#Crypto 360
The Ethereum blockchain network is built upon a long series of improvements. One of the key features of this process is an Ethereum Improvement Proposal (EIP).
Key Takeaways
• An Ethereum Improvement Proposal (EIP) is a proposal that presents suggestions for improvement in the network.
• Each stakeholder on the Ethereum blockchain can propose an improvement to the network through an EIP.
• Once approved by the majority, an EIP is accepted, and the improvement is executed on the Ethereum network.
The way Ethereum (ETH) has grown by leaps and bounds over the years; it owes a great deal to the execution of several crucial improvements to the network. In fact, the Ethereum blockchain is built upon a long series of improvements. One of the key features of this process is an Ethereum Improvement Proposal (EIP).
As Ethereum is a decentralised network, each stakeholder can propose an improvement to the network through an EIP. Once approved by the majority, the proposal is accepted, and the improvement is executed on the network. Let’s understand the concept in detail.
In simple words, a EIP is a proposal that presents improvement suggestions for the Ethereum network. This way, anyone with ether holdings can contribute to enhancing the network. Let’s take an example of our homes.
There are homes where every decision is taken by the parents where the family member with a job has an (unsaid) veto on every matter. But there are homes where every decision regarding everything, whether it is the fabric of curtains or the colour of wall paints, is taken after consulting every member of the family — even children.
If we compare blockchain networks to families, Ethereum is the latter kind of family. Every stakeholder is like a member of the Ethereum family who can propose improvements to the network through an EIP. All the stakeholders then vet the proposal and share their thoughts on the network forum.
Ethereum is a decentralised network, and an EIP is a true example of a truly decentralised or even democratic exercise. Only after an EIP is approved by a majority is it implemented. If approved by a majority, the network implements the proposal and executes the improvements. Otherwise, it gets rejected.
An EIP can propose:
• Alterations to the Ethereum protocol
• Modifications on smart contracts
• Specific function updates
• Network infrastructure updates.
These are among the most common EIPs but there is a gamut of improvements that an EIP can propose.
An EIP is essentially a proposal document that is drafted in technical language. It provides information on a possible improvement that the Ethereum network can execute to enhance its productivity.
EIPs can be classified into these main categories:
Standard Track EIPs propose improvements to the main Ethereum protocol. These EIPs affect most or all Ethereum implementations, such as those relating to the network protocol, changes in block or transaction validity rules and interoperability upgrades.
The main types of Standard Track EIPs are:
• Core EIPs propose improvements for the core model of Ethereum, such as its consensus fork.
• Networking EIPs propose improvements related to the Light Ethereum Subprotocol.
• Interface EIPs propose improvements to clients’ Application Programming Interface (API)/Remote Procedure Call (RPC) specifications.
• ERCs propose improvements to application-level standards such as contract standards, token standards, name registries, library or package formats, and wallet formats. Popular token standards such as ERC-20 or ERC-721 got introduced through ERCs.
• Meta EIPs propose improvements to Ethereum’s procedures, guidelines, decision-making processes, and tools used in development. Informational EIPs propose improvements to distribute knowledge kits with no actual modification suggested for the Ethereum network.
These are the following components of an EIP:
• Preamble contains the EIP number, title, description, metadata, and author details.
• Abstract is the technical summary of the EIP but in simple words so that anyone can read it and quickly grasp its meaning.
• Motivation is required for that EIP that wants to change the Ethereum protocol, detailing why the current protocol is lacking in quality and why an improvement is required.
• Specification describes the syntax and semantics of any new feature being proposed.
• Rationale describes what lies behind the decision to put forward the EIP and list down any objections or concerns raised during the discussion.
• Backwards Compatibility describe different incompatibilities and their consequences and then discuss how the new improvements aim to address these concerns.
• Test Cases are mandatory for Core EIPs that concern consensus changes.
• Reference Implementation mentions an example to refer to while understanding or implementing a specification.
• Security Considerations are mandatory for all EIPs so that the development team can gauge well in advance all potential threats and risks to the protocol arising out of an EIP. This section should also address what measures should be taken to address these security risks.
• Copyright Waiver is also an important component of an EIP as it should be in the public domain, given the fact that all ETH holders are stakeholders in the development of the Ethereum network.
Let’s understand the complete process behind the execution of an EIP:
• First, a member presents a proposal with complete details about the main suggested changes and the potential goals to be reached through these changes.
• Next, an EIP author and an EIP editor come together and write a draft in technical language. It is at this stage that the EIP is recorded on the EIP repository.
• Then, the EIP is shared among the Ethereum community members through platforms such as network forums, social media etc.
• All the members are welcome to review this draft and suggest any changes to the EIP.
