https://mirror.xyz/omniharmonic.eth/AOZcToqtmJzDa2qQUds_caHy9aH2XfEe36Tf4yIWu30

Evolving Protocol Governance and Public Goods Funding

A Forkable Report on Ethereum Protocol Governance and Public Goods Funding Decentralization and Reform

Editor's Note: For a more personal reflection on Ethereum's pluralistic future, please visit mirror.xyz/omniharmonic.eth.

To fork this report, please visit github.com/omniharmonic/ethereumsfuture.

1. Executive Summary

The Ethereum Foundation (EF) has played an essential role in the development and stewardship of Ethereum, but as the network matures, the need for decentralization of its some of its functions has become more and more apparent. The goal of this report is to define EF’s prime directives—stewarding coordination and resourcing for protocol development and expansion as well as filling existentially necessary funding gaps that the market alone cannot address and are necessary for the healthy development of the network—and to guide a structured transition that refines internal functions, establishes extitutional or horizontal structures for deeper community engagement and feedback, and protocolizes aspects of public goods funding to align with Ethereum’s decentralized ethos.

To accomplish this, EF must streamline its core activities, improve transparency and participation in protocol governance, and adopt a funding model that extends, maximizes and more strategically allocates the Ethereum Foundation's finite treasury, bootstraping a self-organizing ecosystem that no longer needs an Ethereum Foundation. By enhancing participation in protocol development and strategy via structured community engagement and vTaiwan-style public consultation processes like Ethereum Town Halls, restructuring ecosystem funding through an onchain Donor Advised Fund and other onchain grant-making mechanisms like staking yield pools for various public goods categories, and ensuring research aligns with ecosystem and user needs, EF can reboot its public image and establish new forms of protocol and treasury governance that both maintain credible neutrality and more strategically advance the collective aims of the ecosystem.

2. Introduction

Ethereum was founded on principles of decentralization, transparency, and open participation. In the early days of Ethereum's emergence, The Ethereum Foundation was established to support and steward these values during the initial development and growth of the network. Over time, however, its role has evolved, and today it holds considerable influence over the ecosystem, funding a significant portion of the Ethereum’s ecosystem public goods despite the relatively small size of the treasury when compared with L2 and DeFi protocol treasuries.

At present, public sentiment around the Ethereum Foundation is rife with critiques regarding the organization's responsiveness to the broader community's needs and vision for the future of the network. From multiple angles, the ecosystem has begun to reflect a sense that the EF’s focus on internal research rather than external developer needs leads to a misallocation of resources that fails to accelerate Ethereum’s real-world adoption. The EF is inaccessible to many within the Ethereum ecosystem, creating an opaque governance structure that lacks clear accountability and responsive mechanisms for meeting and addressing ecosystem needs. Lack of engagement with ecosystem builders results in EF research being detached from real-world Ethereum use cases. Lastly, many in the ecosystem feel that the EF operates with an exclusionary & elitist culture that discourages participation from external contributors.

As Ethereum continues to grow, it is imperative that the EF evolves towards a reduction of centralization risks, increased community participation, and funding mechanisms aligned with Ethereum’s long-term sustainability. This report proposes a structured transition toward further decentralization and community engagement, taking inspiration from open governance models like the Internet Engineering Task Force (IETF) while introducing innovative funding structures to support public goods and ecosystem development.

3. Defining the Prime Directives of the Ethereum Foundation

This report suggests that the dual core missions of the Ethereum Foundation are to steward coordination and resourcing for protocol development and expansion as well as to fill funding gaps that are existentially necessary for Ethereum's holistic development which cannot be met via market mechanisms.

The Protocol Support team is central to this mission, facilitating the "All Core Devs” and providing a neutral forum to balance incentives and priorities across stakeholder groups.

Currently, Ethereum’s governance and development processes, while transparent, remain inaccessible to most of the community due to the highly technical nature of discussions. Additionally, internal misalignments and competing interests have led to inefficiencies. To address this, we propose:

V-Taiwan-style public consultation: Ethereum Town Halls and Citizen Assemblies can combine both expert perspectives and the needs of developers, users, and communities into a more holisitcally considered and transparently communicated development strategy for the future of the network.

