital’s developer report shows that Polkadot’s technology stack ranks third in the crypto space. Currently, Polkadot has 467 full-time developers, second only to Solana (599) and Ethereum (3562). However, Wood believes the actual number is higher because the 35 teams working on JAM are in a closed-source environment and are not included in the report.

In general, no blockchain currently has perfect mastery of all five criteria. As Gavin Wood puts it:

“You have blockchain systems that have very good performance but lack consistency, like Polkadot. And then there are blockchains like Ethereum that do a good job of consistency but have poor performance. If you look at Solana, it does a good job of consistency but lacks resilience and decentralization. So the current situation is that you can choose some of these characteristics, but no blockchain can meet all of them at the same time.”

The real winners will be those blockchains that adapt to change without compromising the core principles of Web3. The question is: which blockchain will find that balance first? ?

Original link:

https://www.forbes.com/sites/digital-assets/2025/01/31/what-makes-or-breaks-a-blockchain-gavin-woods-5-criteria/