Starting from this round of bear market, the embarrassment of Ethereum became more and more obvious. The price of coins has fallen, and technology developers and dApp developers have withdrawn. In addition, it faces the threat of being chased by new public chains such as EoS and Tron.
We can't help but ask: What happened to the governance of Ethereum? Where is its future development direction?
This article was written by senior investor Howard Yuan and published exclusively by Encrypted Valley Editor.
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Why is blockchain governance important?
Blockchain governance has been ignored by the industry. We usually pay more attention to the technical performance of the blockchain, higher TPS processing speed, shorter response time, higher scalability design, and less attention to the governance mechanism.
In fact, if the governance decision is wrong, lack of decentralization, and other technical reasons (such as: can not be extended to large-scale applications), a star public chain is likely to decline.
We have also seen many community disputes caused by chaotic blockchain governance, resulting in forks, user churn or new blockchains.
Blockchain is more than just a distributed ledger technology, but a complete software ecosystem. This system includes foundations, core developers, all nodes, investors, users, miners and many other stakeholders.
If we define the blockchain: the blockchain is an organism that uses distributed ledger technology to carry stakeholders, and is a parallel society that realizes value incentives by issuing native digital assets.
Just as real-life countries or cities have their own governance systems that create, update, and enforce social rules. Blockchain also has its own governance system. A reasonable and effective governance mechanism can guarantee the sustainable development of this organism.
The most successful blockchains are those that best fit the environment, have well-designed governance structures, and evolve.
There are three indispensable links in the basic structure of blockchain governance:
- Foundation (Foundation);
- Full Nodes;
- Core Developer.
These three links are checks and balances, similar to the Western "three powers separation" democratic mechanism. Blockchain governance is the process of balancing the core developers, the entire node, and the foundation.
Block-chain governance structure
The core developer decides the technical roadmap for the blockchain and releases new code. But unless the full node implements these changes, the changes will not take effect.
The full node relies on core developers to build, publish, and improve protocol updates, but if they disagree with the core developer's decision, they can perform hard forks.
Foundations can determine which core developers support and influence the overall direction of the roadmap and protocols, but without the support of core developers and full nodes, it will not be able to achieve its vision.
We have noticed that more and more Token Holders, including miners, private investors or end users (shareholders), are more or less involved in the governance structure.
Token Holders is also an important Stake holder. Token holders may not directly influence the decision-making process of blockchain governance, but they can “vote with their feet” and cause indirect effects. For example, if both the core developer and the full node agree to the blockchain proposal, and most of the token holders do not want to accept the change, then the token holder may collectively sell the token and make the entire blockchain The system is in chaos.
The current situation and problems of the management of Ethereum
Not long ago, at the Deconomy conference held in South Korea, the soul of Ethereum, Vitalik Buterin, talked about the development progress of Ethereum 2.0. However, looking at the entire 2.0 version of the upgrade process, there is no clear timeline, only to be sure that it will take at least several years.
The entire blockchain industry is deeply suspicious of whether Ethereum can really succeed in upgrading.
In the conversation with Nouriel Roubini, the latter is a direct and unrelenting blunt statement: Ethereum 2.0 transformation will eventually fail. Of course, Lubini is not only for Vitalik Buterin, he is almost bearish on BTC and the entire blockchain industry.
We sort out the current situation of Ethereum in accordance with the separation structure of the three powers:
- Core Developers: So far, Ethereum has a total of 250,000 developers, and is the largest and most decentralized blockchain development community. At the same time, Ethereum's core developers are also the most. According to ElectricCapital's statistics, there are 99 active developers who are far ahead of BTC and Cardano or EoS and Tron.
Although the developer team of Ethereum has a large number of people, it faces some big problems: low engineering efficiency and loss of core developers.
The Ethereum developer team is divided into two groups: research team and engineering team. In general, the research team proposes a prototype to solve the specific problem, and uses the programming language to verify; after the verification is passed, the engineering team is directly improved to the client, and finally the implementation is verified.
In the early stages of Ethereum, V God was responsible for the research team, and former CTO Gavin Wood was in charge of the engineering team. Gavin Wood led the Ethereum's prototyping, system development and final test release. The Ethereum's Huangpi book was the main author of the Ethereum, but due to the development concept, Parity (Ethcore) was created after leaving in 2015. Parity once occupied more than 40% of the nodes of the entire network.
Gavin Wood recently focused on the Polkdot cross-chain project.
It is undeniable that the departure of Gavin has made Ethereum's engineering realization ability face great challenges.
At the same time, the inefficiency of the Ethereum developer team is another big problem. The developers of Ethereum's Geth client are globally dispersed, and the implementation of a theory needs to be constantly adjusted, and internal management coordination is very inefficient.
The loss of core developers, in addition to the departure of Gavin Wood, before the Gavin and the early developer of Ethereum Charles Hoskinson.
In 2014, after Charles retired, he created IOHK Cardano with Jeremy Wood, who previously operated Ethereum.
