Ethereum’s governance model is under scrutiny following a new report by Christine Kim from Galaxy Research. This research reveals that Ethereum’s control structure is decentralized and operates primarily off-chain.
So it seems unlike Bitcoin, Ethereum relies on community-driven processes rather than on-chain governance mechanisms.
Ethereum’s governance is characterized by its decentralized, community-driven approach where no single entity has control. Instead, a dynamic interaction among various stakeholders shapes the protocol’s evolution, the researcher concludes.
At the core of Ethereum’s governance is the Ethereum Improvement Proposal (EIP) system. This system allows for formal proposals, discussions, and implementations of changes to the protocol.
Proposals are divided into Standards Track EIPs, Meta EIPs, and Informational EIPs, ensuring a thorough vetting process.
Key contributors to Ethereum's governance include developers, client teams, node operators, and dapp developers. The Ethereum Foundation, although influential, shares its power with these stakeholders. Core developers and client teams integrate EIPs, while node operators have the final say on adopting updates.
A significant example of Ethereum's governance in action is its transition to Proof-of-Stake (PoS) with The Merge. This upgrade required broad consensus across various stakeholders, showcasing Ethereum’s ability to handle complex changes. The report suggests that Ethereum's decentralized model protects against centralization and fosters innovation.
Looking ahead, maintaining effective governance will be crucial as Ethereum scales and integrates new technologies. Kim concludes that Ethereum’s decentralized, community-driven approach is essential for its continued evolution and resilience.