Translation of Technical Discussions: Bi-directional AI-generated summaries to make protocol development understandable for a wider audience, reducing the risk of governance capture and providing technical teams with more input on the sentiment and needs of users.

Adoption of IETF-Inspired Governance: More open working groups that democratize participation in protocol development while preserving technical rigor.

This framework ensures that EF remains focused on its core mandate while making Ethereum governance more accessible, participatory, and resistant to capture.

4. Theoretical and Comparative Framework For Decentralized Protocol Governance

To improve the transparency and responsiveness of Ethereum's protocol development, in response to real community needs, accelerating wider adoption of Ethereum outside of Decentralized Finance applications, further participation and engagement is needed in the protocol development process. Towards those ends, this report draws on the research conducted by Kaliya 'Identity Woman' Young and Day Waterbury as part of a Summer of Protocols grant exploring the protocol governance patterns of the Internet Engineering Task Force. These protocol governance patterns offer instructive lessons for the evolution of Ethereum's own protocol development and could be implemented via participatory governance methods that Kaliya has offered to support in deploying.

4.1 Historical Context of IETF

The Internet Engineering Task Force (IETF) was founded in 1986 to oversee the development of core internet protocols such as TCP/IP, HTTP, and DNS. Unlike traditional standards organizations, the IETF embraced a decentralized, open participation model, allowing engineers and stakeholders from around the world to collaborate on internet standards without a controlling central authority.

Key aspects of the IETF’s history include:

Formation of the RFC System (1969) – The “Request for Comments” (RFC) model was introduced by Steve Crocker, providing an open document format for proposing and revising internet standards.

Separation from the U.S. Government (1992) – Originally overseen by DARPA, the IETF became independent under the Internet Society (ISOC), ensuring neutrality and autonomy.

Role in Web1 Infrastructure – The IETF played a fundamental role in defining early web protocols (e.g., HTTP, SMTP, BGP), ensuring a permissionless, open-source foundation for the modern internet.

The IETF’s success in developing resilient, neutral, and open protocols makes it a valuable governance model for Ethereum’s decentralized future.

4.2 Mechanics of the IETF Governance Process

The IETF operates on open participation, rough consensus, and document-driven decision-making. Its governance structure includes:

Open Working Groups (WG)

Any individual or organization can join and contribute on specific technical issues (e.g., security, transport protocols, cryptography).

Working Group Formation: While anyone can propose a Birds of a Feather (BOF) session to explore a potential working group, there is a rigorous approval process before a WG is officially recognized.

Discussions take place via mailing lists, in-person meetings, and virtual conferences.

Rough Consensus Decision-Making

1. No formal voting — if a proposal has strong opposition, it is refined until consensus is reached.

Request for Comments (RFC) Process

1. Standards are drafted as Internet-Drafts (I-Ds) and, once finalized, an I-D becomes an RFC, serving as a permanent technical standard.

Randomized Nominating Committee (NomCom) for Leadership Selection

The Internet Engineering Steering Group (IESG) is responsible for approving working group decisions.

A NomCom, selected via random sortition, nominates new Area Directors who make up the IESG.

This mechanism prevents governance capture and ensures rotation of leadership roles.

IETF Last Call Participation: The IETF has no formal members; anyone in the world can participate in the IETF last call list and provide feedback.

Human-Centric Governance: The IETF’s success is also attributed to its three major in-person meetings per year, rotating between North America, Europe, and Asia. The human relationships formed at these meetings are a crucial component of IETF’s governance stability.

4.4 IETF Decision-Making & Governance

4.4.1 Hierarchy of Oversight

Working Groups (WGs): The primary units where technical discussions and standard development happen.

Area Directors (ADs): Oversee related WGs and ensure coordination.

Internet Engineering Steering Group (IESG): Approves final drafts before RFC publication.

Internet Architecture Board (IAB): Provides long-term strategic direction and resolves disputes.

RFC Editor & Internet Assigned Numbers Authority (IANA): Maintains the official registry of RFCs and technical standards.

4.4.2 IESG Selection Process

Nomination Process

Members of the community nominate candidates for open positions within the IESG.

