Thank you for coming to this conversation. As Kartik mentioned, I'm going to talk about how to track Ethereum as an insider. I'm going to tell you my trade secrets of how I do what I do. And for those who do n't know me, a little bit about my background to explain why I'm qualified to tell you about tell you about how to track Ethereum like an insider. I have been following the development and management of Ethereum for the past eight years.
I was one of the first to start regularly covering Ethereum developer calls, ACD calls, and now I independently run the Ethereum development newsletter and the Bitcoin development newsletter. I also host a podcast on Bitcoin and Ethereum development, and run a small research and consulting firm to help businesses building on Ethereum and Bitcoin. Another thing I did was Another thing I did was launch something called ACD and BTC tools. And that's the series I'm actually going to talk about today. I gave up on this series.
And I'll explain a little bit why I did that later in this conversation. But the framework I use to build the ACD and BTC toolkit is really relevant to all the work I do today. So let me tell you a little bit about this framework, specifically for the ACD toolkit. The framework and my foundation for understanding Ethereum core development and management comes from how I answer these three questions. First: How does Ethereum governance work?
Second: who are the key players involved? Last but not least: where and when do they meet to discuss and resolve issues related to Ethereum? All my insights about Ethereum are based on how I answer these questions. And the way I answered these questions has actually changed over the years as the Ethereum protocol has evolved, and also as the governance and development of Ethereum has evolved. So let's start by teaching you all how I answer these three questions about Ethereum.
Starting with the first: how does Ethereum governance work? is like an onion. It has many layers. And the first one is pretty easy to understand. It is quite easy to disassemble.
There are formal processes defined by EIPs, these documents, some of which can be updated, especially those related to governance, but there are other EIPs that are intended to be static. Hmm, certain EIPs, like EIP1, define the EIP process, the process of proposing changes, changes to the Ethereum protocol code. There are other EIPs, such as EIP7723, that define different labels that can be given to these EIPs to identify what stage of the management process this EIP is at. So you may have heard on X or some of these ACDs that these labels like CFI that these labels like CFI , PFI , SFI , DFI , um, all those "I's , PFI , SFI , DFI , um, all those "I's " actually mean terms like " terms like " rejected for inclusion", " inclusion", " planned for inclusion", " inclusion", " considered for inclusion in update". And this document tries to clearly define when an EIP is considered for inclusion in an update and how that differs from, say, an EIP scheduled for inclusion in an update.
Hmm, these are formal processes. You can read about them. You can ask AI to summarize them. It's not that hard to understand what Ethereum's formal governance processes are. The more complex and important part important part is the informal processes.
These are the norms that govern the governance of Ethereum, which are not defined in any document. This is something you only really notice when you track Ethereum updates in real time or the EIP lifecycle in real time. The more you do this, the more you start to notice forces influencing Ethereum decision-making that no one has ever clearly identified, but they definitely exist. So, a few examples of this are how voting and decision-making happen, especially when it's a very controversial issue. You will see that on ACD calls, usually when there is a disputed decision when there is a disputed decision , each customer team gets one vote.
During the call, the ACD moderator says, “Okay, Rhett, how is your voice?” Basu, what is your voice like? "H, what's your voice?" And it does n't really matter whether the client's team may have 40% the client's team may have 40% market share or less than 1% market share. Their votes count equally.
And another interesting norm that you'll notice if you really track the updates in real time is that it's not often enough to have a majority of those votes in support of a decision. You need some kind of supermajority some kind of supermajority . And the more controversial the decision, the more this supermajority threshold varies . Um, for controversial decisions, you need a slightly higher supermajority to get that decision passed than for other non-controversial decisions. And even for truly uncontroversial decisions, you don't need, perhaps, not even a simple majority, not even a supermajority.
Um, so these are the trends you might notice. They are not entirely black and white. Um, and they are not formalized in any process, but they are very important for understanding Ethereum governance. Therefore, it is important to know both formal and informal processes. Another part of Ethereum governance that I think is also very important to understand when you're following Ethereum as an insider is that these processes change more often than you might think.
Hmm, it's really important to regularly review Ethereum governance because, um, in the last two updates, there have been completely new formal processes for determining Ethereum's development. For example, the headliner process is something that was only implemented after the Fusaka update. Um, which I believe was actually just the latest Ethereum update. Um, and often you'll find that developers create a formal process, like the Ethereum protocol update process , and in the process of implementing that formal process, they realize that we don't actually like that formal process. There are various policies there that we cannot adhere to.
So let's change that. Let's update this. Um, and so it's really important to know that yes, Ethereum governance is like an onion, but it's also growing and changing. Um, and it 's important to update regularly, um. So, this is the first part.
