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If you have recently ventured into the world of blockchain or have camped in this space for a while, you will certainly agree with one thing: Ethereum is a name that simply needs no introduction.
Being the home of Ether (ETH), the second largest cryptocurrency in the world, and with the distinction of being the world's largest blockchain public platform, Ethereum has several feathers in its hat.
Of course, the introduction does not even include what made Ethereum such a renowned name. Blockchain fans all over the world are familiar with Ethereum for its ability to create custom blockchains and tokens and to launch their first coin offerings (ICO).
However, for Ethereum, these distinctions also have the responsibility of updating the blockchain and executing it in a way that not only improves it but keeps it functioning smoothly.
Ethereum is based on a decentralized model. The platform has its own key value proposition built around the notion of centralized forms of control. As such, there should be no higher authority within the organization.
But since there is no formal mode of conduct and a governance system other than blockchain-based voting concepts such as EOS, Dash or Tezos, one wonders how the improvements of Ethereum work and whether it has any model of governance.
The short answer: Ethereum has a governance model but Ethereum does not record or lead the blockchain process. Designated developers implement the improvements needed after the decision-making process.
To get a long and more detailed answer, we will see exactly how that model of governance works, because it is not registered on the blockchain and how it does not influence the decentralization of which Ethereum is so proud.
To begin, let's go through some of the history of Ethereum and its consent algorithm.
Ethereum, a brief history and why it has the consent algorithm that it does
Vitalik Buterin launched the idea of Ethereum in 2013. Ethereum was born in a world where Bitcoin dominated the space. The only apparent case of use of the blockchain seemed to be focused on cryptocurrencies and the disintermediation of financial institutions in foreign currency.
However, Buterin, who had also co-founded the cryptocurrency news site Bitcoin Magazine at the time, wanted the technology to transcend this limitation. He proposed a blockchain platform that would exploit the ability of smart contracts, a less known feature of the Bitcoin platform that was hardly ever talked about.
The idea of Buterin was to improve the functionality of Bitcoin he could they made an essential offer but did not and made it available in a way that allows users to create their own blockchain apps or decentralized apps (DApp). After some discussions, Buterin together with Vitalik Buterin, Mihai Alisie, Charles Hoskinson and Anthony Di Iorio co-founded the Ethereum platform in 2015.
Since the concept was still emerging, focusing more on the development of blockchain rather than on cryptocurrency transactions, it used innovative features for the development of blockchains such as the complete Intelligent contracts of Turing and its programming language with the name of Solidity. Ethereum has also decided to use the same Bitcoin consent algorithm.
The consensus on proof-of-work (PoW) was known to be the most effective consensus algorithm at the time. While churning out the evidence of manual transaction verification through costly and expensive hashing methods, it has been tasked with validating transactions effectively. As such, there was no need for another consent algorithm.
Anyone could join, become a miner and validate transactions. While this has provided real decentralization, it has also enabled a large number of users to become miners, with their total number gradually increasing.
However, Ethereum soon lost expectations and not only attracted a large user base that created blockchain applications and generated custom tokens on the platform, but also used and transferred Ether to a considerable transaction frequency.
Consequently, during the periods of greatest use, the consensus of PoW (due to its demanding processing and expensive equipment requirements) has given Ethereum some problems.
It has led to delayed processes and higher transaction costs.
However, Ethereum still uses PoW consent at the time of writing.
Ethereum plans to move soon to a stake test model (PoS) where users who are tasked with validating existing transactions and mining Ethers have a vested interest in the Ethereum blockchain. This would only allow serious parties to participate in the mining sector and would ensure that only those who really care about the performance of the Ethereum blockchain are working on it.
But even with these plans, Ethereum does not intend to have a model of governance on the chain as proof of delegated participation (DPoS) present on its platform. This is because Buterin is a vocal opponent of blockchain models such as DPoS that tend to provide administration to those who, by default, have a larger amount of coins to stake out.
According to Buterin, this gives those entities the opportunity to hold a larger share of a single user's block premiums with an average amount of cryptocurrencies, and to a large extent upsets the decentralization model.
However, while on-chain governance is opposed by more than one key entity at Ethereum, the platform has an off-chain governance in the form of an EIP (Ethueum Improvement Proposals).
What are EIPs?
If you have already looked at other off-the-chain governance models of this type, then the acronym EIP would have sounded a lot like BIP, which stands for Bitcoin Improvement Proposals.
These improvement proposals work outside the blockchain. The processes are not presented, registered, passed or voted on the blockchain itself. Instead, improvements are proposed through GitHub, where they are taken into account and then discussed on a larger scale.
EIPs are often based on detailed design documents that provide suggestions on how to improve the Ethereum blockchain by addressing certain existing services, adding new features and improving any discovered bugs.
