'Absolute Essentials of Ethereum' by Paul Dylan-Ennis: An Excerpt

How does on-chain and off-chain governance work in Ethereum?

AccessTimeIconFeb 7, 2024 at 6:49 p.m. UTC
Updated Mar 8, 2024 at 9:11 p.m. UTC
AccessTimeIconFeb 7, 2024 at 6:49 p.m. UTCUpdated Mar 8, 2024 at 9:11 p.m. UTC
AccessTimeIconFeb 7, 2024 at 6:49 p.m. UTCUpdated Mar 8, 2024 at 9:11 p.m. UTC

Blockchain governance refers to the coordination mechanisms that allow blockchain stakeholders to make legitimate decisions. It is traditionally split up into two broad areas: on-chain governance and off-chain governance. In the context of Ethereum, on-chain governance relates to the Ethereum protocol. The protocol roughly encompasses the original white paper by Vitalik Buterin, the more technical yellow paper by Gavin Wood, and the more recent execution layer and the consensus layer specs.

"Absolute Essentials of Ethereum" by Paul Dylan-Ennis was published by Routledge. Dylan-Ennis is a lecturer/assistant professor in the College of Business, University College Dublin.

There are currently efforts to update and standardize everything, such as the Ethereum Execution Layer Specification (EELS) update of the yellow paper, and likely in a few years we’ll see a more formal structure. off-chain governance consists of open source procedures – developer and researcher meetings, GitHub repositories, Ethereum Improvement Proposals (EIPs) – where users can propose changes to the Ethereum protocol and potentially implement them.

Blockchain culture is the social, cultural or political values shared by a blockchain community. Ethereum’s culture is multifaceted and dynamic but builds on a core set of values. The first value is especially important in Ethereum and almost every other blockchain community: decentralization.

Decentralization means authority is spread among all participating members, rather than concentrated. Just slightly below decentralization we find more values important to Ethereans: permissionlessness (no permission required to use Ethereum); censorship resistance (nobody can censor you on Ethereum) and credible neutrality (Ethereum’s operations should be fair to everyone).

Governance and culture are tightly interrelated because governance is supposed to reflect the values of the culture.

Ethereum governance

Satoshi Nakamoto, the inventor of Bitcoin, released Bitcoin as open source software. Open source development means volunteers work collaboratively to make non-proprietary software where the code is freely available for users to inspect and even to copy and build upon. Ethereum adopts this model of open source development wholesale. This model applies to many projects built on Ethereum as well.

Ethereum’s main codebases are hosted on the open source development platform GitHub. The Ethereum GitHub contains various code repositories the community recognises as essential to Ethereum. These are:

  • Official Go implementation of the Ethereum protocol: Familiar to most as the Geth client, the Official Go implementation acted something like a reference client for the pre-Merge Ethereum protocol. (Ethereum, however, pursues a policy of client diversity where multiple client teams work on software clients. Since The Merge, Geth is an execution client — the others are Nethermind, Besu, Erigon, Reth — that must be run with a consensus client such as Lighthouse, Lodestar, Nimbus, Prysm and Teku. The software teams are independent from one another, but collaborate closely when coordinating EIPs.)
  • Ethereum Improvement Proposals (EIPs): EIPs are the governance mechanism for major changes to the Ethereum protocol.
  • Solidity: Solidity is a high-level programming language for writing smart contracts. Smart contracts can be written in other languages, such as Vyper, but Solidity dominates the landscape.
  • Remix: An Integrated Developer Environment (IDE) and compiler for Solidity that is accessible within your browser.
  • Ethereum.org website: This is the Ethereum homepage and consists of extensive and user-friendly information about all facets of Ethereum. It is maintained as an open source effort with a small support staff. It is probably one of the most accessible means for readers to become actively involved in Ethereum open source contribution. Just go to their Discord and ask where they need help.

The open source process for GitHub in general is as follows. This process is broadly used in all the above cases, but expect nuance once you get involved:

  • Issues: users publicly suggest changes, whether bug fixes or improvements. Discussion about the Issues might happen.
  • Pull requests: developers, usually from the project team involved, propose solutions to Issues. Discussion about the Pull Request might happen. If the PR generates interest and broad support, it will pass some checks and then be merged into the next release. Each repository will have people that can merge code, called having commit access. If the PR is controversial, it might cause a rift.

