Gavin Wood: USDT is an extremely regulated centralized bank? The more compliant, the more it deviates from its original intention.

Author: PolkaWorld

Link:

Statement: This article is a reprinted content, and readers can obtain more information through the original link. If the author has any objections to the form of reprinting, please contact us, and we will make modifications according to the author's request. Reprinting is for information sharing only and does not constitute any investment advice, nor does it represent Wu's views and positions.

When people are still debating how hot the narrative of meme coins is, Ethereum co-founder and Polkadot founder Gavin Wood made a stark judgment in a podcast: “The crypto industry has deviated from its original mission.”

In issue 124 of When Shift Happens, Gavin embarked on a long and profound reflection: from the failure of governance mechanisms to the replication of financial tools; from doubts about the Ethereum L2 route to the original intention behind the design of the JAM system; from the disillusionment of the “free society” to a sharp critique of casino culture.

This is not just an interview, but more like a declaration: in the current trend of the crypto industry becoming vulgarized, can we still pick up the original ideals? He did not provide an answer, but suggested a direction.

PolkaWorld is introducing this 3-hour interview to friends in the Chinese community through a series of content (approximately five parts). This article is the first part and mainly covers the following topics:

· USDT is a highly regulated centralized bank. The more compliant, the more it deviates from the original intention? Democracy can only be established when citizens have a sense of responsibility and awareness. Self-sovereignty is not about escaping the rules, but escaping arbitrary power. Are Solana, Ethereum, and Polkadot “network nations”?

Continue reading to view the full content of the first section!

USDT is a highly regulated centralized bank.

Kevin: How have you been lately? Oh, this is the gold card.

Gav: Solana Gold Card?

Kevin: It's actually a card introduced by a project called Cast, which can be used for spending stablecoins. It's somewhat like a stablecoin bank, very practical, and I use it often. Although I haven't been using cryptocurrency as long as you have, I now rely almost entirely on cryptocurrency for my daily life, so this card is particularly convenient for me, saving me the hassle of converting cryptocurrency to fiat.

Gav: Oh, do they help you with withdrawals? How are the fees charged?

Kevin: From what I understand, they use Visa's exchange rate, so if you spend directly with a USD stablecoin, there are basically no fees. But for other currencies, there’s about a 2% fee. Of that, 0.5% is Cast's own revenue, and 1.5% goes to Visa. This fee is not low, but like most early projects, they have a points system where spending can return rewards of 6% to 10%, which effectively offsets some of the fees—provided that their token can maintain the valuation level they are promoting after launch.

Gav: A rebate of 6% to 10%? It is returned in the form of their tokens, 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, which is about five to six hundred million dollars. Once the tokens are launched and if the price stabilizes, it would mean you actually received this cash back.

Gav: It sounds like a perpetual motion machine… Where does this 6% to 10% rebate come from? Besides the speculative value of the tokens, do these tokens have any actual use? Isn't their only source of income right now that 0.5% fee?

Kevin: To be honest, I haven't fully figured out the specific mechanism and economic model of their token either; it seems like it hasn't been made public yet. But what I want to say is that the product itself is really easy to use—it’s just about spending stablecoins directly, and that’s it. Right now, I mainly use it to spend stablecoins; what happens to the token in the future is another story. However, I recently wrote an article expressing similar views: high transaction fees are indeed a problem. For example, the 2% you just mentioned is quite high. I have also talked to the founder about this, and he acknowledged it, but this is set by Visa, and it might be optimized in the future.

But my point is, if something can really enhance my life experience, I am willing to pay for it, which is completely opposite to many of the current “mining + incentives” projects. To be honest, I am not interested in mining or grabbing airdrops; what I care about more is: does this product have practical value? Can it make my life easier? If this card allows me to avoid the complicated and troublesome cryptocurrency withdrawal process, then I am willing to pay a little fee for it.

Gav: That's true. If something has actual utility, it's worth paying for. But in the end, you still have to exchange fiat currency for stablecoins, right?

Kevin: Interestingly, when I was talking to Raoul Pal in Dubai last week, he said something similar. He said, “Why still use stablecoins? Who still uses stablecoins?” His thoughts are the same as yours.

Gav: To put it simply, the issuers of stablecoins are essentially banks. USDC and USDT are increasingly resembling banks now – they are that kind of highly regulated centralized bank.

Kevin: You are absolutely right. In fact, I think the reason these projects are easier for ordinary people to trust is that they are regulated. Although it's not the extreme beliefs of the “crypto punk” style, it is indeed more acceptable for most people.

Gav: But I know quite a few “ordinary people” whose bank accounts have also been frozen; this is not something that only crypto geeks encounter.

Kevin: Yes, especially some tech entrepreneurs often encounter this kind of thing, right?

Gav: Yeah. I know some people who just casually bought some Ethereum back in 2014 and got wrecked.

