in a new ethereum-governance/” target=”_blank” rel=”noopener nofollow”>report, Christine Kim of the Galaxy Research team delves into the intricate governance of ethereum and reveals how this blockchain, which underpins more than 4,000 decentralized applications (dapps) and hosts the largest developer community among blockchain platforms, is governed through a complex but unofficial series of chain processes involving multiple stakeholders. ethereum, as a pioneer in blockchain technology, follows a unique governance path distinct from bitcoin, relying on decentralized community-driven processes rather than on-chain governance mechanisms.
Here's who controls ethereum
ethereum operates a decentralized, off-chain governance system, a deliberate design to prevent undue influence from large eth holders or potential attackers. “ethereum's governance is off-chain and coordinated through various community forums rather than through direct voting mechanisms built into the blockchain itself,” Kim notes, emphasizing the system's resistance to manipulation. Discussions and decisions occur on various digital forums, including GitHub, ethereum Magicians, and developer calls, without the community directly voting on the changes themselves.
At the center of eth governance is the ethereum Improvement Proposal (EIP) system, which facilitates the formal proposal, discussion, and implementation of changes to the protocol. EIPs fall into three categories: standards-tracking EIPs that suggest crucial protocol changes; Meta EIPs aimed at governance disruptions; and informative EIPs that provide guidelines to improve community practices.
“EIPs are the primary mechanism through which new features and functionality are proposed, discussed, and implemented in the protocol,” Kim says, underscoring the process that ensures that only well-vetted proposals influence the evolution of the blockchain.
The eth governance landscape is populated by a wide range of contributors, each playing distinct but overlapping roles. The ethereum Foundation, although influential in the early days, now shares its significant, but not one-sided, influence with developers, client teams, node operators, and dapp developers. Kim notes: “No party controls the development of the ethereum protocol, which is a collective effort of various stakeholders in the ethereum ecosystem.”
Core developers and client teams like Geth or Prysm hold the technical reins, integrating EIP into the protocol and maintaining the client software. Node operators have practical authority over changes as they choose whether or not to adopt new software versions, essentially deciding on whether to activate updates. Meanwhile, dapp developers provide crucial feedback and drive changes that directly affect their applications, representing the first line of users interacting with the eth codebase.
The report highlights the consensus building process using the example of ethereum's transition to Proof-of-Stake (PoS) with The Merge. This major update was not just a technical overhaul but a test of eth's governance model, which required broad agreement among various stakeholders. “The transition to PoS, known as Merge, required significant technical coordination and broad consensus among multiple stakeholder groups, demonstrating ethereum's ability to manage complex, large-scale changes,” explains Kim.
Looking ahead, governance is expected to face increasing complexities as the platform scales and integrates new technologies. Kim suggests that governance processes will need to adapt to remain effective and inclusive. She predicts: “Maintaining a decentralized governance model is crucial as eth continues to scale and incorporate more complex features and upgrades.”
Kim's comprehensive analysis concludes that ethereum governance is characterized by its decentralized and community-driven approach where no entity is in control. Instead, a dynamic interaction between various stakeholders shapes the evolution of the protocol. This model not only protects the network from centralization but also fosters an environment conducive to continuous development and innovation.
At the time of this publication, eth was trading at $3,802.
Featured image created with DALL·E, chart from TradingView.com
