Ethereum Governance and Backward Compatibility Decisions

Backward compatibility is non-negotiable. The core social contract of Ethereum is that deployed code remains executable forever. This prevents breaking changes that would invalidate billions in locked value, from Uniswap v2 pools to MakerDAO's vaults, but it also ossifies design flaws.

Governance becomes risk management. Upgrades like EIP-1559 or the Merge required years of consensus-building because a single bug risks the entire network's immutable ledger. This contrasts with Solana's coordinated restart model or Cosmos's app-chain sovereignty, where failures are contained.

The EVM is a fossil. The original Ethereum Virtual Machine design, with its 256-bit words and gas model, is inefficient for modern ZK-proof generation. Layer 2s like Arbitrum and zkSync must build complex, expensive compilers to translate this legacy architecture instead of designing optimal VMs from scratch.

Evidence: The Shanghai Upgrade. Unlocking staked ETH required a hard fork that coordinated dozens of client teams and delayed other critical improvements. The process demonstrated that protocol governance is now primarily about safely navigating accumulated technical debt.

Backward compatibility is a social contract. Ethereum's core promise to never break existing applications forces security decisions into the political arena of governance forums like Ethereum Magicians and ACD calls.

The EVM is a liability. Maintaining the original Ethereum Virtual Machine opcodes and state structure preserves bugs and inefficiencies, creating a permanent attack surface that tools like Slither and MythX must constantly patrol.

Governance decides security. Critical fixes, like those for reentrancy or gas griefing, require social consensus to implement, creating a lag that protocols like Aave and Compound must hedge against with their own circuit breakers.

Evidence: The Berlin and London hard forks introduced EIP-2929 and EIP-1559, which were security and economic upgrades that risked breaking obscure dApp logic, demonstrating how core improvements are inherently political.

Verge enables stateless clients by moving to Verkle trees, allowing nodes to validate blocks without storing the full state. This reduces hardware requirements for consensus participants, but it is a client-side optimization, not a protocol-level solution. The global state database continues its unbounded growth, a cost externalized to full nodes and infrastructure providers.

State bloat is a subsidy problem. Applications like Uniswap and Lido accrue value by writing permanent data to the chain, but they do not pay the full cost of storing that data forever. This creates a tragedy of the commons where protocol success directly increases the network's archival burden, a cost borne by a shrinking set of node operators.

Backwards compatibility is the constraint. Solutions like state expiry or EIP-4444 (execution-layer history expiry) require breaking changes that risk fracturing the ecosystem. The governance challenge is imposing a new, sustainable cost model on high-throughput L2s like Arbitrum and Base, whose activity is the primary driver of L1 state growth, without destroying backward compatibility for existing applications.

Evidence: Ethereum's state size grows by ~50 GB/year. Without intervention, running a full archive node becomes prohibitively expensive, centralizing infrastructure around a few providers like Infura and Alchemy. The Verge makes this problem more urgent by solving the adjacent execution scaling issue.

Backward compatibility is non-negotiable. Ethereum's governance, from core devs to application layer stakeholders, treats breaking changes as an existential risk. This ensures that every contract deployed since 2015 remains executable, creating an unassailable legacy codebase moat.

Developer inertia drives standardization. The EVM's first-mover advantage created a massive talent pool and tooling ecosystem (Hardhat, Foundry). Competing VMs like SVM or Move must offer 10x improvements to justify the switching cost, which most projects cannot afford.

Capital follows the path of least resistance. Major protocols like Uniswap and Aave deploy first on Ethereum L1, then on EVM-compatible L2s (Arbitrum, Optimism). This creates a capital flywheel where liquidity aggregates on EVM chains, reinforcing the standard.

Evidence: Over 90% of all DeFi TVL is on EVM or EVM-equivalent chains. Non-EVM ecosystems like Solana or Aptos must build custom bridges and liquidity bootstraps, a significant execution hurdle that entrenches the EVM's dominance.

The Purge (Verkle, Statelessness) is inevitable. The current hexary Patricia trie is a bottleneck for node performance and decentralization. Stateless clients and Verkle trees are not optional upgrades; they are prerequisites for scaling validator count and enabling single-slot finality. The purge removes historical baggage.

The Perpetuate (EVM Object Format, EOF) is strategic. Backward compatibility is Ethereum's moat. The EVM Object Format (EOF) upgrades the EVM without breaking existing contracts, a lesson learned from the DAO fork. This preserves the $50B+ DeFi ecosystem built on protocols like Uniswap and Aave.

The conflict is about state, not consensus. Governance debates center on historical data bloat versus developer inertia. Proposals like EIP-4444 (execution layer history expiry) force a choice: prune data or demand perpetual storage from clients like Nethermind and Geth.

Evidence: The L2 Litmus Test. Rollups like Arbitrum and Optimism are the primary scaling vector. Their success depends on a lean, verifiable base layer. A bloated L1 makes L2 fraud proofs and validity proofs exponentially more expensive to compute, undermining the entire scaling thesis.