The second part is knowing who is who knowing who is who . What I really want to emphasize on this slide is that it is not enough to just know who the stakeholders are in the development and governance of Ethereum as a category. Often you'll hear even in the understanding of governance of other protocols that this theoretical understanding that the balance of power is made up of validators or miners, and then you have developers, and then you have end users, and you have users, and you have , uh, client teams, and they're all supposed to have different motivations and different reasons for being involved in development and governance. But if you look a little deeper not at the stakeholder category , but at who this person is involved in making governance decisions, involved in decision-making, uh, what company they work for, and how that company gets funded gets funded , you start to get a little more accurate picture of what's really driving the development and governance of Ethereum. And a really good example of this is the idea of client teams.
Often you think of client teams as the people who actually develop Ethereum. They are on the front lines, and they are an independent group of developers who just really love Ethereum and are gathering feedback from the entire community on what they should do. What are the best code changes for Ethereum to implement at this time? But if you look a little deeper into who is funding the client teams, you can see that some of them are actually funded by second- level protocols. Some of the client teams are themselves validator node operators.
They also help secure Ethereum. Some client teams are funded by venture capitalists. And I don't know if many in this room know this, but most of the client teams for Ethereum were partially involved and funded by the Ethereum Foundation. And that should tell everyone in this room a lot about why the Ethereum Foundation plays such a key and arguably leadership role in coordinating the development and governance of Ethereum. Of course, the foundation recently announced that they were downsizing and that they were going to, you know, have a somewhat narrower focus.
Hmm, but it also opens up the question that since the Ethereum Foundation is no longer the one managing the funding of client diversity, it opens up an arena for questions and doubts about what will happen when client development is funded from more diverse sources. Hmm, and is there a funding source funding source that will become dominant again, perhaps not the Fund, and how does that affect governance and development? So these are questions you would only ask if you dig a little deeper than the theoretical categorical understanding of who plays a role in governance and really start participating in the calls. Hmm, track and update in real time, know and do a little research on who's who on the calls. Do a little research on the company, this person, where this company is based, and how it is financed.
So, this is the second part and, finally, the third pillar of this structure–it is being in the room where decisions are made. Hmm, and all these pillars can be seen as synergies. So, if you track an EIP throughout its lifecycle, you will naturally look for places where that EIP is discussed. And during this conversation, you will naturally hear the voices of people in these conversations and think: who is this person? Why are they in the room?
What is their motivation? So you don't have to think about it consistently. They are all very synergistic to understand. If you know who is who, it will help you better understand management understand management . If you know more about management, it will naturally help you understand a little better where management takes place.
I highlight these three ACD challenges because they are among the most important for decision-making regarding Ethereum. They accurately inform you of the decisions being made for the next immediate Ethereum update, and these ACD calls. Similar to what I mentioned about the development of Ethereum governance, this is another really great example of how decision-making forums are also evolving quite rapidly. When I first started covering Ethereum, all the decisions and asynchronous coordination happened on Gitterter. This is happening now in Discord.
Back then, developers only met once every two weeks to agree and decide on certain, ahem, changes. But when the merge happened and Ethereum became twice as complex, the developers started meeting weekly meeting weekly . They added another call and said, " call and said, " Okay, we need to coordinate every week coordinate every week ." And then, over the next few years after the merger, the developers got a little more ambitious, saying, we want to continue to change Ethereum quite significantly, and we want to accelerate that. We want to do two updates per year.
So then they added another call, and now the developers meet twice, ahem, a week to make sure they're trying to meet their development goals. Hmm, but in addition to these calls, there are other, um, various meetings that are held to try to work on initiatives that are long-term, beyond the next immediate update. So there are some calls that are happening around the Lean roadmap. There are some calls that are happening around quantum security, and I think, yes, Lean and quantum, they are a little bit intertwined in a way. There are also some calls for JSON RPC standardization, which is not necessarily a consensus-breaking feature, but it is very important for developers to improve the UX of the software they create.
And these rooms, these decision-making platforms, are the most accurate way to understand what is a priority in the Ethereum development roadmap. I argue that this is even more accurate than a straw map. This is more accurate than all the discussions and conversations that are happening on X. This is more accurate than This is more accurate than any marketing you will get from you will get from any Ethereum company. If you listen to these calls and see what the developers are actually working on and implementing , it will give you the most up-to-date information on what is actually a priority on the Ethereum development roadmap.
So very important things. People, places, and process are the foundation for a good understanding of Ethereum and tracking Ethereum as an insider. That's why I created the ACD toolkit. I have written three posts that comprehensively answer all of these questions. I have incorporated all my knowledge from the past eight years into these three publications.
