diff --git a/specs/ChainSpec/README.md b/specs/ChainSpec/README.md
deleted file mode 100644
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--- a/specs/ChainSpec/README.md
+++ /dev/null
@@ -1,3 +0,0 @@
-# Chain Specification
-
-TBD
\ No newline at end of file
diff --git a/specs/ChainSpec/Upgradability.md b/specs/ChainSpec/Upgradability.md
new file mode 100644
index 000000000..39040da58
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+++ b/specs/ChainSpec/Upgradability.md
@@ -0,0 +1,100 @@
+# Upgradability
+
+This part of specification describes specifics of upgrading the protocol, and touches on few different parts of the system.
+
+Three different levels of upgradability are:
+1. Updating without any changes to underlaying data structures or protocol;
+2. Updating when underlaying data structures changed (config, database or something else internal to the node and probably client specific);
+3. Updating with protocol changes that all validating nodes must adjust to.
+
+## Versioning
+
+There are 2 different important versions:
+- Version of binary defines it's internal data structures / database and configs. This version is client specific and doesn't need to be matching between nodes.
+- Version of the protocol, defining the "language" nodes are speaking.
+
+```rust
+/// Latest version of protocol that this binary can work with.
+type ProtocolVersion = u32;
+```
+
+## Client versioning
+
+Clients should follow [semantic versioning](https://semver.org/).
+Specifically:
+ - MAJOR version defines protocol releases.
+ - MINOR version defines changes that are client specific but require database migration, change of config or something similar. This includes client-specific features. Client should execute migrations on start, by detecting that information on disk is produced by previous version and auto-migrate it to new one.
+  - PATCH version defines when bug fixes, which should not require migrations or protocol changes.
+
+Clients can define how current version of data is stored and migrations applied.
+General recommendation is to store version in the database and on binary start, check version of database and perform required migrations.
+
+## Protocol Upgrade
+
+Generally, we handle data structure upgradability via enum wrapper around it. See `BlockHeader` structure for example.
+
+### Versioned data structures
+
+Given we expect many data structures to change or get updated as protocol evolves, a few changes are required to support that.
+
+The major one is adding backward compatible `Versioned` data structures like this one:
+
+```rust
+enum VersionedBlockHeader {
+    BlockHeaderV1(BlockHeaderV1),
+    /// Current version, where `BlockHeader` is used internally for all operations.
+    BlockHeaderV2(BlockHeader),
+}
+```
+
+Where `VersionedBlockHeader` will be stored on disk and sent over the wire.
+This allows to encode and decode old versions (up to 256 given https://borsh.io specficiation). If some data structures has more than 256 versions, old versions are probably can be retired and reused.
+
+Internally current version is used. Previous versions either much interfaces / traits that are defined by different components or are up-casted into the next version (saving for hash validation).
+
+### Consensus
+
+| Name | Value |
+| - | - |
+| `PROTOCOL_UPGRADE_BLOCK_THRESHOLD` | `80%` |
+| `PROTOCOL_UPGRADE_NUM_EPOCHS` | `2` |
+
+The way the version will be indicated by validators, will be via 
+
+```rust
+/// Add `version` into block header.
+struct BlockHeaderInnerRest {
+    ...
+    /// Latest version that current producing node binary is running on.
+    version: ProtocolVersion,
+}
+```
+
+The condition to switch to next protocol version is based on % of stake `PROTOCOL_UPGRADE_NUM_EPOCHS` epochs prior indicated about switching to the next version:
+
+```python
+def next_epoch_protocol_version(last_block):
+    """Determines next epoch's protocol version given last block."""
+    epoch_info = epoch_manager.get_epoch_info(last_block)
+    # Find epoch that decides if version should change by walking back.
+    for _ in PROTOCOL_UPGRADE_NUM_EPOCHS:
+        epoch_info = epoch_manager.prev_epoch(epoch_info)
+        # Stop if this is the first epoch.
+        if epoch_info.prev_epoch_id == GENESIS_EPOCH_ID:
+            break
+    versions = collections.defaultdict(0)
+    # Iterate over all blocks in previous epoch and collect latest version for each validator.
+    authors = {}
+    for block in epoch_info:
+        author_id = epoch_manager.get_block_producer(block.header.height)
+        if author_id not in authors:
+            authors[author_id] = block.header.rest.version
+    # Weight versions with stake of each validator.
+    for author in authors:
+        versions[authors[author] += epoch_manager.validators[author].stake
+    (version, stake) = max(versions.items(), key=lambda x: x[1])
+    if stake > PROTOCOL_UPGRADE_BLOCK_THRESHOLD * epoch_info.total_block_producer_stake:
+        return version
+    # Otherwise return version that was used in that deciding epoch.
+    return epoch_info.version
+```
diff --git a/specs/SUMMARY.md b/specs/SUMMARY.md
index 7cd14751f..80344c2d1 100644
--- a/specs/SUMMARY.md
+++ b/specs/SUMMARY.md
@@ -7,8 +7,9 @@
   - [Access Key](DataStructures/AccessKey.md)
   - [Transaction](DataStructures/Transaction.md)
 - [Architecture](Architecture.md)
-- [Chain specification](ChainSpec/README.md)
+- Chain specification
   - [Consensus](ChainSpec/Consensus.md)
+  - [Upgradability](ChainSpec/Upgradability.md)
   - [Transactions](ChainSpec/Transactions.md)
   - [Light Client](ChainSpec/LightClient.md)
 - [Runtime specification](RuntimeSpec/README.md)