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Recap
In our previous article ( Review of Ethereum Governance for Ethereum Blockchain Development), we discussed Ethereum governance for blockchain application development.
In this article, we learn about the effect of government regulations on Ethereum blockchain development.
Ethereum governance
Good governance is at the heart of any successful business or organization. A good governance framework defines the decision-making process upfront. It has a clear definition of roles and responsibilities in the decision process, defines what decision influences the common objectives, and specifies how the decision outcome is disseminated and tracked. Typically, in a well-run business entity, IT governance is one of the key components of enterprise governance, which governs IT decision-making and investment directions.
The governance process plays a key role in blockchain and Ethereum development. It has three aspects of the decision and governance process. One is like the IT governance process, that is, to have a process to define the future vision, goals, and objectives of the network. In particular, like Ethereum, it is still at the earlier stage of development and so it requires good governance and a decision process to define the future roadmap, as well as shepherd the community to the future. Another one is operations and economic governance, which governs the economic and monetary policies and decisions that are made on the Ethereum network. The third one is DApp and crypto-token governance, which are typically done by the owners themselves, but depends on the underlying platform governance from the other two.
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In general, there are four types of governance that are applicable to the blockchain network and community, as shown in the following diagram:
On-chain governance refers to the decision process that leverages the network and code for voting or decision-making. Off-chain governance refers to a blockchain improvement or operations decision that’s made outside the network, usually manually. The decision can be made through a centralized decision authority or in a totally de-central approach.
Although it seems a bit nebulous, Ethereum employs a decentralized off-chain approach for Ethereum platform governance. It is quite effective, according to Vitalik. EIPs are the main avenue for anyone to propose the improvement proposal, and through community voting, they will be prioritized and get assigned to someone to implement. There is some undercurrent that may challenge the current governance model and quite a few contentions in certain Ethereum decisions, but largely, the community is aligned when it comes to major development decisions, especially when it comes to scaling solutions.
Next Article
In our next article ( Review of Government Regulations for Ethereum Blockchain Development), we discuss the effect of government regulations on Ethereum blockchain development.
This article is written in collaboration with Brian Wu who is a leading author of “Learn Ethereum: Build your own decentralized applications with Ethereum and smart contracts” book. He has written 7 books on blockchain development.
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