The NomCom (Nominating Committee), composed of randomly selected volunteers from the IETF community, reviews and evaluates these nominations.

Community Review & Feedback

1. The NomCom solicits community feedback on nominees to assess their suitability for leadership roles.

Area Director Appointment

1. Once the NomCom selects its preferred candidates, the choices must be approved by the Internet Society (ISOC) Board of Trustees.

Term Limits & Rotation

1. IESG members serve fixed terms, and roles rotate regularly to prevent entrenchment.

The key randomized element is in the selection of the NomCom itself, which is drawn randomly from the list of active IETF participants. This mechanism introduces an element of sortition to ensure broad community representation, but the final selection of leadership remains a deliberative and feedback-driven process.

4.5 Comparing the Ethereum Improvement Proposal (EIP) Process and the IETF’s RFC Process

Ethereum’s governance relies heavily on the Ethereum Improvement Proposal (EIP) process, which serves as the primary mechanism for proposing and implementing changes to the protocol. Similarly, the Internet Engineering Task Force (IETF) maintains the Request for Comments (RFC) process, which has governed the evolution of internet standards for decades. While Ethereum Request for Comment (ERC) process exists for changes that don’t require a hard fork, the IETF and EIP processes differ in key ways that impact governance and decentralization.

4.5.1 Structural Differences

EIP Process:

Primarily driven by Ethereum client teams, core developers, and researchers.

Proposals are reviewed and refined through the All Core Devs (ACD) calls, where consensus among core developers is the primary deciding factor.

Formal governance structure is less defined than IETF’s process, leading to informal power dynamics and potential bottlenecks.

IETF RFC Process:

Uses formalized working groups for different protocol areas.

RFCs progress through defined review stages, ensuring broad community input and technical rigor.

Decision-making follows rough consensus rather than majority voting or developer-driven approval.

4.5.2 Decision-Making Mechanisms

EIP Process:

Lacks a formalized governance structure, relying on developer-led coordination.

Requires client team adoption for implementation, leading to implicit veto power from dominant client teams.

Some proposals get stalled due to misalignment between core developers, researchers, and ecosystem stakeholders.

IETF RFC Process:

Uses structured working groups to refine technical proposals before seeking approval.

Employs a randomized Nominating Committee (NomCom) to select leadership roles, preventing governance capture.

Ensures long-term archival of decisions via the immutable RFC publication process.

4.5.3 Transparency and Accessibility

EIP Process:

Technical discussions are transparent but highly complex, making participation difficult for non-developers.

No structured mechanism exists for aggregating community feedback beyond core developer consensus.

IETF RFC Process:

All discussions, working group notes, and decisions are archived publicly.

AI and automated tools could be leveraged to improve accessibility, making governance more inclusive.

4.6 Applying IETF Principles to the Ethereum Protocol Governance

Ethereum governance shares several similarities with the IETF but lacks the formalized processes needed to ensure neutrality and decentralization. Key areas where the IETF model could benefit Ethereum include:

Decentralizing Ethereum’s Governance Through Working Groups

Establish Ethereum Working Groups (EWGs) for Protocol Development, Security, L2 Coordination, and Public Goods Funding.

Expand open participation with in Working Groups by integrating with public Town Halls and interactive sense-making and decision-making mechanisms.

Restructure EF Treasury Into A Pluralistic Set Of Onchain Allocation Mechanisms For Protocol Support and Public Goods Funding

Shift Ethereum’s funding model from EF grants to protocolized funding pools for public goods, governed by quadratic voting of stakeholders.

Use staking pool rewards and an onchain Donor Advised Funds to fund ongoing research and development.

Improve strategic public goods and research funding allocation through multi-mechanism strategies while maintaining credible neutrality for the EF.

Implementing a Randomized NomCom for a formalized Ethereum Steering Group and Protocol Support Team

Introduce a sortition-based NomCom to oversee Protocol Support Team and Ethereum Steering Groupappointments.