What about when someone proposes a change to the Ethereum protocol rather than a specific software client or the website? This kind of suggestion has its own special process: Ethereum Improvement Proposals (EIPs). EIPs have their own repository on the Ethereum GitHub. EIPs follow a template where the proposer, known as the champion, will provide the rationale and the proposed technical specification.

These changes can relate to various parts of Ethereum. The most well-known are Core EIPs that are upgrades or improvements that require a fork. EIPs are extensively discussed. A subset of EIPs, called Ethereum Request for Comments (ERC), relate to standards for smart contracts and dApps, and at the time of writing there is discussion to separate ERCs from EIPs, rendering ERCs their own category.

A famous Core EIP is EIP-1559 which proposed gas fees be burnt rather than sent to validators. This is a change to the Ethereum protocol itself. It therefore needed to garner support from all quarters. This meant as close to all the stakeholders possible in the Ethereum ecosystem had to back it before it went live in 2021. Remember, Ethereum is politically decentralized to a strong degree so there is no centralized entity that can decide on behalf of everyone else.

(Paul Dylan-Ennis)
(Paul Dylan-Ennis)

Decision-making is spread among many blockchain stakeholders. Blockchain stakeholders are groups with a stake or interest, whether financial or culture, in a blockchain implementation. Ethereum’s stakeholders in no particular order are:

  • Ethereum users: the everyday Ethereum end user. Just your Average Joe and Jane sending USDC or joining a DAO or buying an NFT.
  • Ethereum media: specialist media and influencers such as podcasts or YouTube shows e.g. "The Daily Gwei" or the Bankless podcast.
  • Ethereum builders: the various decentralized applications (dApps) teams that are building on the Ethereum blockchain.
  • Ethereum developers: open source developers and researchers who work on Ethereum client software or the protocol. This also includes protocol support members and coordinators.
  • Ethereum stakers: users who help to secure Ethereum’s blockchain.
  • Ethereum Foundation (EF): a non-profit providing support for conferences (e.g. Devcon), developer meetings, the ethereum.org website and offering grants.

An EIP proposal might not garner any interest, but every so often some will. When this happens, the EIP will most likely be picked up by the Ethereum developers and researchers.

The developers congregate in the Ethereum’s Magician forum and the Ethereum R&D Discord (Research and Development). In these hubs, developers and researchers meet to coordinate and discuss issues, including representatives from the various client software teams. Every week there is a meeting called AllCoreDevs where the most important issues around the Ethereum protocol are discussed. There are several smaller, more niche discussion meetings as well.

Ethereum’s logistics is generally handled by the Ethereum Foundation (EF), the non-profit created at the launch of Ethereum. It has other roles too, such as organizing and hosting Ethereum conferences (e.g. Devcon) and providing grants for Ethereum research (e.g. the Ecosystem Support Program). However, its everyday role is providing several dedicated full-time staff who work on Ethereum, which includes developers and researchers, but also protocol support members.

To be a good citizen in Ethereum is to ... disrupt centralization where you find it

For example, the Ethereum Cat Herders is a collective that helps with logistics, but also cleans up EIPs. The Cat Herders include EF and non-EF staff, but the staff members really keep the engine running. The Protocol Guild, with EF and non-EF members, manages a smart contract that rewards open source developers of Ethereum, but again the EF members are the main drivers. Somewhat amusingly, the logistical role of the Ethereum Foundation is often conflated with centralised control of Ethereum, but I’ve yet to encounter a single instance of the EF dictating to anyone.

There is no exact science to how an EIP garners support. Over time it gains support from developers and researchers and quite often it will be raked over the coals for any potential issues it might cause. EIPs will then attract people to contribute toward any further research, testing or coding required. News about this EIP will begin to filter out to the other stakeholders. Ethereum validators or project teams might express their own support or concerns. Ethereum media and users might start to discuss it among themselves.