Kevin: Me too. In 2019, it wasn't even 2014 yet, my Revolut account was frozen - isn't Revolut now starting to offer crypto services? Back then, I just transferred a bit of money to Coinbase, about £10,000, and they said it was too much and froze my account. It hasn't been unlocked since, permanently banned.

The more compliant, the more it deviates from the original intention?

Gav: Yeah, 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 is a suitable “balance point”?

Gav: It depends on what you mean by “popularization”. This question is hard to clarify because it depends on what “people” truly want. But for me, I pursue “less trust, more truth”. I don't want my life to be affected by opaque, arbitrary, or even unreasonable decisions. And these are precisely the essence of regulation.

When you trust others, they have the opportunity to take advantage of you. And if you don't know these people, they have no obligation to consider you, and once they have a small benefit to gain from you, they are very likely to do so. This is one of the core ideas of the “Web3 Declaration” that I wrote initially. There is a straightforward opening statement in it: as long as we live in a world that relies 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: Is it still possible to realize the world of your ideals?

Gav: It really depends on people's choices. As the post-war global order gradually disintegrates, perhaps people will start to change their attitudes and no longer want to rely on those institutions that do not care about user interests at all.

Kevin: What if the direction the world ultimately takes is not the one you want? Would you choose to leave?

Gav: I don't know either. But for me, a large part of the motivation comes from curiosity - it was curiosity that initially led me to Ethereum. At least my curiosity is still there now, but satisfying curiosity and leading a project are completely different things. I'm not sure if I will lead a project again, but the disappearance of curiosity is impossible. 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: So if you had to explain to someone who has no understanding of “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 seen with your own eyes.” In other words, let people stop relying on others to “kindly” decide their lives for them, and instead empower them to see what is truly important in life, allowing them to make their own choices. This is “less trust, more truth.”

If I had more time and there were people really willing to delve deeper, I would explain it in more detail. I would say that many of us have fallen into a misconception, thinking that society is free, but if your life has to rely on those who act arbitrarily and without any accountability to move forward, then that is not a free society at all.

This is actually a form of disguised authoritarianism. If someone feels that this is how society should be, or just wants to live this way, then they must accept that they are in an authoritarian system. Of course, they may be willing to do so, but as this system becomes increasingly opaque, unreliable, and unstable, perhaps their thoughts will gradually change. But what I want to emphasize is that this way of life is essentially an authoritarian environment. And I have always believed that living in a free society is far better than living in an authoritarian regime.

Kevin: You have always been a strong supporter of “self-sovereignty.” Ultimately, what we are discussing is exactly that. Why do you think the free world is better than the authoritarian world? Perhaps many people have never even thought about this question, or rather, most people are unwilling to take responsibility and would rather delegate power to others – for example, in matters like retirement, most people do not want to take charge themselves.

Gav: These people are just foolish. They are gambling with their own future – and even the future of society as a whole. 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 that many people are already ignoring these issues, and this attitude will eventually lead to the collapse of the entire system. I have no patience for such people.

Kevin: Is there a moment in your life that made you realize “no one is going to save you,” or in other words, “I have to take control of my own life”?

Gav: I seem to have been born with a natural distrust of authority. From childhood to adulthood, I haven't felt that many authorities truly care about my well-being. Of course, that doesn't mean I haven't encountered good people; for example, some of my teachers have been quite nice. Moreover, in Western society, teachers are the most common authority figures in a child's life. My parents have also treated me well. But I just can't believe that strangers would intentionally act in my interest—why would they? I still can't figure it out; maybe it's just in my nature.

Kevin: Actually, you think this way, which is quite rational.

Gav: So why should I trust a system that defaults to “authoritarianism 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 that I found it strange when I was a child: some teachers had never left the school gate in their entire lives, yet they were teaching me about business and the principles of life, and they had no persuasive power at all. Later, at the end of 2018, I read “The Bitcoin Standard” and instantly understood. Ten years ago, I started my own business because I felt that the existing system was not trustworthy, always thinking about whether it could be done better. And this book suddenly made me see many things clearly. It's like it was saying, “If you inherently don't trust the system, then look at this.” And then I felt, wow, finally someone understands me.

Gav: Indeed. Although I haven't read that book, I completely agree with the conclusions you've drawn from it.

Kevin: That book is actually written for ordinary readers like me who don't understand technology very well; it's very easy to understand. He spent about 80% of the book not discussing Bitcoin, but talking about the evolution of currency, such as what constitutes “hard currency,” “sound money,” and what “unsound money” is, and why we once used feathers, stones, silver, and gold as money, but none of them could sustain over time. Then he explains why Bitcoin is significant in that context, so I felt a strong resonance after reading it, as if I had found my peers—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 one’s own destiny. But I don’t think it’s a black and white matter; it’s more like an attitude. Some people may never be able to truly achieve “self-sovereignty”—including ourselves. Because sometimes the environment imposes too many restrictions, 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 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 attain perfect “self-sovereignty”, but some are willing to strive for it, especially when there are some “low-hanging fruits” available now.

