Ethereum
Who really controls Ethereum? New research sheds light
In a new report, Galaxy Research’s Christine Kim delves into the complex governance of Ethereum, revealing how the blockchain, which underpins more than 4,000 decentralized applications (dapps) and hosts the largest developer community among blockchain platforms, is governed by a complex but unofficial series of chain-based processes that involve multiple stakeholders. Ethereum, as a pioneer of blockchain technology, follows a unique governance path distinct from Bitcoin, relying on decentralized and 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 direct voting mechanisms built into the blockchain itself,” notes Kim, highlighting the system’s resistance to manipulation. Discussions and decisions take place on various digital forums including GitHub, Ethereum Magicians and developer callswithout the community voting directly on the changes themselves.
At the heart of ETH governance is the Ethereum Improvement Proposal (EIP) system, which facilitates the formal proposal, discussion, and implementation of changes to the protocol. EIPs are divided into three categories: Standards Track EIPs which suggest crucial protocol changes; Meta-EIP aimed at changing governance; and informative EIPs that provide guidelines for improving community practices.
“EIPs are the primary mechanism by which new features and functionality are proposed, discussed, and implemented in the protocol,” Kim asserts, highlighting the process that ensures that only well-reviewed 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, while influential at first, now shares its significant but not unilateral influence with developers, client teams, node operators, and dapp developers. Kim emphasizes: “No party controls the development of the Ethereum protocol, which is a collective effort of the various stakeholders in the Ethereum ecosystem. »
Lead developers and customer teams like Geth or Prysm hold the technical reins, integrating EIP into the protocol and now the client software. Node operators have practical authority over changes, as they choose whether or not to adopt new software versions, essentially deciding whether upgrades are enabled. Meanwhile, dapp developers provide crucial feedback and push for changes that directly affect their apps, representing the front line of users interacting with ETH’s codebase.
The report highlights the consensus-building process using the example of Ethereum’s transition to Proof-of-Stake (PoS) with Fusion. This major upgrade was not just a technical overhaul but a test of ETH’s governance model, requiring broad agreement between different 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,” says Kim.
Going forward, governance is expected to face increasing complexities as the platform evolves and incorporates new technologies. Kim suggests that governance processes will need to adapt to maintain their effectiveness and inclusiveness. She predicts: “Maintaining a decentralized governance model is crucial as ETH continues to evolve and incorporate more complex features and upgrades. »
Kim’s comprehensive analysis concludes that Ethereum’s governance is characterized by its decentralized and community-based approach where no single entity has control. Instead, a dynamic interaction between different stakeholders shapes the evolution of the protocol. This model not only protects the network from centralization, but also encourages an environment conducive to continuous development and innovation.
At press time, ETH was trading at $3,802.
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