A recent report by Galaxy Digital highlights that Ethereum’s decentralized governance relies on off-chain voting rather than on-chain voting by Ether (ETH) holders. Christine Kim, the vice president of Galaxy Digital’s research team, unveiled the report on June 3, shedding light on the various stakeholders who play a crucial role in Ethereum’s governance.
In an interview with Cointelegraph, Kim expressed concerns about the potential risks associated with the absence of direct on-chain voting by ETH holders. The report indicates that key players involved in the off-chain decision-making processes include client teams, validator node operators, the Ethereum Foundation (EF), and decentralized application (DApp) developers.
Client teams play a central role in decision-making, proposing, discussing, and implementing changes through Ethereum Improvement Proposals. The report also underscores the significance of validator node operators who have the authority to approve or reject code changes on the Ethereum network by selecting which software version to run.
Despite the diminishing direct influence of the EF over time, it continues to support development efforts on Ethereum as one of the earliest and most prominent nonprofit organizations in the space.
DApp developers also hold sway over specific features and upgrades based on user requirements. Off-chain governance discussions take place across forums to foster 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 debate within the community.
Regarding the comparison between off-chain and on-chain governance, Kim explained that the preference for off-chain voting over on-chain voting in Ethereum is driven by concerns over the potential influence of large Ether holders. The off-chain approach is seen as a safeguard against centralization, ensuring nuanced decision-making even though it may be challenging to audit and objectively evaluate.
As the discussion surrounding Ethereum’s governance model continues, the report highlights the complexities and considerations involved in maintaining a decentralized ecosystem that prioritizes fairness and participation among all community members.