According to Ethereum guidelines, EIPs must be supported by knowledge and technical specifications. The author of the EIP should also have a sufficient influence or gather sufficient support to pass it without causing a rift between the community, while ensuring that all comments, including those that oppose the 39; EIP, are properly documented.
This process ensures that all views are listened to and considered. People can view EIP documentation and related discussions and see progress in a global way.
The same process is followed when the EIPs come from simple forms such as the Ethereum comment request (ERC).
What are ERCs?
Sometimes EIPs are also formed through ERC, which are suggestions that are peer-reviewed through Ethereum. These suggestions usually concern application standards and related operational processes, such as how certain smart contracts should work, but this is not always the case.
Once these ERCs have been presented and show promise to improve the Ethereum blockchain, they are discussed in the community more extensively. Subsequently, they are transformed into EIP and placed on the table for further consideration. The famous ERC-2o and its ERC-20 tokens come to life from the same mechanism.
Once an ERC arrives at the EIP stage, things tend to be more serious. It means that the ERC has shown sufficient traction and promises to move on to the next stage, and from there it has some potential to gain some traction.
What happens in the EIP discussion phase?
The discussion phase of the EIP, although promising, is also a proverbial doline to stop the traction of many EIPs. At this stage, developers working on Ethereum decide if EIP is sufficiently feasible and is technically sound to face the real world.
These developers, who also have their own consortium under the name Fellowship of Ethereum Magicians, are deeply involved in the development of Ethereum.
Similarly to the development of Bitcoin Core, powered by the MIT Digital Currency Initiative, along with the efforts of other entities such as Blockstream, the enhancement of Ethereum is supported by entities such as the Fellowship of Ethereum Magicians and the Ethereum Foundation.
There is a whole room dedicated to the governance and development of Ethereum on GitHub, where these discussions often take place in real time. People can discuss ideas, share suggestions and vocal criticism with other developers and people like them.
You could think of this room as a cafe to go out to discuss your thoughts with other like-minded people.
While disagreements often occur, they are mostly, if not always, civilized. The main focus of these discussions remains the topic at hand along with its improvement, which is what makes Ethereum debates healthy in this context.
In addition, GitHub provides a project management room for All Core Devs.
The meeting is to bring together the different segments that work on Ethereum to make it consistently better. You may think this is a collaboration and calibration meeting.
Leading developers are not only able to share their ideas and question them, but also to determine where they stand exactly in terms of thinking like the people they work with.
After some details and what some may consider exhaustive discussions, all core developers reach a decision on whether or not to make available EIP sub-considerations within the code. If the answer is agreed, the code becomes part of the most current Ethereum iteration.
So it's about the entities connected to Ethereum, like the nodes and miners to implement the code or not. This is why all core developer meetings must also ensure that you listen to these stakeholders before implementing any updates.
They have to make sure that they do not risk rebelling completely and losing a huge amount of users just because they do not want to use the updated code.
This is where the "sinkhole" comes into play.
Most EIPs simply hang because the wider Ethereum community does not feel comfortable with its launch or its participation in the main blockchain.
To avoid a difficult fork and repeat the Ethereum Classic incident, Ethereum core developers must ensure that all users connected to the blockchain are on board with scheduled updates and that no one has problems with the updates they have planned.
The process is more difficult and nuanced because in Ethereum there is no way to obtain the consent of the stakeholders through the chain vote. As mentioned earlier, the key developers of Ethereum tend to stay away from those forms of chain voting that could favor those with multiple Ethereum tokens.
Building an intelligent contract that accepts answers with a simple "Yes" or "No" from every public node would not be the logical way to take.
As we explore the jagged paths of off-chain governance, the developers of Ethereum, who have digitized so many daily processes through intelligent contracts, still adhere to the traditional. They choose to follow older and more conventional methods to gather, discuss and elaborate opinions to ensure that stakeholders' concerns are addressed promptly.
There are both advantages and disadvantages in this process.
In off-chain governance, you can use many social cues and discuss issues in a more conventional way. If a stakeholder is not in agreement with you at a meeting, this does not mean that they will continue to oppose you until the next meeting.
Between these two meetings, you may have shown them a quality or two or explained your point in a way that made them turn your side. On the other hand, if they were simply presented with the option to choose your proposal or not during the first meeting, you would never have had that chance.
But even this positive side has its own disadvantages, the biggest drawback of which seems to be the time involved in the process.
Instead of proposing EIP on the blockchain, being considered for a few days and then being called for voting, they are taken into account for days, weeks or even months before their fate is decided by Ethereum's core developer team.
You could think of this process as the conventional process of lobbying and voting in US government agencies.
The legislative proposals are not only presented to be approved from scratch, but we need to do a lot of work behind the scenes to make sure that the proposing party has the right amount of votes to ensure that the proposed bill is passed.