Ethereum Steering Group makes final decisions in EIP adoption

Area Directors candidates are nominated by the NomCom and voted on by participants with elected Area Directors overseeing related Working Groups and composing the Ethereum Steering Group

Protocol Support Team facilitates All Core Devs Calls

Prevent governance capture by rotating leadership every 1-2 years.

Enhancing Transparency and Civic Participation augmented by v-Taiwan-style public consultation and AI-Assisted Sensemaking

Deploy AI tools to summarize governance discussions, making Ethereum’s decision-making more accessible to non-technical participants.

Host Ethereum town halls, citizen assemblies, or public consultation processes to engage the broader ecosystem in overarching strategic alignment.

Aggregate sentiment from research forums and social media to provide structured feedback on protocol evolution and ecosystem needs.

5. Progressive Protocolization: A Strategic Subtraction Approach

Ethereum’s continued decentralization requires a shift from centralized institutional control towards protocolized and community-governed mechanisms. This transition should be structured to ensure stability while maximizing stakeholder engagement and transparency.

5.1 Key Strategies for Protocolization

Refining Core Coordination Functions

The Protocol Support team remains central to Ethereum’s development, but it must evolve to include better sensemaking mechanisms (AI-assisted synthesis of governance discussions) and broader participation from stakeholders (v-Taiwan-style public consultation) that is both more formal and more open.

Development decisions should be more accessible, reducing technical barriers through improved documentation and AI-generated summaries.

Creating Decentralized Equivalents of Centralized Teams

Teams involved in ecosystem expansion (e.g., Devcon, Developer Growth) should operate as independent entities with their own funding models.

The EF also could establish parallel decentralized (horizontal) structures for some teams that fall outside of its core mandates.

Participatory Grant-making

Instead of only providing discretionary EF-controlled funding, on-chain public goods funding and onchain Donor Advised Funds should be implemented as complimentary structures to augment treasury fund allocation to research and public goods initiatives.

A staking DAO model (similar to Octant v2) would allow some aspects of funding to be community-drivenwhile ensuring sustainability through staking rewards.

This model extends EF’s financial runway while expanding centralized discretion to include decentralized participation in public goods funding.

EF could delegate its own staking shares to key community leaders, balancing power dynamics and ensuring a broader voice in funding allocations.

Other mechanisms like viaPrize or Endaoment could offer more centrally controlled treasuries to fill gaps while still ensuring transparency and community participation.

Enhancing Governance through Working Groups

Taking inspiration from IETF, Ethereum should form independent, specialized working groups for research, execution, and security.

These groups should be open to public participation and work through a consensus-driven approach.

6. Horizontal and Vertical Restructuring of EF Teams

This section explores how the EF could embrace horizontal and vertical restructuring, akin to the Taiwanese government's response to the Sunflower Revolution which established decentralized equivalents to centralized ministries.

By streamlining EF’s responsibilities and structure with a combination of centralized and decentralized decision making and resource allocation, we can ensure that resources are allocated efficiently, governance remains neutral, and unnecessary centralization risks are minimized.

6.1 Core to the EF Mandate (Should Remain Within EF's Centralized Control)

These teams are essential to Ethereum’s protocol stability, security, and long-term resilience. They contribute directly to Ethereum’s core technical development, coordination, and cryptographic research.

Protocol Support Team: Facilitates All Core Devs calls, manages upgrade coordination, and acts as a neutral mediator between stakeholders, ensuring a balanced decision-making process in protocol evolution.

Consensus R&D Team: Conducts in-depth research on Ethereum’s proof-of-stake model, cryptoeconomic security, and scaling solutions. Their work informs key network upgrades and optimizations.

Cryptography Research Team: Investigates and develops cryptographic primitives that enhance Ethereum’s security, privacy, and resilience. Contributions include zero-knowledge proof research and secure protocol upgrades.

Robust Incentives Group (RIG): Analyzes cryptoeconomic mechanisms, game theory applications, and validator incentive structures to ensure the network remains economically secure.

PandaOps: Provides DevOps infrastructure for Ethereum upgrades, testnets, and operational security, ensuring smooth network transitions. Their expertise is critical for Ethereum’s operational stability.