I updated them every week. Hmm, I also used them every week to generate ideas that I posted in my Ethereum newsletters. I also applied this framework to Bitcoin. I started, um, covering Bitcoin core development about a year ago, and I used this framework to create, um, versions of the same documents, um, covering Bitcoin core governance Bitcoin core governance , um, its people, and its meeting space. I updated them every week, um, made them as complete as possible, kept adding to them.
But, as I mentioned at the beginning of the conversation, I gave up on ACD and BTC tools earlier this year. Hmm, and it wasn't because I thought the framework was imperfect. Hmm, the two main reasons I gave up on it were that , firstly, the environment wasn't that ideal. Hmm, these were written posts that I had to manually update, and they got longer and longer over time longer and longer over time . And with such dense information, it was not easy for my readers to know when updates or new changes were made to this post.
And I was inspired by other inspired by other websites and tools tracking Ethereum development, such as forecast, to consider repackaging this information into more automated, interactive dashboards, which I hadn't had time to really delve into yet, but that was exactly the direction exactly the direction I was headed. Hmm I was headed. Hmm , which brings me to the second point of why I condemned them. Hmm, I'm one person with a few newsletters, a podcast, and a little consulting work on the side. Uh work on the side.
Uh , and most of my clients, and, uh, most of my readers actually wanted practical information practical information . They weren't really interested in how sausage was made , so to speak. They weren't really interested in all the details of how Ethereum development works. Hmm, and they were much more willing to hear from me about the latest news, such as the Clarity Act or why the price of ETH dropped or why the price of ETH dropped , etc. Hmm, that's why I started switching my time and focusing a little more on generating more information information .
Hmm, although all of these conclusions that I've shared with you today are based on the basic structure of how I answer these questions. And again , as I mentioned at the beginning, the way I answer these questions is evolving. And as the way I answer these questions evolves, one of the things I want to emphasize is that this framework has been extremely helpful to me in understanding the changes in Ethereum's value proposition, as well as in considering how Ethereum differs from other blockchains and from traditional finance. If you can track the development of a particular protocol from a more internal perspective, you get a very clear idea of the values that are driving it, or the forces that influence the value of that blockchain. Hmm, and so I want to end this conversation by taking a small step back.
And for those of you in this room who are either building a protocol or using it, to highlight and reach out to you, at least to ask you to consider using the framework for at least one protocol and see what answers you find and how that impacts your understanding of the value of that protocol, because it will shed some light on the complex issue, the time and place where we are with cryptocurrency. It is clear that cryptocurrency is growing significantly in institutional acceptance and value. But as this is happening, I think it happening, I think it raises a lot of questions about what the real value of these protocols is. And it's quite clear that while many of us may have started in this industry or initially thought when we came into this industry that these decentralized protocols would lead to greater permissionlessness and, ahem, trustless neutrality in the financial services that we interact with. It is quite clear that many protocols built on Ethereum, built on Bitcoin, are not really decentralized for these purposes.
They are indeed more decentralized with the aim of providing a bit more operational stability and uptime, as some operators are located in different jurisdictions and geographic regions. And I think we've also seen a kind of decentralization theater, trying to align that with industry values of decentralization, certain protocols rely on federations and multi-IGs federations and multi-IGs , and say, "My federation has six members, so it's more decentralized than yours, which has five," or "This is a three-party multi-signature, which is more decentralized than a two-party multi-signature," which, yeah, I mean, you could say technically that's great, that it's a little more decentralized, but it's not quite the end and purpose of making this protocol more reliably neutral, permissionless, or censorship-resistant. Especially if such coordination comes from a central source or central founder, which begs the question: “ begs the question: “ Okay, so what is the real value or end of these decentralized technologies?” And when you take that into account, you can really think about other goals like transparency. Um, you might think about whether blockchain is significantly more verifiable or accountable in terms of the financial activity that occurs on that chain compared to other traditional sources.
But these are questions that, I promise you, you will be able to find a clearer answer to if you start tracking the development and management of these chains, since these are still such new and modern technologies. Um, and I'm just pointing out that tracking the development of a public blockchain has never been easier or more important. I hope this structure can help you guys help you guys . I think there are also a lot of artificial intelligence resources. Um, and especially given the amount of institutional adoption and value that we see in this area.
Um, I think we need a lot more people who are insiders on this protocol and sharing what they know. So if you want to get started with Bitcoin or Ethereum, these tools, as I mentioned in my talk today, are available on my Substack. Um, and if you want to dive deeper into some of these topics, I'm hosting a happy hour tomorrow, um, which you can learn more about on my Substack. Thank you.
Automatic transcript — names and jargon may be misspelled.