If the right agreement and consent are not made, then the bill could go either way at the time of the vote, and then months of work and efforts will end.
Once again, this makes Ethereum a blockchain network that is more considerate to its users, but nevertheless fails to deliver faster results and to use its own technology.
How can you start with the governance of Ethereum?
If you think you have a new idea that could be presented as an ERC or an EIP, then you can certainly go ahead and make a contribution to GitHub.
However, before doing so, make sure you understand all the requirements for submitting an ERC or EIP to Ethereum. Making sure you adhere to the required policies and guidelines would be a sure way to get your ERC or EIP seriously considered.
Your first step on this journey should be the EIP-1. You can think of this as Adam or Eve of EIP, since it is the first EIP that will be created for Ethereum.
Among other things, EIP-1 contains details on the governance of the Ethereum blockchain. That's where you might be able to look for specific help during the proposal submission and approval process.
Another great resource here would be the book called Mastering Ethereum. Written by Andreas M. Antonopoulos and Gavin Wood, the book describes all aspects of Ethereum and serves as a definitive guide to the world of this revolutionary platform.
Once you check the book and you realize how thorough it is, it would no longer be a surprise to see that it has a very detailed chapter on the governance of Ethereum, in which the book provides an objective but very interesting related topic.
The book also notes that the developers of Ethereum are more inclined to keep the social layer of the governance mechanism intact to ensure that they are not diverting the concerns of any stakeholder or taking their concerns lightly.
According to the book, to the developers of Ethereum, the governance of the blockchain is "more art than science" and would prefer that the processes of governance be hand-picked by hand rather than having them written in code.
This ensures that stakeholders do not lose their fortune or that they find the blockchain an unsafe space for their concerns due to the fact that it is a code-only environment.
You could also go through this helpful presentation of the Ethereum Foundation programmer Jamie Pitts on EIP how to tos. It is useful for understanding what is required to complete the task of sending an EIP or ERC that has the potential to survive the challenge of Ethereum's extensive governance.
After reviewing this material as part of the preparation process, go ahead and submit your EIP to GitHub. In case you want it to be an ERC, simply label it this way while you are making the contribution.
What to expect by participating in the governance of Ethereum
Since anyone can submit a proposal to Ethereum, the off-chain governance model follows a standard operational process for these scenarios. In general, it seems like this:
Courtesy of Ethereum GitHub
However, as the model below the map indicates, it does not always mean that the process will follow this established standard. Because of the nuanced nature of the off-chain governance model, some measures can be added or rejected accordingly.
To get the basics of starting, if your proposed ERC or EIP exceeds the initial phase of the discussions, then it will go towards the next step.
If you did not request a protocol change, you could go ahead and implement it immediately.
However, if there are any technical defects within the proposal, it will be returned to the first step.
You or your employees will need to make changes to the technical functions and continue through the process.
On the other hand, if your ERC or EIP needs a protocol change in the platform after doing it through the initial discussions, it will be discussed in the All Core Devs meeting. From here, it can be launched back if there are technical defects, but if it is technically valid, it will be moved forward to be implemented in the code.
If all interested parties accept the change and use the updated iteration of the code, your ERC or EIP will pass and will be implemented within the Ethereum platform.
However, if not all users implement it, then a hard fork situation will occur.
Ethereum's rigid loyalty to off-chain governance prevents the possibility of potential hard forks.
As in the control of the core development team of Ethereum seems to be for its blockchain, there are some problems that outline the defects of the governance plan.
As you may have noticed, time is nobody's friend when it comes to updating Ethereum's blockchain. Updates that may have required only days in a project like Dash, which uses the vote on blockchain, take months to be approved by Ethereum.
This has prompted the Ethereum community to raise questions about the effectiveness of Ethereum in this rapidly evolving space of blockchain technology.
Another concern is the way some developers check blockchain updates and make decisions themselves.
While community concerns seem to be addressed during these decisions, the way in which these individuals have assumed responsibility for the blockchain without being designated by the public community also inspires questions to decentralize the process.
The governance of Ethereum could be under control, but there is room for improvement
Having said that, Ethereum is not abandoning its position of governance outside the chain. Ethereum wants to avoid the risks of making it go the same way as EOS, where exchanges such as ZB.com, Huobi and Bitfinex regulate the voting and reward system to their advantage.
All in all, governance on Ethereum is fairly detailed even if it is not reflected on the blockchain alone.
With the updates planned in 2019 for Casper's update and the PoS consensus algorithm, Ethereum may be able to resolve the delay and performance problems it faces at the time of extensive use.
However, it should also try to speed up the consensus issues that it faces at the moment.
With blockchain competitors such as NEO, EOS and Tezos now showing quick decision making with more or less success, the time has come for Ethereum to start trying to maximize its efficiency when it comes to governance – whether on-line or off – chain.
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