Applied Research Group (ARG): Bridges theoretical and applied research, working on key areas such as MEV, validator incentives, and execution layer efficiency. Their contributions directly impact Ethereum’s roadmap and technical improvements.

Ecodev Coordinators: Acts as an internal project management team and conduit to the ecosystem. Decentralized working groups and self-organized governance mechanisms could replace this role, reducing EF’s internal overhead.

6.2 Candidates for Decentralization With Paths To Self-Sustaining Revenue (Independent but Aligned with Ethereum’s Goals)

These teams contribute significantly to Ethereum’s ecosystem but do not need to be directly controlled by the EF. Instead, they could operate independently while still receiving ecosystem-wide support through decentralized funding mechanisms.

Geth Team: As Ethereum’s most widely used execution client, Geth could function independently like other clients (e.g., Nethermind, Erigon). This would diversify client governance while ensuring long-term sustainability.

Devcon Team: Organizing global Ethereum events is important, but not core to protocol development. Devcon has a clear path to either profit or being self-sustaining and could be managed by a DAO or non-profit structure that provides the same support to the developer community without relying on EF funding.

Ethereum.org: While Ethereum.org is a key educational resource, its maintenance does not require EF oversight and also has several clear paths to generate revenue. It could be managed by an independent community-run foundation or DAO, providing community-centered resources as a public good while generating revenue through advertising, courses, or paid directory listings.

Snake Charmers: Maintains Python-based Ethereum tooling (e.g., web3.py). This is valuable for developers but could transition to independent funding via ecosystem grants, productizing, or providing consulting services.

6.3 Candidates for Hybrid Decentralized and Centrally Coordinated Decision Making

These teams provide valuable services but could benefit from being split into decentralized (horizontal) and centralized (vertical) ministries or departments. Decentralizing some aspects of their functions would allow for other actors within the ecosystem to participate in funding the public goods that they benefit from while preserving some aspects of centralized decision making.

Developer Growth Team: While developer education is critical, funding and educational resources could be managed via a decentralized grants model. Note: Since initial drafting of this report, the Developer Growth Team has successfully spun out of the EF into Geodework.

Next Billion Team: These initiatives should be funded externally through ecosystem-driven philanthropy or DAOs.

STEEL: Provides execution layer specification and testing. This function is important but could be community-managed to prevent EF from centralizing test processes.

Ethereum Funding Initiative: EFI fills funding gaps in Ethereum’s public goods ecosystem by supporting strategic, underfunded, or time-sensitive projects. It prioritizes emerging domains, unfunded areas, and urgent needs while reducing dependence on EF. EFI provides flexible support to high-potential initiatives, bridging short-term gaps and fostering sustainability.

ESP (Ecosystem Support Program): EF’s role in allocating grants is highly centralized. Funding decisions could transition to a hybrid of decentralized public goods funding models for some aspects of public goods funding (community initiatives) while retaining centralized control over specific domains (research initiatives).

7. Protocolization Roadmap

A structured, multi-phase approach ensures a smooth transition:

7.1 Phase 1: Transparency & Modularization (0-6 Months)

Objective: Collaborate with the EF to further map EF’s internal structures, funding allocations, and dependencies while designing horizontal or decentralized complimentary structures.

Publish Transition Reports: Release detailed reports on development of phased deployment of horizontal or decentralized structures to provide full visibility into the transition of financial and operational structures.

Modularize EF Functions: Clearly define the core responsibilities that should remain centrally controlled within EF and identify functions that can be expanded into horizontal complimentary structures.

Establish Open Governance Discussions: Create structured forums where stakeholders can discuss and provide input on EF’s transition, ensuring community participation from the outset.

Develop a Transition Support Program: Provide logistical, legal, and financial support to teams preparing to operate independently, ensuring a smooth transition without disruptions.

7.2 Phase 2: Progressive Decentralization (6-18 Months)

Objective: Reduce EF’s centralized control over funding and governance by implementing decentralized funding and decision-making mechanisms.

Transition EF Grants to Hybrid of Decentralized and Centralized Funding: Establish protocolized funding models such as quadratic funding, staking-backed DAOs, and retroactive public goods funding to compliment direct EF grant allocations.

