Ethereum Improvement Proposals (EIPs) are key mechanisms for suggesting and implementing changes to the Ethereum network. EIPs enable developers and community members to propose new features, enhancements, or optimizations that improve Ethereum’s functionality and efficiency. This guide explores all the key aspects of EIPs and how they are implemented.
KEY TAKEAWAYS
➤ EIPs allow Ethereum community members to propose and implement network changes through a structured review process.
➤ The EIP review process involves developers and community members to ensure transparent and decentralized decision-making.
➤ Upcoming upgrades like the Prague-Electra will introduce new EIPs to further optimize Ethereum’s performance.
A brief intro on EIPs
EIPs provide a structured method for proposing changes to the Ethereum blockchain.
➤ EIPs can be submitted by any member of the community and cover a variety of topics such as technical improvements, protocol changes, and new token standards like the widely-used ERC-20.
The importance of EIPs became evident with landmark upgrades like EIP-1559, which revamped Ethereum’s fee structure by introducing a base fee mechanism.
Similarly, EIP-4844 (proto-danksharding) in the Dencun upgrade brought significant enhancements to Ethereum’s scalability. It did so by introducing temporary data storage methods that reduce gas costs and improve transaction throughput on layer-2 rollups.
What is the history behind Ethereum EIPs?
In 2015, a group of developers created the Ethereum Improvement Proposal repository on GitHub, a platform for software development. The EIPs took inspiration from the Bitcoin Improvement Proposals, which is why there are similarities between their writing and review processes.
A group of core developers like Vitalik Buterin and Gavin Wood initially oversaw it. Over the years, the process has expanded to include more contributors and independent developers.
Initially, EIPs focused on core protocol updates, such as the Byzantium and Constantinople upgrades. Over time, they evolved to include ERCs (Ethereum Requests for Comment) like the ERC-20 and ERC-721 standards, which enabled the creation of fungible and non-fungible tokens, respectively.
This evolution has allowed EIPs to cover a wide range of topics, from consensus mechanisms to smart contract functionality.
The anatomy of Ethereum EIPs
➤ Each EIP is a formal document that follows a structured format similar to research papers. This attribute makes them comprehensible for community members to review and provide feedback on.
A proposal consists of documents, put forward by Ethereum community members, proposing improvements to the cryptocurrency and smart contracts. A team of editors reviews these EIPs and makes decisions on which to take forward to a potential upgrade.
An Ethereum EIP, much like a research paper, contains a detailed description of a proposed change or addition to the Ethereum blockchain. It includes an abstract, motivation (the underlying reasoning), and technical specifications. In addition, each EIP should outline its rationale, backward compatibility, security considerations, and test cases.
EIPs are broadly categorized into:
- Core EIPs: Fundamental changes affecting the Ethereum protocol.
- ERCs (Ethereum Requests for Comment): Standards for application-level changes, such as token standards.
- Networking and Interface EIPs: Proposals focused on network upgrades and API improvements.
Implementation of EIPs
EIPs follow a multi-stage process before going live in the Ethereum network:
- The process starts with draft Submission. Any community member can draft an EIP and submit it on GitHub.
- Then comes the review and discussion phase. Community members and developers provide feedback and discuss the EIP’s merits.
- Next, a final opportunity for any revisions before the EIP is either accepted or rejected.
- Once accepted, the EIP will be included in the next scheduled upgrade.
➤ For instance, the London Hardfork introduced EIP-1559 to adjust gas fee mechanisms. Similarly, the Dencun upgrade implemented proto-danksharding to optimize data handling for rollups
Who decides on EIPs?
A group of editors from the Ethereum Foundation and independent developers manages the EIP review process. Key figures like Tim Beiko and Micah Zoltu evaluate each proposal based on technical feasibility and long-term network goals.
This decentralized approach ensures that EIPs are reviewed from multiple perspectives, promoting transparency and community participation.
Final decisions depend on the consensus among the editors and community members. This ensures that only well-reviewed and beneficial EIPs are accepted to ensure safety of the network from potentially harmful changes.
How EIPs impact ETH price
Not only did EIPs transform the network’s technical capabilities but they have also shown a notable influence on Ether’s market price.
➤ A recent study by academics at the University of Texas at Austin and the University of Basel revealed an interesting pattern: in the weeks leading up to final discussions of Core EIPs, Ether’s price saw an 18% increase, with a 12% increase relative to Bitcoin.
This trend underscores how market participants often anticipate EIPs, seeing them as indicators of Ethereum’s development and potential growth.
The study examined Ether’s price movements over an 80-day period surrounding critical AllCoreDevs meetings — where Ethereum’s core developers discuss and decide on EIPs.
The researchers found that Ether’s price tends to rise about 30 days before these discussions, likely reflecting investor expectations on the proposal’s impact on network performance and value.
The upcoming Prague-Electra (Pectra) upgrade in 2025 will likely include EIPs like EIP-7251, which raises the validator staking limit, and EIP-7702, which enhances smart contract interactions. These upgrades will further improve Ethereum’s performance and user experience, positioning it as a more robust platform for developers and users.
What EIPs mean for the future of Ethereum?
As Ethereum progresses through its post-merge roadmap, EIPs will continue to play a key role in its growth and sustainability. Future upgrades will focus on achieving full danksharding, which will enable the network to process over 100,000 transactions per second. This will involve implementing additional EIPs that refine the consensus mechanism, reduce gas fees, and enhance network security.
Frequently asked questions
What are Ethereum EIPs?
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