Lane Rettig

Ethereum’s Governance isn’t Decentralized

Key Ethereum developers are freaking out

Public blockchains will probably fail due to a lack of decentralization in decision making in governance as well as other technical reasons such as an inability to scale to mass adoption.

A blockchain isn’t decentralized if it still has a few people at the top. That is, the technical and the human elements both require decentralization. In an era of decentralized autonomous organizations (DAOs), the missing link is often how managers and developers are organized. Let’s take Ethereum as an example here.

Ethereum has been faulted for having only a few core developers determining what happens on the network.

While Vitalik Buturin and Joseph Lubin talk a good game, the truth is of course the developers who make key decisions are very limited. This is highly problematic for a company that’s basically the post-child for what decentralization might be. Here’s where the story starts to get serious.

A core dev Lane Rettig said the small group has the final say on what goes into the protocol, a situation that has led to several concerns because emerging issues with the network are non-technical.

Etheruem Governance is Tested in 2019

The recent controversy around Afri Schoedon also points to this. Developers are just people at the end of the day and the bias is usually towards young males.

So this criticism isn’t just from crypto journalists like myself, but from the actual developers working on Etheruem. Following the departure of core developer Afri Schoedon from the open-source project in late February, Etheruem needs a new hard-fork coordinator. Why he actually rage quit is important.

There are some signs something is not quite right here internally in Etheruem’s loose idea that there is no hierarchy.

You can pretend your governance is decentralized, it doesn’t mean it’s actually true.

Lane has essentially suggested Ethereum’s Governance model has failed. He has added that Ethereum has only a few options to choose from, one of which is to give up on governance completely “and be like Bitcoin”. Another viable option proposed by him is to allow Ether holders to participate in decision making concerning the network in a plutocracy instead of a technocracy.

What’s clear is Ethereum has tried hard at decentralized governance, but it’s possible they haven’t achieved it. Realistically the core developers are just another bro-culture. While public blockchains are a cool idea, until Etheruem 2.0 is fully manifest, it’s not even a viable technical solution.

I personally think EOS and TRON are making mockeries of what Etheruem is.

I’ve recently been trolled on Twitter for publicly being critical of Ripple (XRP) not being decentralized. Trolled by Twitter handles with (XRP) in their name. Crypto communities are tribal, at best. Can we expect a bunch of mid or early 20-year olds to truly change the world with how they implement decentralized governance?

You got like what the kids are trying to do, but let’s face it, they are kids and decentralization probably isn’t viable yet.

While stimulating, the tweets of Ethereum’s core developers are all over the block. They are philosophical, reactionary and clearly biased by their own creation. It’s what you expect of developers who believe they are changing the world.

When Afri Schoedon, a long-time Ethereum contributor, abruptly quit working on Etheruem there’s a sense that the hierarchy within Ethereum is under challenge. For the future of decentralized governance, there’s always the question who governs the governors? I think the future of decentralized governance is oversight by AI, I would not trust a 20-something year olds ego and leadership ability no matter how much I like their vision. Human nature is a binary risk. That won’t change.

The Concept of DAOs and Decentralized Governance is Flawed

While DAOs, not for profit foundations and decentralized governance templates are good in theory, you really cannot trust humans to lead without personal power games, ego clashes and true equality in decision making taking place. It’s absurd to think a clique of developers could achieve it, whether they work at Etheruem or somewhere else.

Corporate management is a fundamentally centralized power structure. People like Vitalik or Lubin can’t quit, since they have their entire identities and wealth invested in the project. So long as there are a few core developers , investors or prophets at the top, your organization isn’t decentralized.

Rettig would know the limitations of the current setup. Rettig suggests that Ethereum should stop running a decentralized network and go for a centralized, more transparent and accountable governance system as well as embrace capture by the elite for now because the Ethereum network may be running and blocks still being produced but the project is stuck. There will be times when your attempt at decentralized governance is actually a bottleneck in how your product evolves, and that’s a problem too for Ethereum.

Ethereum is a great experiment, but the concept of the DAO needs more work. Scalable blockchain needs more work. The future of crypto communities needs a product timeline that accounts for reality, contingencies, risks, outcomes, monetization and how to truly be held accountable. Ethereum is and was the post-child of what decentralization might be or become.

In reality effective systems mix and marble centralized and decentralized elements. They are agile with both to deal with reality and obstacles as they arise. The best economies are *mixed* economies. The decentralized elements check the centralized elements, make it difficult for them to act in arbitrary and harmful ways. (see Steve’s Tweet on this).

Ethereum is going through growing pains where a crisis of confidence of core developers is really fully understandable. The stablecoin white walkers are coming, such is life in the crypto winter. Being too open is also not a good thing for Ethereum. Etheruem needs to find a functional balance, to imagine that core developers would be capable of operating in a decentralized manner is a bit ridiculous.

  • Historically, Ethereum project management was a simple affair: a few years ago there were only 3–4 core developers working on the platform at any given time.
  • Early on, all of the stakeholders participating in Ethereum governance were affiliated with the Ethereum Foundation.

Well guess what, things change as your organization evolves. You will hit bottlenecks of product, management and future outlook. Etheruem is a leading project when it comes to smart contract deployment as well as dapps development. EOS and TRON clearly are not decentralized platforms or even remotely at the philosophical sophistication of Ethereum. Yet they pretend to be serious competitors to ETH. However in 2019, the crypto hype ain’t what it used to be.

According to ZYcrypto, there have been several allegations concerning Ethereum’s centralization one of which Weiss Ratings mentioned recently, saying few wallets holding 80% of circulating Ethereum is quite dangerous for the network especially when Ethereum moves to proof-of-stake.

Ethereum today is probably unrecognizable compared to Ethereum at the time of the DAO hard fork. That’s not a good or a bad thing but it does make you wonder at the future viability of decentralized organization as a best practice for public blockchain projects.

You will notice Rettig quickly recanted after coming out and saying that Ethereum’s decentralized governance had failed. He choose to call it a ‘crisis of confidence’. He was likely pressured to do so by some authority or peer, or combination of both. The attempt at Decentralized Governance failing and Etheruem failing are two very different things. Etheruem has to pivot in order to go from surviving to thriving. The privacy stablecoins are coming.