Formalize New Protocol Governance: By collaboratively writing a constitution for Ethereum protocol governance, new collective decision-making and sense-making mechanisms can be gradually introduced by following a protocolization roadmap and developing new modular governance functions.

Diversify Public Goods Funding Models: Implement a pluralistic funding approach, where multiple funding mechanisms (e.g., Endaoment, Gitcoin, Octant, L2-native DAOs) support Ethereum’s ecosystem needs.

Formalize Independent Governance Bodies: Establish Ethereum Working Groups (EWGs) modeled after the IETF, each focused on different aspects of protocol development, security, and research.

Expand the NomCom-Like Selection Process: Implement a randomized Nominating Committee (NomCom) mechanism to select key governance roles, ensuring broader community representation and preventing entrenched power structures.

Pilot Staking-Based Treasury Management: Begin shifting a portion of EF’s treasury management to community-governed staking DAOs, where staking rewards are used to fund development initiatives transparently without spending down the principle.

Encourage Client Independence: Provide support for Ethereum client teams (e.g., Geth, Nethermind, Erigon) to function as fully independent entities rather than relying on EF funding and coordination.

7.3 Phase 3: Horizontal Structures Implemented (18-36 Months)

Objective: Finalize the transition to a hybrid of self-sustaining, decentralized governance model with deep relationships to their centralized equivalents, ensuring not all key functions must operate with EF’s direct oversight.

Ensure Decentralized Governance Frameworks are Fully Operational: Confirm that independent working groups, NomCom-based governance, and community funding mechanisms are effectively managing Ethereum’s core development and research priorities.

Monitor and Iterate on Decentralized Models: Conduct periodic evaluations to refine decentralized governance processes, ensuring long-term adaptability and resilience.

8. Conclusion

Ethereum’s long-term sustainability requires reducing reliance on centralized institutions. By refining EF’s prime directives, establishing horizontal versions of some of the EF's current functions, and implementing protocolized funding mechanisms, Ethereum can achieve a more transparent, community-driven, and decentralized governance structure.

The EF should evolve into a neutral coordination body for protocol development, ensuring research, execution, and governance remain aligned with Ethereum’s core principles. By leveraging decentralized funding models and transparent protocol governance, Ethereum can remain a thriving, self-sustaining ecosystem for generations to come.

Adapting IETF-inspired governance, Ethereum can improve neutrality, transparency, and decentralization while maintaining the technical rigor needed for protocol evolution. Key recommendations include:

Establish Open Ethereum Working Groups (EWGs) to decentralize protocol governance.

Introduce a Randomized NomCom for rotating leadership selection.

Expand public goods funding to include a Staking DAO model for sustainable ecosystem development.

Implement v-Taiwan-stayle public consultations to enhance accessibility and participation.

These reforms would future-proof Ethereum’s governance, ensuring that no single entity—whether EF, corporate actors, or large token holders—can unilaterally dictate Ethereum’s evolution, securing its role as a foundational layer of global blockchain infrastructure.

12. References

Ethereum Foundation Report, 2024 – Annual public report listing teams and budgets.

Ethereum Improvement Proposal (EIP) Repository – Documentation of Ethereum’s formal proposal process.

All Core Devs Meeting Notes – Transcripts and summaries of Ethereum’s protocol decision-making discussions.

Exploring the Remarkable Regenerative Patterns and Practices of the Internet Engineering Task Force (IETF) By Kaliya “Identity Woman” Young & Day Davis Waterbury – Summer of Protocols funded research report.

Internet Society (ISOC) Documentation – Provides insights into IETF’s funding model and long-term governance.

MEV Research by Flashbots – Important for understanding the economic incentives within Ethereum’s governance.

Subscribe to Benjamin Life

Receive the latest updates directly to your inbox.

Mint this entry as an NFT to add it to your collection.

Verification

This entry has been permanently stored onchain and signed by its creator.

Arweave Transactionm7UTvb0X07UEnjy…S4Eues2_gYpe7bUAuthor Address0x7d03C5c37f77Fd0…15CA108C84E8f3B

Content Digest

AOZcToqtmJzDa2q…XfEe36Tf4yIWu30