• The community reaches a broad consensus on the EIP after discussing different opinions and comments on the proposal.
• Once the approved changes are incorporated in the EIP proposal, the draft reaches its final stage.
• As per the suggestions recorded in the EIP, the technical team executes the proposed improvements on the Ethereum network.
• As and when more suggestions are added to an EIP, they are vetted and executed if approved.
We have already talked about how Ethereum is where it is today because of several crucial EIPs that have been executed on the network over the years. Let’s have a quick look at some historic and notable EIPs:
• ERC-20: It paved the way for the implementation of the Ethereum Request for Comment-20 (ERC-20) token standard. Beginning November 2019, builders active on the Ethereum blockchain could create their own customised, interoperable ERC-20 tokens.
• EIP-721: It led to the emergence of EIP-721 token standard which is a kind of non-fungible token (NFT). Previously, creators could only mint fungible tokens on Ethereum. Once finalised in June 2018, the EIP-721 made it possible for Ethereum validators to verify all the transactions of NFTs, digital art, gaming, metaverse, and tokenised real-world assets (RWAs).
• EIP-3675: It involved the transition of the Ethereum network from the proof-of-work (PoW) consensus mechanism to the proof-of-stake (PoS) mechanism to address the environmental concerns raised due to crypto mining. The monumental event took place in July 2022 and came to be known as the Merge.
• EIP-1559: A part of the London hard fork, EIP-1559 was implemented in August 2021 and changed the way the Ethereum network determined and processed gas fees. It introduced a new gas fee structure to combat the volatility of the fees on the blockchain.
An EIP is necessary for every change to take place on the Ethereum blockchain network. It is through EIPs that the network caters to the requirements of its diverse user base. EIPs are important for the consistent development and growth of the Ethereum blockchain. Every upgrade or modification on the network is a series of EIPs that all the Ethereum stakeholders must agree upon.
Ethereum is built to support a diverse array of decentralised applications (dApps), not any specific kind of application. The way EIPs are executed, it puts an emphasis on improving the network while keeping in mind the principles and functions of its diverse user base. EIPs bring together a large community for a collective goal of transforming the Ethereum network for good. This method eliminates any chance of a centralised approach to decision making, governance, and operation.
EIP is the primary method of proposing new additions or modifications to the Ethereum network at a collective level. It offers an opportunity to every stakeholder on the Ethereum network to propose a modification which they think is necessary for the growth of the network. Similarly, every participant has the right to accept, challenge, or add a rejoinder to the said proposal. You can find the complete history of proposed, rejected and approved proposals for the network’s upgrades on the Ethereum platform.
EIPs are also a repository of all the steps undertaken in the development of each improvement on the Ethereum network. EIPs are maintained as text files in the network’s repository. So, you can look at the history of modifications on the Ethereum network. All the improvements, with what stage they are in, are listed on the EIP repository.
An EIP is a proposal that presents improvement suggestions for the Ethereum network.
EIPs can be categorised into these main categories:
• Standard Track EIPs propose improvements on the main Ethereum protocol. It can be further categorised into four types:
• Core EIPs propose improvements for the core model of Ethereum.
• Networking EIPs propose improvements related to the Light Ethereum Subprotocol.
• Interface EIPs propose improvements to clients’ API/RPC specifications.
• ERCs propose improvements to application-level standards such as contract standards, token standards.
• Meta EIPs propose improvements to Ethereum’s procedures, guidelines etc.
• Informational EIPs relate to knowledge kits.
The following steps are involved in an EIP:
• Proposal writer, with the help of an editor, submits the EIP draft.
• The EIP then gets listed on the website for review.
• Suggestions to the proposal are added and vetted.
• The final EIP draft is then up for final review.
• If it is alright, it gets accepted (core EIP) or finalised (non-core EIP).
• Else, the EIP gets denied.
• Ethereum client developers then take over and implement the EIP on the network.
Given the fact that Ethereum is a decentralised blockchain, each ETH holder can propose an improvement to the network through an EIP. Once approved by the majority, that EIP is accepted, and the proposal is executed on the Ethereum network.
The main purpose of an EIP is proposing improvements on the Ethereum network, such as:
• Alterations to the Ethereum protocol
• Modifications on smart contracts
• Specific function updates
• Network infrastructure updates
A. It was EIP-3675 that led to the transition of the Ethereum blockchain from the PoW consensus mechanism to the PoS mechanism. The monumental event came to be known as the Merge.
EIP-1559, implemented in August 2021, stabilised the gas fees on the Ethereum network.
An EIP is crucial for every modification to take place on the Ethereum network. It is through EIPs that the network caters to the requirements of its diverse user base.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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