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Who holds the keys to Ethereum governance?

Galaxy Digital released report shows that Ethereum’s decentralized governance is driven by off-chain voting rather than on-chain votes by Ether (ETH) holders.

Christine Kim, vice president of research at Galaxy Digital, published a report on June 3, revealing multiple stakeholders hold the keys to Ethereum governance.

Discussing the risks of not having direct on-chain voting by ETH holders, Kim said:

“The less Ethereum technology depends on governance for value and sustainability, the better. The more Ethereum can consolidate parts of its codebase, the less vulnerable the network will be to centralization and governance. The risks of Ethereum being governed by off-chain forums and processes are not the same as the risks that exist with on-chain forms of governance.”

According to the report, groups collaborating on off-chain processes include client teams, validator node operators, Ethereum Foundation (EF), and decentralized application (DApp) developers.

Client group and authentication node operator

According to the report, client teams are central to decision-making, proposing, discussing, and implementing changes through the Ethereum Improvement Proposal (EIP).

“Client teams build and maintain the software needed to deploy and connect to the Ethereum network.”

The report also highlights validator node operators as they can “make or reject code changes” to the Ethereum network, voting by choosing which software version to deploy.

Although EF’s direct influence has waned over time, it still supports development efforts on Ethereum as “the earliest and most prominent non-profit organization.”

DApp developers, forums and communities

Kim’s report also revealed that DApp developers influence certain features and upgrades based on user needs.

“DApp developers are the primary users of Ethereum, interacting with the Ethereum codebase to deploy smart contract code.”

According to the report, discussions on off-chain governance are also conducted on forums, facilitating consensus building among stakeholders.

“Governance discussions took place on several forums: with suggestions from Ethereum Core Developers (ACD), ETHMagicians, Ethresear.ch, Discord, and GitHub.”

On the topic of whether he believes Ethereum’s off-chain governance model remains transparent and inclusive for all community members, Kim said:

“There are a number of improvements that could be made to Ethereum’s off-chain governance model, particularly regarding the Ethereum Foundation’s role in the Ethereum ecosystem. However, the forums outlined in the report will be a place where stakeholders can voice their opinions on Ethereum’s development roadmap, providing inclusiveness and transparency.

Off-chain or on-chain?

Discussing which is better, off-chain or on-chain, Kim said:

“Both forms of blockchain governance run the risk of becoming “opaque,” ​​unscalable, and inaccessible to new participants, but with smart contract-based governance solutions, Users will be at increased risk of errors and contract failures.”

The report also highlights the rationale behind Ethereum prioritizing off-chain governance over on-chain voting, due to the risk of large Ether (ETH) holders exerting too much influence.

“No decisions are voted on by ETH holders through on-chain proposals or decentralized autonomous organizations (DAOs). The off-chain approach prevents centralization and maintains nuanced decision-making, although it is difficult to audit and objectively evaluate.”

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Viet Cuong

According to Cointelegtaph

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.
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