Ethereum

Core

Galaxy

<h2 id="key-points">Key Points</h2>
<li>Galaxy Digital’s report indicates that Ethereum’s decentralized governance is primarily driven by off-chain voting.</li>
<li>Various stakeholders, including client teams, validator node operators, the Ethereum Foundation, and DApp developers, play significant roles in the governance process.</li>
Galaxy Digital recently published a report highlighting that the decentralized governance of <a href="https://crypto.ro/en/cryptocurrencies/ethereum/" rel="noopener noreferrer nofollow">Ethereum</a> is predominantly guided by off-chain voting rather than on-chain Ether holder voting.
The report, which was released by Christine Kim, Vice President of Galaxy Digital’s research division, on June 3, identifies several key stakeholders in Ethereum’s governance.
These stakeholders, who are involved in the off-chain processes, are client teams, validator node operators, the Ethereum Foundation (EF), and decentralized application (DApp) developers.
<h2 id="the-role-of-different-stakeholders">The Role of Different Stakeholders</h2>
The report points out that client teams play a crucial role in Ethereum’s decision-making, proposals, discussion, and implementation of changes through Ethereum Improvement Proposals (EIPs).
Client teams are responsible for building and maintaining the software required to run and connect to the Ethereum network.
The report also underscores the role of validator node operators, who possess the power to implement or reject code changes made to the Ethereum network.
They essentially vote by choosing which software version to operate.
While the EF’s direct influence has gradually diminished, it continues to support development efforts on Ethereum as its most notable nonprofit organization.
The report also sheds light on the influence of DApp developers, who shape certain features and upgrades based on user requirements.
As the primary users of Ethereum, DApp developers interact with the Ethereum codebase to deploy smart contract code.
Additionally, the report states that off-chain governance discussions take place across various forums, aiding in the consensus-building among stakeholders.
These discussions occur in several forums, including Ethereum All Core Developers (ACD) calls, ETHMagicians, Ethresear.ch, Discord, and GitHub.
The report further explains Ethereum’s preference for off-chain governance over on-chain voting.
This preference stems from the risk of large Ether holders wielding disproportionate influence.
According to the report, no decisions are voted on by ETH holders through on-chain proposals or decentralized autonomous organizations (DAOs).
The off-chain approach, despite being challenging to audit and objectively evaluate, helps prevent centralization and ensures nuanced decision-making.

Unmasking Ethereum Governance: Insights from Galaxy Report Unveiled

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