Galaxy Digital has published a report revealing that Ethereum’s decentralized governance relies on off-chain voting rather than on-chain voting by ETH holders. The report, released by Christine Kim, the vice president of Galaxy Digital’s research team, highlights the various stakeholders involved in Ethereum’s governance. Kim expressed concerns about the absence of direct on-chain voting by ETH holders.
The report identifies client teams, validator node operators, the Ethereum Foundation (EF), and decentralized application (DApp) developers as the groups collaborating on the off-chain processes. Client teams play a central role in decision-making, proposals, discussions, and implementation of changes through Ethereum Improvement Proposals. Validator node operators have the authority to implement or reject code changes, effectively voting by selecting the software version to run. Although the EF’s influence has diminished over time, it continues to support Ethereum’s development as the earliest and most prominent nonprofit organization.
The report also highlights the influence of DApp developers in shaping certain features and upgrades based on user needs. Off-chain governance discussions take place across forums to facilitate stakeholder consensus-building. When asked about the transparency and inclusivity of Ethereum’s off-chain governance model, Kim stated that it remains a topic of discussion.
Regarding the choice between off-chain and on-chain governance, Kim expressed her views, stating that both have their drawbacks. The report emphasizes Ethereum’s preference for off-chain governance due to the risk of large ETH holders exerting excessive influence. The off-chain approach aims to prevent centralization and maintain nuanced decision-making, even though it may be challenging to audit and evaluate objectively.
In summary, Galaxy Digital’s report sheds light on Ethereum’s decentralized governance, revealing the key players involved in decision-making processes. It highlights the importance of off-chain voting and the challenges associated with maintaining transparency and inclusivity within the Ethereum community.