Ethereum Improvement Proposal Meaning

Oct 18, 2023 | Updated Mar 18, 2024

An Ethereum Improvement Proposal is a formal proposal to make changes or updates to the Ethereum network.

What is the Ethereum Improvement Proposal (EIP)?

Simply put, Ethereum Improvement Proposal or EIP provide a means for Ethereum community members to contribute to the development and evolution of the network by allowing them to suggest changes and engage in proposal reviews and discussions. It is also a way of documenting or monitoring the progress of design changes in the protocol.

Think of how centralized tech firms update their software. The decisions and changes are made internally by the company. In a decentralized network like Ethereum, where there is no central entity to determine which features the network will adopt, the network’s community submit potential changes in a standardized way. For instance, Ethereum users use a standard known as Ethereum Improvement Proposal to write and submit proposals.

Ethereum Improvement Proposals (EIPs) refer to the standards that specify the potential upgrades or functionalities to the Ethereum protocol. It allows developers and community members to propose new solutions, protocol specifications, modifications and features to the network. If the Ethereum community accepts the EIP proposal, the network is upgraded with the proposed changes, improvements, or new features. EIP takes inspiration from the Bitcoin Improvement Proposal (BIP) that Bitcoin uses to accept improvement suggestions from its community.

EIPs vs ERC

An ERC or Ethereum Request for Comments outlines the rules and specifications that developers must adhere to when creating new features, tokens, libraries, or smart contracts within the Ethereum blockchain. Thus, while EIPs are used to suggest improvements to the Ethereum network itself, ERCs are used to create new Ethereum-based tokens or standards, such as ERC-20 tokens and non-fungible tokens (ERC-721). Basically, ERC is a subcategory of EIP.

EIP-3675, dubbed the Merge, is the most recent Ethereum Improvement Proposal, where the blockchain shifted from the original proof-of-work algorithm to a proof-of-stake consensus mechanism. The move was designed to improve the network’s scalability and efficiency while reducing its energy consumption.