The Ethereum Staking Debate

Author: Paul J. Dylan-Ennis; Translator: Block unicorn

The Ethereum community is debating the power and responsibilities of the Ethereum Foundation, with some arguing that the Foundation is acting like a central bank when it proposes changes to the Ethereum token issuance formula.

When a discussion about the Ethereum staking reward issuance curve is not really about the Ethereum staking reward issuance curve, it is actually a discussion about Ethereum governance and Ethereum monetary policy.

A brief summary of curve issuance (and why everyone seems to be upset about it) is as follows: At the current trajectory, it is conceivable that all ETH will eventually be staked, either directly or through re-staking. Currently, almost 27% of all ETH has been staked.

Starting with a post on the Ethereum Research forum in February, Ethereum protocol developers and researchers have begun discussing how best to address this issue, with the key changes centering on a new issuance reward formula that makes staking less attractive after a certain point.

Exciting stuff! However, reactions on social media tend to focus more on the idea that the proposal involves changing Ethereum’s monetary policy than on the technical details. In other words, the crux of the matter is not about issuance, but rather the perception that “core developers” (a vague term in Ethereum), particularly those associated with the Ethereum Foundation, have not achieved the appropriate level of “rough consensus” from the wider stakeholders.

Critics tend to be members of the Ethereum community associated with the “sound money” subculture, who want to establish ETH as sound money (just as people view Bitcoin as sound money). For them, changing the issuance curve is a red flag because it is reminiscent of the practice of central bankers constantly adjusting monetary policy.

In my opinion, the Ethereum ecosystem encompasses a variety of roles and groups such as regular users, node operators, validators/stakers, Ethereum media and podcasters, and dApp developers. In at least two recent media articles, these stakeholders are referred to as the community, and the community is "strongly opposing" or raising objections to the proposal.

The core developers are certainly part of the community, but it is clear that they have more influence on the protocol than other stakeholders. In addition, we are really talking about the various researchers paid by the Ethereum Foundation. Because,

The Ethereum Foundation is one of the few organizations that specifically researches the protocol and pays researchers.

Now there are subtleties to consider here, especially since we live in an era of real conspiracy theories about the Ethereum Foundation, such as the ridiculous "ETHGate" world. As an Ethereum governance researcher, my view is that the Ethereum Foundation does not "control" Ethereum. It is worth mentioning that the Ethereum Foundation is participating in a process called "subtraction" and will gradually fade out. In fact, there are a large number of core developers that are completely independent of the Ethereum Foundation, especially when we take into account autonomous software client teams.

Perhaps it is time to consider community feedback mechanisms.

However, it is clear to me that while the influence of the Foundation is overstated by its critics, it is also underestimated by its defenders. We know that only 10 people are responsible for 68% of all implemented Ethereum Improvement Proposals (EIPs), and if you have been following the development of the Ethereum protocol, you can probably guess who these 10 people are. Hard forks are announced via the Ethereum Foundation blog, and the logistics of all core developer meetings are mostly handled by people associated with the Ethereum Foundation. Therefore, it is not difficult to understand why some people think that the Ethereum Foundation is leading this.

I think this is actually a communication problem. As Ethereum developer Tim Beiko pointed out, most core developers view the Ethereum Magicians League Forum and the Ethereum Research Forum as a place to discuss and debate ongoing research work, but many in the wider community misunderstand it as a place where the final research results are shared and everyone must accept them.

But as Beiko points out, Casper and Ansgar, two of the authors of the Ethereum Foundation, have tried to spread their message in some ways, including an appearance on the Uncommon Core podcast to propose slowing down the issuance of ETH. Unfortunately, people tend to see X as a medium for discussions of Ethereum governance.

Interestingly, in a response to a post by Hasu (an industry OG), Ansgar noted that they could have done better, but he also saw the backlash as a sign of Ethereum's strong decentralization. This is true! The community does have a voice and the ability to dispute research it doesn't like (at least in its current form).

One ​​way to dispel the idea that Ethereum governance is the exclusive domain of the Ethereum Foundation is to observe second-layer networks starting to participate more closely in governance, such as the second-layer RollCall trying to create common standards. Or dApp developers lobbying for support for EIPs (Ethereum Improvement Proposals).

What these stakeholders realize is that Ethereum governance is, in principle, open to anyone. There’s nothing stopping you from writing your own research on the Ethereum Wizards League forum and the Ethereum Research forum. There’s nothing stopping you from supporting your own EIP, or attending all the core devs’ meetings.

Another overlooked angle is the importance of independent observers through professional podcasts. Sassal’s The Daily Gwei and Christine Kim’s The Infinite Jungle both closely follow protocol governance and in my opinion play an important independent advocate role. A perfect recent example is Christine Kim asking the Prysm developers at EthDenver why they don’t focus more on user and developer experience.

Thinking about the larger picture, maybe it’s time to consider some community feedback mechanisms. One idea I’ve floated before is to have an annual Ethereum conference (like at EthCC) where different stakeholders from the wider Ethereum ecosystem can voice concerns about any EIPs. But there’s a general feeling that this could become a centralizing force, so maybe that idea won’t work.

As an alternative, it might be interesting to explore an online feedback mechanism. Perhaps a one month window per year where everyone else can post their concerns or questions about new research directions, hard forks, roadmaps, etc., and the core devs can review them as a sanity check. I think this would solve some of the problems that wouldn't go away otherwise.

Ultimately, without such a feedback mechanism, Ethereum's "social layer" will be limited to an adversarial platform that tends to encourage our worst behaviors.