Also in the same year was Joseph Lubin, co-founder of Ethereum, who founded Consensys.
One of the core developers of Ethereum that has recently been lost is Afri Schoedon. He has contributed code to Ethereum since November 2015 and is the coordinator of the hard fork of Constantinople.
Afri's EIP-999 proposal is suspected of being a fake public (Polkdot is expected to become an upgraded version of Ethereum), but in any case, the development veteran left the important loss of the Ethereum ecology.
The aforementioned core developer Lane Rettig also talked about the current problems in the developer community:
“Today, we are facing more and more challenges in non-technical areas. Core developers don’t want to make these decisions because they think they are not capable enough, they are afraid to take legal risks, or they are used to avoiding conflicts, they just like to write Code."
- Full node: The full node is the backbone of the blockchain and is any computing site that runs full blockchain software (such as Bitcoin Core, Geth, etc.). All nodes should contain a complete distributed ledger of the blockchain and routing software running the P2P protocol.
Miner Miner refers to a part of the entire node running professional mining software. But there are also some full nodes that don't run mining software. For the code changes to take effect, the node needs to update the software separately to include the updated code. It can be implemented by soft fork, a backward compatible method; it can also be implemented by hard fork, which is not compatible with the old version of the software.
A fork can be agreed or controversial (or both). Most forks are consistently passed through the network. For example, the SegWit fork in the BTC is ultimately agreed by the entire node.
But there are also some forks that are controversial. For example, Ethereum formed the ETC (Ethereum Classic) after the famous The DAO event in 2016. The controversial fork is designed to oppose core developers and create a new digital asset.
It is worth noting that the number of full nodes in Ethereum is declining. There are still 25,000 Ethereum nodes in 2017, and there are currently only 8338, which is about 20 fewer per day, less than 10,000.
It is worth pointing out that most of the current more than 8,000 nodes are "castrated" full nodes (pruned full-verification nodes. Ethereum officially refers to such nodes as full nodes, and complete storage history The node of the status data is called the archive node – the same as the full node of the BTC.
At present, there are less than 100 file nodes in Ethereum, which is far from the total number of Berry's 9593.
The file nodes of Ethereum and the entire nodes of BTC are the backbones of their respective networks. If the network completely loses them, the security will be greatly reduced. The more such nodes, the stronger the resistance of the network. Obviously, compared to the BTC full-node network, Ethereum's master node network is not robust enough.
- Foundation: The Ethereum Foundation is a non-profit organization that supports the development of Ethereum. It currently holds 645,173.90 ETHs (approximately US$108,000,000) and is under the unified leadership of Ethereum founder Vitalik Buterin.
Although Vitalik Buterin does not have the ability to add code to the core repository or force forks on the network alone, there is a non-negligible influence in the community.
With the departure of the seven founding members of the Ethereum Foundation, Vitalik’s control over the Foundation has gradually become too strong. One of the problems that Ethereum is currently facing is Vitalik’s right to speak.
Although V God is not a dictator, he has taken the initiative to define the ETF's sponsoring organization as a non-profit foundation rather than a company, but his role is still the absolute spiritual leader and technology of the Ethereum community.
Lane Rettig is on the current issue of the Ethereum Foundation:
“The Ethereum Foundation does not dare to make decisions because they are afraid. To be good, it is to worry about favoring one side; to the bad, it is to be afraid to stand or express opinions. The legitimacy of the foundation is also precarious because they both do Not releasing a new ethereum.org can't give developers enough money to pay, or even respond to bonus applications…"
BTC and Ethereum's chain management
Let us sort out the two most blockchain projects in the market, BTC and Ethereum. Both are PoW consensus, and they all use chain governance.
- BTC: Under-chain technology elite governance. In the BTC network, the core developers of Bitcore BTC have a great say on the technical level, while users have the right to vote on the level of use of the new code. The three-tier structure of chain governance can be summarized as: majority proposal -> minority decision -> majority vote.
In the open source technology community, anyone can make a proposal for the protocol of the BTC network. Then, the core developers of BTC will reach a consensus through the Bitcoin Improvement Proposal (BIP) mechanism. If Bitcore core developers agree that an improvement is necessary, then more than 95% of the hash computing power is needed to support the code, and the code improvement will be accepted by the extensive BTC network. Otherwise, miners and users can refuse to execute the new code.
In general, BTC core developers provide code improvement suggestions for BTC network users, and adoption is determined by the overall network computing power.
- Ethereum: The founding authority under the chain. Ethereum and BTC are similar in governance. Similar to BTC, governance must be agreed by the community, and the Ethereum Improvement Proposal (EIP) can become active. However, due to the personal influence of V God, Ethereum's governance effect is slightly higher than BTC. V God's personal appeal can promote the progress of the proposal. For example, in the ETH and ETC hard fork caused by the DAO incident, 85% of the voting users agree V. Only 15% of God’s bifurcation proposals are against.
