Successful blockchains, like any living system, must not only have good initial design but effective mechanisms for change that resolves emerging issues while abiding by fundamental values. Within the blockchain governance sphere, the problem of building an effective public blockchain governance framework can be understood as either (1) a design problem or (2) an institution building problem.

Within the “governance as a design problem” camp, Fred Ehrsam argues that the instituting and evolving of governance processes can be designed from the outset, with each initial design having a qualitatively different outcome. In the context of public blockchain networks, where the software and state are open-source and forkable, competing coalition groups can easily pursue path-departing forks in which they create a mirror of the current blockchain with their own features edited in (this can be seen in the case of Bitcoin Cash and a multitude of other contentious forks away from the original Bitcoin). Ehrsam argues that the ease in which blockchains can be forked will result in “a Cambrian explosion of economic and governance designs where many approaches will be tried in parallel at hyperspeed” (Ehrsam 2017). However, the ease of “forkability” can prove damaging in the long run, and make the community more fragmented with each exit fork. If the blockchain with the most effective form of governance will result in sustained network effects and become the dominant chain, then the developer community will have strong incentives to experiment with the design of governance frameworks. Ultimately, with effective governance, a blockchain will be able to increase its robustness, and be better at identifying “collective decisions about which features to adopt, or allocate funding to support or expedite development of key functionality” (Zamfir 2017).

Hall and Taylor elaborate on the institutionalist position, arguing: “historical institutionalists define institutions as the formal or informal procedures, routines, norms and conventions embedded in the organizational structure of the polity or political economy” (Hall and Taylor 1996). They expand further, outlining how historical institutionalists have traditionally focused on the power asymmetries embedded within institutions. In other words: “rather than posit scenarios of freely-contracting individuals, for instance, they are more likely to assume a world in which institutions give some groups or interests disproportionate access to the decision-making process; and how some groups lose while others win” (Hall and Taylor 1996). Over time, these power asymmetries grow, solidify, and get reinforced–developing into a path dependent procedure in which the “contextual features of a given situation” are constrained by historical factors.

In the case of Ethereum, core developer Vlad Zamfir thinks that it’s a “mistake to imagine that you can design and institute a governance process, especially for an existing blockchain community with existing processes, and especially without adequate knowledge of the existing governance processes” (Zamfir 2017). As such, despite the varying interest groups (competing forks or developer groups) that may want to design and institute a new or formalized governance process, the current institutional structures in place are shaped by a contextual past–placing “pre-existing constraints on participants’ ability to coordinate to adopt any proposed governance solutions” (Zamfir 2017). Following the bounded rationality approach in which people build upon existing structures, any Ethereum protocol update or proposal will necessarily be constrained by the information, incentives, and knowledge about governance processes (formal or informal) that Ethereum participants have. So when a new governance model is proposed, the participants in the current governance processes will ask themselves “is this a significant improvement over the process we are using now?…Will the other participants in the process think so, too?…What will it take to switch from our current process to this one?, and Is it worth the disruption to existing processes?” (Zamfir 2017).

Ultimately, the proposal of new governance design models may represent various advocacy coalition groups forming around new beliefs, competing with other coalitions to create incremental change that may lead to an altogether new governance design one day. However, such a change will have been path-dependent and incremental, rather than exogenous, sudden, and without regard for the existing blockchain governance process.