Claim: Ethereum's governance has failed


#1

Lane Rettig, an leading member of the Ethereum Foundation, argues that Ethereum governance has failed and that the challenges that the project faces today are increasingly non-technical. Moreover, he argues that neither the core devs nor the Ethereum Foundation want the burden of governing these decisions:

Core devs don’t want to make these decisions because they feel unqualified, fear legal liability, are conflict avoidant, and prefer just to write code.

EF will not make these decisions for fear of taking sides. EF has also lost legitimacy for failing to deliver a new http://ethereum.org , for failing to pay its developers, for failing to reply to grant applications, etc.

He then goes on to propose the following 3 options for how to solve the governance issue:

  1. No governance

Give up on governance entirely, and be like Bitcoin. Hard decisions will not get made, the protocol will not evolve, progress will slow, and other projects will eat Ethereum’s lunch.

  1. Plutocracy

Replace technocracy with plutocracy. Ether holders would be all too happy to take control of decision making. (Democracy is not even on the table as long as we don’t have formalized, unique identity.)

  1. Tyranny

Double down on the tyranny of structurelessness that we’re in today. Give up on technocracy, embrace capture by the elites, the well-connected, the already-powerful.

  1. Give up decentralized governance

Admit that decentralized governance just does not work, give up on Ethereum, and find something better to work on.

  1. Keep working towards decentralized governance

Admit that decentralized governance does not work yet, but that we might someday figure it out. Fall back on centralized governance for the time being. Introduce transparency, accountability, the best tools we have for clean governance. Try our best to avoid capture.

He argues that options 1, 2, 3, and 4 essentially mean Ethereum is a failed project. And that if option 5 is all we can do right now, then perhaps it means that there is no point to even trying because if the solution to decentralized governance was obvious, we should have figured it out by now.

There is a lot to unpack here, so let’s use this thread to write down arguments for why we agree or disagree with Lane’s claim about Ethereum’s governance being on the brink of failure.


#2

I agree withe claim that Ethereum’s governance is failing.

However, I disagree with the assumption that Lane is making that if we can’t figure out decentralized governance, the project should be considered as “failed”. This assumes that a centralized governance is not a good form of governance. I fundamentally disagree with this assumption. More context below:

I’ve been warning the Ethereum community about this for almost a year now. It all started with the massive Parity bug in 2017 which caused $280M of Ether to be locked up in wallets. The bug was catastrophic and subsequently led to a long and contentious debate about whether Ethereum should Hard Fork or not.

At the time, I was super passionate about Ethereum’s success and ended up spending a lot of time researching this event, the underlying causes, the pros and cons of a hard-fork, and my recommended best path forward. I presented my research live last May at an Ethereum conference, where I concluded that the only way for Ethereum to succeed long term is for the community to figure out:

  1. What are our shared social norms?
  2. What are our shared political norms?

You can see my full presentation here.

I think the community is coming around to the fact that you can’t expect to govern a protocol which doesn’t have a shared set of social and political values. For example, Afri recently resigned from the Ethereum community because of the toxicity of the community and concluded that:

As I noted in the presentation, Governance is the

“processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions.

Therefore, without shared social and political norms, we can’t expect people to agree on what needs to be done.

I’m going to argue that there is Option 6: Figure out what the community stands for. If there is a unified vision for what purpose Ethereum serves, then the community can govern themselves based on this unified vision.

Open communities form around shared norms. Without those, you don’t have a community.

And communities don’t form norms by accident. They must be intentionally defined and followed. They usually come from a leader or set of leaders. When you go full leader-less before these norms are defined, you end up with a bunch of people who are lost and stuck.

I love how this fellow phrased it:


#3

Things to discuss:

  1. How is Ethereum currently governed?

  2. What exactly is ProgPoW? Why is there so much contention around it?

  3. Do you think that structured governance is possible in a system where users can fork at any time?

  4. Why do you believe we need better signaling tools? What’s the current state of affairs for how signals are accumulated?


#4

What are signaling tools? Are they metrics that can signal the performance of Ethereum development on different areas?

Perhaps signal tools can give more legitimate reference ground for certain decisions to be made regarding Ethereum governance. Because it seems that the current governing system is an off-chain decentralized approach, and this may not be the most efficient method to make decisions and align talent resources to solve problems. (As Lane expressed in Twitter)

This may partly relate to that Vitalik was making an effort to step back a bit, and hoping that the open-source community will organically coordinate and sort out problems on its own. However, it becomes ineffective as a classic off-chain problem, because Ethereum already exists of wide stakeholders and diverse interest groups in the ecosystem. Likely, potential conflicted groups (e.g. DApps, technical solution projects, exchanges, investors, etc.) will differ preferences in upgrade decisions and ETH development priorities.

Because different groups have vested interest within the ethereum project, any seemingly too centralized decision-making instances from Core Devs will further deviate the intended nature of Ethereum. This human-interest issue further discourages Core Devs to make bold calls because any decision will piss off someone, and if not worst, being accused of making advantage for oneself after putting the hard work. This could create human emotional disincentive to make bold calls and resultantly decrease efficiency.

Of course, what said above is extrapolative but possible.

The fundamental goal of Ethereum (as stated on website) is to “build unstoppable applications”. This broad definition allows different people of worldviews, incentive, behavior to join the community, which can make coordination and collaboration harder. A good thing however is, Ethereum doesn’t seem to face major dispute on its fundamental goal, unlike bitcoin having the contention of store of value vs. digital currency.

I feel that the world is moving even more “technocrat capitalism” under the blockchain governance narrative. If exchanges, funds, validators, developers have more voting + lobbying power and knowledge to shape how decisions are made, there will be inherent bias that will (likely and hopefully) benefit the overall ecosystem but also self-interest. Another way of looking at this is that the increasingly digital world is a meritocracy serving for technocrats and capitalists since it rewards hard work + tech know-how + coordination + persuasion + capital.


#5

All excellent points. Thank you.


#6

Ethereum’s governance model today seems to resemble what Vitalik called “multi-factorial consensus” where different mechanisms and groups are polled, including:

  • Consensus among core development teams (i.e., All Core Devs call, Eth Implementers 2.0, Ewasm community call, Plasma Implemeters)
  • Ethereum improvement proposal (EIP)
  • Twitter Poll
  • Carbon Vote (Coin Vote)
  • Miner Vote
  • “The RoadMap”
  • User votes*

*I don’t think an anti-sybil polling system exists, and there’s been calls for better ways to gauge community sentiment.

(source: here, here)

Three questions:

  1. Does Lane feel that “multi-factorial consensus” accurately describes Ethereum’s current governance approach?

  2. Why is there resistance to ‘formalizing’ a model (notwithstanding the challenge of formally defining something like multi-factorial consensus)?

  3. Can he elaborate on the term “capture” ?