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What Is an Ethereum Improvement Proposal (EIP)?
Key Takeaways
An Ethereum Improvement Proposal (EIP) is a formal document used to suggest new features or changes to the Ethereum network.
EIPs are the primary mechanism for community governance and protocol upgrades in Ethereum’s decentralized ecosystem.
Vitalik Buterin and other core developers review these proposals to guide the protocol's development.
Experienced developers, including founder Vitalik Buterin, review these documents to make sure the network continues to develop safely and effectively.
Introduction
Ethereum is a decentralized network that relies on a global community of developers and stakeholders to make decisions. Unlike centralized software companies, where a board of directors controls decisions and updates, Ethereum uses a collaborative process to implement changes.
The Ethereum Improvement Proposal (EIP) is the standard method for proposing, debating, and implementing these changes.
How EIPs Function in Governance
The EIP process is central to how decisions are made on the decentralized network. While code governs the execution of smart contracts, the evolution of that code requires human judgment and coordination.
In the early days of Ethereum, governance challenges were highlighted by the DAO incident, where a vulnerability led to big losses. The community had to debate what to do. Eventually, they decided to perform a hard fork to fix (revert) the damage. This proved that rules written in code aren't always perfect and that human judgment is necessary in certain situations.
Today, leaders like Vitalik Buterin still help guide these changes by reviewing EIPs and sharing research, but the process is open for the whole community to join in.
Real-World Example: EIP-1559
To understand the impact of an EIP, it is helpful to look at a major standard that changed the network's economics: EIP-1559.
Implemented during the London Hard Fork in 2021, EIP-1559 revamped the gas pricing mechanism. Before this upgrade, users had to guess how much to pay validators, often leading to overpayment or delayed transactions.
EIP-1559 introduced a more predictable formula involving two components:
Base Fee: A minimum amount of gas required for a transaction. Crucially, this fee is "burned" (removed from circulation), which reduces the total supply of Ether over time.
Priority Fee (Tip): An optional extra payment you give directly to validators to get your transaction processed faster.
Since the EIP-1559 proposal, the base fee is calculated automatically based on network congestion, which helps make costs more stable and predictable to users.
The Role of Consensus and Upgrades
EIPs are not just about code; they are about consensus. Proposals often undergo rigorous debate before being accepted.
For example, the transition from Proof of Work (PoW) to Proof of Stake (PoS), known as "The Merge", was the result of years of development and discussion involving technical specifications and validator design. Vitalik Buterin played an active role in these discussions, helping to explain the transition's purpose to the wider audience.
While some proposals result in "soft forks" (backward-compatible changes), others, like the response to the DAO hack or major upgrades, may require "hard forks".
Closing Thoughts
Ethereum Improvement Proposals are the roadmap for Ethereum’s future. They offer a clear, organized way for anyone to suggest how to make the blockchain better. Whether it is adjusting how fees work (like EIP-1559) or completely changing the engine of the network (like The Merge), EIPs are the bridge between human ideas and technical progress.
Further Reading
How Do Gas Fees Work on Ethereum?
What Is the Ethereum Pectra Upgrade?
The Merge Ethereum Upgrade: All You Need To Know
Who Is Vitalik Buterin?
Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.
An Ethereum Improvement Proposal (EIP) is a formal document used to suggest new features or changes to the Ethereum network.
EIPs are the primary mechanism for community governance and protocol upgrades in Ethereum’s decentralized ecosystem.
Vitalik Buterin and other core developers review these proposals to guide the protocol's development.
Experienced developers, including founder Vitalik Buterin, review these documents to make sure the network continues to develop safely and effectively.
Introduction
Ethereum is a decentralized network that relies on a global community of developers and stakeholders to make decisions. Unlike centralized software companies, where a board of directors controls decisions and updates, Ethereum uses a collaborative process to implement changes.
The Ethereum Improvement Proposal (EIP) is the standard method for proposing, debating, and implementing these changes.
How EIPs Function in Governance
The EIP process is central to how decisions are made on the decentralized network. While code governs the execution of smart contracts, the evolution of that code requires human judgment and coordination.
In the early days of Ethereum, governance challenges were highlighted by the DAO incident, where a vulnerability led to big losses. The community had to debate what to do. Eventually, they decided to perform a hard fork to fix (revert) the damage. This proved that rules written in code aren't always perfect and that human judgment is necessary in certain situations.
Today, leaders like Vitalik Buterin still help guide these changes by reviewing EIPs and sharing research, but the process is open for the whole community to join in.
Real-World Example: EIP-1559
To understand the impact of an EIP, it is helpful to look at a major standard that changed the network's economics: EIP-1559.
Implemented during the London Hard Fork in 2021, EIP-1559 revamped the gas pricing mechanism. Before this upgrade, users had to guess how much to pay validators, often leading to overpayment or delayed transactions.
EIP-1559 introduced a more predictable formula involving two components:
Base Fee: A minimum amount of gas required for a transaction. Crucially, this fee is "burned" (removed from circulation), which reduces the total supply of Ether over time.
Priority Fee (Tip): An optional extra payment you give directly to validators to get your transaction processed faster.
Since the EIP-1559 proposal, the base fee is calculated automatically based on network congestion, which helps make costs more stable and predictable to users.
The Role of Consensus and Upgrades
EIPs are not just about code; they are about consensus. Proposals often undergo rigorous debate before being accepted.
For example, the transition from Proof of Work (PoW) to Proof of Stake (PoS), known as "The Merge", was the result of years of development and discussion involving technical specifications and validator design. Vitalik Buterin played an active role in these discussions, helping to explain the transition's purpose to the wider audience.
While some proposals result in "soft forks" (backward-compatible changes), others, like the response to the DAO hack or major upgrades, may require "hard forks".
Closing Thoughts
Ethereum Improvement Proposals are the roadmap for Ethereum’s future. They offer a clear, organized way for anyone to suggest how to make the blockchain better. Whether it is adjusting how fees work (like EIP-1559) or completely changing the engine of the network (like The Merge), EIPs are the bridge between human ideas and technical progress.
Further Reading
How Do Gas Fees Work on Ethereum?
What Is the Ethereum Pectra Upgrade?
The Merge Ethereum Upgrade: All You Need To Know
Who Is Vitalik Buterin?
Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.