An EIP that manages to gain a positive response from the various Ethereum stakeholders – but especially the developers and researchers in the AllCoreDevs call – reaches a rough consensus that the EIP should be implemented. In open source development culture, there is rarely complete consensus, but instead a rough consensus is reached across the many distributed parties. Again, there’s no perfect science here, but usually you can recognise rough consensus by the disappearance of concerns, critiques or controversies. Once accepted, the EIP will usually be included in the next Ethereum upgrade and become part of the general developer and researcher discussion about how to coordinate and integrate the EIP in the various software clients in preparation for the upgrade. EIPs are often bundled together these days.

Governing a blockchain like Ethereum is the responsibility of the community collectively and each stakeholder in the wider community has some influence, albeit sometimes small. The optimal governance state, central to the belief systems behind almost all blockchain communities, is decentralization. The rationale, at least at this abstract level, is to replace centralised governance with decentralized governance.

Centralized institutions, companies, organizations, governments are seen as inherently corrupted or corruptible. However, the desire to implement decentralized alternatives does not always go to plan and centralization tends to reassert itself, even in the most mindful of blockchain communities. The reality of decentralization is more like a dance, where centralised power is disrupted by decentralization, new forms of centralisation appear, renewed efforts at decentralization occur, in acts of re-decentralization.

To be a good citizen in Ethereum is to keep an eye on what you believe might be centralized points of influence and to raise concerns and disrupt centralization where you find it. Generally speaking, Ethereum governance is highly decentralized, but with some light centralization around logistics.

Ethereum culture

Ethereum has no dominant culture and Ethereans can on principle be drawn from any culture, in the spirit of an open permissionless protocol. Despite this, there are recognizably popular subcultures within Ethereum and we can learn a lot about the protocol by looking at who is attracted to it. Since culture is dynamic, some of these subcultures will continue to flourish on Ethereum and others might dissipate.

Cypherpunk: Many of Ethereum’s influential developers and researchers are influenced by cypherpunk ideals. Cypherpunk was one of the foundational subcultures in Bitcoin and it carried over into parts of the Ethereum world. A cypherpunk is committed to open source development and a certain DIY or punk attitude. Cypherpunks believe the best way to solve problems is to create the solution yourself and then disseminate the results freely, even allowing others to copy and build upon them. Cypherpunks usually stress an apolitical position regarding what they build should be used for. In Ethereum’s case, the cypherpunks build the infrastructure and tools, but are hands off about how they are used, taking a neutral stance. Historically, cypherpunk had an explicit emphasis on privacy, but in Ethereum it is not always prioritised, albeit this seems to be changing. A neo-cypherpunk movement called lunarpunk has also emerged to advocate for placing privacy back front and center. You can find cypherpunks on the Ethereum’s Magician forum, the Ethereum R&D Discord or by attending events like ETHDenver.

Regens: Many influential voices within Ethereum are committed to a regen or regenerative approach to building technology. Rooted in Vitalik Buterin’s interest in politics and social science, many regens engage in governance experiments designed to reinvigorate, improve or even replace contemporary institutions. This subculture is characterized by its experimental nature and interest in public goods, engaging in experiments such as Quadratic Funding, Soulbound Tokens (SBT), and retroactive public goods funding. Regens are usually less focused on financial applications and more drawn to the idea of building a new decentralized Web, sometimes called Web3. Regens usually, but not always, tend to hold more progressive forms of politics and are associated with an aesthetic called solarpunk. You can find regens in public goods communities like Gitcoin or Optimism.

Degens: Within Ethereum there exists a contingent of users driven purely by speculation and wealth accumulation at all costs, the degens (degenerates). Degens are financial nihilists who focus on current trends and hype to strike it lucky and escape the rat race of contemporary neoliberal capitalism. Degens will often take extraordinary risks, but in an ironic, almost detached way. Degens usually, but not always, tend to hold more provocative political views and are associated with a more anime-type aesthetic. You can find degens in and around newly launched Decentralized Finance (DeFi) or Non-Fungible Token (NFT) launches.

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Paul J. Dylan-Ennis

Dr. Paul Dylan-Ennis is a lecturer/assistant professor in the College of Business, University College Dublin.