Kevin: For example?

Gav: Use cryptocurrency. Even if it's just stablecoins, that works too. Although we have to admit that stablecoins are still somewhat distant from “self-sovereignty.” The rules behind stablecoins may not be as arbitrary as those of banks, but essentially, you still have to trust that a centralized institution will operate it well. However, compared to banks, your stablecoins might be slightly more secure, but we shouldn't be too optimistic.

Bitcoin is certainly the typical representative. Other cryptocurrencies have their own advantages, but you must be cautious of those so-called “decentralized” projects — in reality, they are only decentralized in name, while a centralized team still controls them behind the scenes, and holding these coins does not truly grant you economic autonomy.

This is not much different from putting money in a bank and then saying “I control my assets”; it's self-deception. However, I do believe there are some opportunities to seize now, such as Bitcoin, which has a clearly defined total supply, and wealth distribution is relatively transparent, with no founder holding a massive amount of tokens.

What else can be done? Find a country that respects sovereignty as much as possible and move there, find a group of like-minded people, and establish a reasonable set of rules. This idea is quite old in the crypto circle, but it has clearly become more popular recently, with the concept of “free cities” appearing everywhere. Several such projects are being promoted in the United States, and there are also signs in places that are not so free, like Dubai, which has created a hybrid system with a service desk for foreigners to handle issues they find unfair or bureaucratic. So I believe people have a desire for this way of life.

The key to “self-sovereignty” is not whether you are completely detached from rules, but rather that you are no longer subject to arbitrary and illogical power. It does not mean you can ignore the rules, but rather that you must know what the rules are, understand them, and not be obliged to comply with a power that you do not even know and cannot be held accountable for. Some rules are unavoidable, such as the laws of physics, economic laws, and the principles of mathematics and cryptography; these are rules you must abide by. It is not the case that today, if a certain official is in a bad mood, they can freeze your account; that is the “arbitrariness” we want to escape from.

Are Solana, Ethereum, and Polkadot these protocols “network nations”?

Kevin: You mentioned before 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 during these gatherings?

Gav: I can't remember clearly, to be honest, my mind gets a bit fuzzy after each 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 pile of stale logic, either based on events from hundreds of years ago or decisions made by some people on a whim, mixed with religious factors. Many laws are outdated yet still linger in books, and the government pulls them out to use whenever they remember. Now we 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 made the world completely different from a few decades ago—these technologies have changed our way of life in a way that is almost incomparable to that of our grandparents' generation.

However, you will find that people still seem to think that laws and social contracts should remain the same, or that changes should not be too drastic. I completely disagree. I believe this is also the core of our discussions in Patagonia: Can we redesign a social contract suitable for modern society within this technological context?

Kevin: You mentioned “building a country by yourself” before, so what do you think of Balaji's ideas in “Network States”?

Gav: I know that book, but I’m not sure if they have made any actual progress. The concept is quite interesting, but I have a rather neutral attitude. After all, we now have the internet and an increasing number of network-based self-sovereignty systems, which have begun to transcend the boundaries of traditional national sovereignty. However, when it comes down to it, true sovereignty ultimately still relies on “physical security”—that is, territory. To put it another way, even if you are a network nation, if you don't even have a piece of land, it will be very difficult to truly enforce your own rules. The Catholic Church is a good example—it can actually be considered a long-established “network nation” with a very large network of followers. Yet it still required a small piece of land—Vatican City. Although it is very small, it realized that to truly possess some form of “sovereign status”, even if only symbolically, territory is indispensable. Therefore, I believe that if we really want to construct a “network nation” that transcends the current forms of DAOs or crypto communities, we must acknowledge the importance of “territory”—you must have a physical space that can support the rule system you establish.

Kevin: So would you consider protocols like Solana, Ethereum, and Polkadot as “network countries” as well?

Gav: Well… this term isn't one I invented, so I'm not sure if they align with the definitions mentioned in the book “The Network State.” But in my view (though it may be somewhat “unorthodox”), even a cryptocurrency can be considered a very “weak” prototype of a network state. For example, with Bitcoin, everyone who joins must adhere to the rules; if someone alters the client to issue themselves more currency, they will be kicked out of the network — because that altered client can no longer synchronize with the real Bitcoin network, which 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 the network state will become even more refined.

However, the key point is that a networked nation does not necessarily require everyone to live within it, which distinguishes it from traditional nations. But people must have a sense of belonging, right? Besides food, language, and friends and family, one of the most important sources of belonging is the social contract you participate in—whether it is explicit law or unwritten social expectations. If there is no tangible land to go to, it is difficult for this sense of belonging to manifest on a physical level.