The term “credible neutrality” was first used in the blockchain space by Vitalik Buterin in a 2020 blog post. He used it to describe the decision making of algorithms and mechanisms-
Essentially, a mechanism is credibly neutral if just by looking at the mechanism’s design, it is easy to see that the mechanism does not discriminate for or against any specific people. The mechanism treats everyone fairly, to the extent that it’s possible to treat people fairly in a world where everyone’s capabilities and needs are so different.
Ironically, Ethereum is currently undergoing a debate where credibly neutrality happens to be in-credibly important. We will come back to this debate later since our focus here is credible neutrality in industry standards, specifically the governance of industry standards.
The Rare yet Inevitable Need for Standards
In a future blog post we will dive more deeply into the different types of standards and why they exist, but for the purposes of this article we are talking about standards that a large number of industry participants explicitly agree to adopt. Creating this type of standard is resource intensive because it involves many independent participants cooperating. We view these “industry standards” as a solution of last resort. As articulated by our chair, Dirk Lueth, industry standards should only come into play where there is a “market failure”. This is because the creation of an “industry standard” tends to hinder innovation, as the standard crowds out competing technologies and is itself slow to change.
So why are industry standards sometimes necessary when technologies driven by top-down centralized organizations improve more quickly? It’s because centralized technologies often spawn competition, and while competing approaches may seem like a healthy driver of innovation competition can also lead to lack of interoperability, market fragmentation, and increased costs and friction for builders and users alike. When incompatibility problems outweigh the benefits of fast innovation an industry standard becomes necessary.
Learning from the Past: Wireless, Metaverse, and the Internet
The history of mobile networks is a good case study. Before LTE unified wireless communication, competing technologies like GSM, TDMA, and CDMA created a fractured landscape. Consumers and businesses suffered as roaming was restricted, costs were inflated, and progress was stifled. Switching cellphone carriers? Gotta buy a new phone. When LTE finally became the global standard it lowered hardware costs, enabled global roaming and accelerated adoption.
The internet itself was built on a foundation of open, interoperable standards—DNS, HTTP, TCP/IP, and many others. Without these universally adopted protocols, the internet would have stayed an isolated patchwork of incompatible systems. The metaverse faces a similar challenge today. Without standardized approaches to interoperability, identity, and governance, the potential of an open metaverse will remain unrealized.
The Role of Credible Neutrality in Industry Standards
When agreement across a diverse group of stakeholders is needed, the process of coming to agreement turns out to be more important than the actual agreement (e.g.- industry standard) itself. Credible neutrality in the agreement process ensures that all stakeholders operate on a level playing field, allowing even market competitors to collaborate in an environment of trust. If the agreement process is unclear, or favors early participants, influential players in an industry will hesitate to engage, fearing that others may have an outsized influence over the direction of the standard. If not all influential players engage, adoption of the standard suffers and the standard fails.
The Cost of Lacking Credible Neutrality
We’ve seen what happens when credible neutrality is absent. In the enterprise blockchain world, IBM and Maersk’s Tradelens project aimed to create a global shipping standard. However, because it lacked credibly neutral governance, competitors in the industry saw it as an extension of its founders rather than a truly shared standard. As a result, adoption lagged and the initiative ultimately shut down.
Many Web3 projects claim to be credibly neutral, but a closer look at their governance structures often reveals otherwise. DAOs, for instance, frequently claim token holders control decision-making, yet the legal entities that have the ultimate control are often governed by a small, centralized group. Even DAOs without legal entities tend to be controlled by large token holders, leaving smaller participants with little influence. This lack of credible neutrality has worked in Web3 so far because consumers generally aren’t particular about governance, but businesses will hesitate to fully align without credible neutrality.
A Case Study: The FIDO Alliance
Outside of Web3, the FIDO Alliance offers a compelling example of the value of credible neutrality. The organization, which standardizes passkeys, started off with a handful of companies- not enough support for the standard to be successful. However, it was structured to ensure that all members—regardless of size or when they joined —had an equal vote. This neutrality attracted direct competitors of the founders, leading to broad adoption by industry giants like Visa, Mastercard, Apple, Google, Qualcomm, and Intel. Today, FIDO’s standards are even being adopted in Web3, thanks to initiatives from new member companies like Coinbase.
OMA3: Credibility Neutral
Like the FIDO Alliance and many other state-of-the-art standards development organizations, OMA3 is structured to be credibly neutral. Its governance structure follows a one-member, one-vote model, ensuring that no single entity has disproportionate control. As outlined in OMA3’s Member Agreement, any organization can join, and every participant has the opportunity to gain the same level of influence as anyone else, regardless of size or market position. OMA3 may expand its membership to include individuals as well, reinforcing its commitment to open participation and fair governance.
OMA3 is not the only credibly neutral consortium in the metaverse space. Credibly neutral organizations like the Metaverse Standards Forum and Khronos Group play important roles in fostering interoperability. As OMA3 grows, attracting both major industry players and emerging startups, you can attribute its success to its commitment to credible neutrality.
Back to Ethereum
The criticism currently being thrown at the Ethereum Foundation is unfair. The EF was not designed to resolve conflict, or even to “lead” Ethereum as it explicitly states. However, Ethereum is now deep in a debate that has, to quote Buterin’s 2020 blog post, “high stakes outcomes”. With competing projects like Optimism, Arbitrum, ZkSync, Uniswap, Base, Consensys, etc., not to mention the large ETH holders, all trying to influence the direction of Ethereum’s Layer 2 scaling future, what is needed is a credibly neutral agreement process. If this can be provided by EF or another entity, Ethereum will be in good hands.