There is no doubt that Ethereum has a more ambitious vision and ambition than BTC. Ethereum adopts the PoW consensus mechanism. In addition to core developers, master nodes (miners, holders) and foundations, it also includes users. Users mainly refer to smart contract users, using ETH as the Gas in the system.
Compared with the governance structure of BTC, a remarkable feature of Ethereum is that its “Zhongbencong” has not yet retired. Vitalik is implementing Ethereum's “de-V” in its personal rhythm, trying to dilute its influence on the entire community and future technology routes, but the effect is not obvious, especially in this “Everything Autumn”.
Ethereum core developers use EIPs to drive new technology innovations. Last month, the upgrade of Ethereum in Constantinople was a key step from PoW to PoS. After the realization of PoS, the boundary between the miners and the holders in the Ethereum system will become more and more blurred, so that the decentralization degree will be significantly improved compared with the BTC calculation power.
However, after entering 2.0, where will the governance of Ethereum go?
Where is the governance of Ethereum 2.0 going?
Vitalik Buturin mentioned in a speech at the Deconomy conference on April 5 that Ethereum has just released a 2.0 version of the test network and has officially turned to the Proof of Rights (POS) mechanism.
“This approach will consume less energy and cost less. I think it is also safer than POW (Workload Proof Mechanism) in many ways.”
The PoS consensus is quite different from the PoW consensus such as Ethereum and BTC.
Under the PoS (DPoS) consensus mechanism, most of the project governance such as EoS, Tron, and Tezos adopt On-Chain Governance.
Learn from the pioneers who have adopted PoS (DPoS) and hybrid mechanisms for chain governance: DCR and Tezos.
- Decred (DCR): is a public chain that governs by a block creation mechanism that mixes PoW and PoS consensus. DCR has developed three sets of voting mechanisms: First, the blocks dug by PoW will be verified by PoS miners, and then the interests of the holders and miners will be reconciled. For example, when 60% of PoS miners vote against a particular PoW, the block is invalid; the second is the modification of major consensus rules, such as the upgrade of the main network protocol. In addition to the development team, the miners, 75% of the holders must vote to pass; the third is the PLOTEIA proposal system under the chain, which is a public proposal system for anti-censorship and blockchain anchoring, which can be submitted by any user. Relevant project development proposals, voted by all holders.
Obviously, the governance of DCR can involve the largest range of relevant parties. Through governance, DCR can almost never be forked, motivate relevant parties to continuously invest, and the community can achieve true autonomous DAO.
- Tezos (XTZ): Tezos is a blockchain that features governance. In Tezos, in addition to the core developer, anyone can submit changes to the governance structure in the form of code updates, but not immediately. Then, there will be a vote on the first round of the chain, and if it passes, the update will enter the test network. After running smoothly on the test network for a period of time, if there is no objection, a second confirmation vote will be initiated; after passing, the change will be deployed on the primary network. The process of network upgrade is done entirely in the chain with an automated mechanism.
This concept is called "self-correcting books." On Tezos, upgrades (automatic fixes) are done without hard forks. If the code to be updated passes through the continuous voting, the test network is deployed; if the test network passes the continuous voting, the main network is deployed.
In the Tezos system, anyone can commit changes. Most importantly, everyone has an economic incentive to do this. But in order to prevent witch attacks, Tezos stipulates the use of equity, the amount of currency, to determine the threshold for voting rights. In the early days, the Foundation had the veto power. A voting rate of more than 80% is considered a valid vote.
The community rewards newly minted tokens in the form of inflationary funds, which is different from the current BTC and Ethereum dynamics. There, new developers have little incentive to develop agreements, so power is often concentrated among existing developers. And here, everyone has the same ability to make money. Allowing users to coordinate directly in the chain greatly empowers users to maximize their transfer from a more focused group of developers and miners.
Changing the governance mechanism is an urgent task
At present, chain governance represented by DCR and Tezos is the development direction of future blockchain governance. But the chain management is also a double-edged sword.
On the one hand, it helps to ensure that processes are always followed, increasing coordination and fairness. It also makes faster decision making possible.
On the other hand, it is risk, because once the meta system changes, it is difficult to change. Just like anything that's written directly to the code, it can be used faster and easier if it's flawed. Vlad Zamfir, chief architect of the Proof of Stake, believes that “risk is much greater than revenue” and “is extremely risky”.
However, under the background that there are obvious problems in the current Ethereum governance model, it is urgent to make positive changes. A number of PoS (DPoS) blockchains led by EoS and wave fields are gradually emerging, and Ethereum, which once dominated the blockchain, is losing its lead. Not only did EOS and the wave field start to attract more developers, but some startups also turned to currency exchanges represented by Binance. Ethereum is no longer the only option.
There is not much time left for Ethereum! As Lane Rettig screamed:
"Ethereum 2.0 is a distant promised place, unless we have a governance model that can lead us there, otherwise it won't come."
We hope that Ethereum 2.0 can actively embrace change, act quickly, and promote innovation in the governance mechanism to jointly meet the new future.
– END –
Howard Yuan author
Edited by Sonny Sun
Source: Encrypted Valley