How governance works for the Ethereum blockchain

It’s a common misconception that the creator and/or the developers are in sole control of the blockchains they create, such as Bitcoin or Ethereum. But in reality governance of blockchains involves different parties that act according to whatever incentive they have.

In the case of the Ethereum network, it consists of various participants that all depend on each other in various ways. Ethereum isn’t a single piece of software. Ethereum is a network of different actors, as well as different kinds of software. Almost by definition, all actors and software needs to agree, at some level, around a protocol for the network to work. No one can take protocol decisions by themselves (not even Vitalik Buterin, the founder of Ethereum). The most significant parties in the Ethereum ecosystem are:

  • Developers
  • Users
  • Miners
  • Node operators
  • Ethereum Improvement Proposals

Developers build software that users use to interact with the blockchain. Examples include Geth, Parity, Metamask and Status.im. Developers are free to build their own software that follows the protocol, and won’t build for a protocol they don’t agree with. Developers are also incentivised to build software that users want to use.

Users are people like you and me, who use the blockchain for things like sending value or voting in decentralised organisations. Users are free to use any software that follows the protocol, and won’t use the protocol if they don’t agree with it.

Miners build software that create new blocks in which users’ transactions are hashed and ordered. Examples include ethminer. Miners are free to build their own mining software that follows the protocol, and won’t mine for a protocol they don’t agree with. Miners are also incentivised to mine on chains where there are more users.

Node operators run “full nodes” (e.g. Geth or Parity) that validate miners’ blocks and processes users’ transactions in those blocks, often for some kind of business or service provided to users. Node operators can use any node software that follows the protocol, and won’t operate for a protocol they don’t agree with. Operators are also incentivised to build successful businesses where users are.

Ethereum Improvements Proposals or EIP, are standard proposals that defines what the Ethereum protocol is. These are very similar to RFCs of the traditional Internet. Anyone can submit EIPs, and anyone is free to follow, or not follow, what is being proposed. Once a certain proposal as reached a certain level of consensus the Ethereum Foundation developers will include it as part of the official protocol.

More details

The below presentation by Vlad Zamfir explains really well what blockchain governance is, and how it works in the case of the Ethereum network. It’s well worth watching!

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