diff --git a/pkg/innerring/processors/governance/list.go b/pkg/innerring/processors/governance/list.go
index 4babe930..f5e21d75 100644
--- a/pkg/innerring/processors/governance/list.go
+++ b/pkg/innerring/processors/governance/list.go
@@ -7,7 +7,10 @@ import (
 	"github.com/pkg/errors"
 )
 
-var errNotEnoughKeys = errors.New("alphabet list in mainnet is too short")
+var (
+	errNotEnoughKeys = errors.New("alphabet list in mainnet is too short")
+	errNotEqualLen   = errors.New("old and new alphabet lists have different length")
+)
 
 // newAlphabetList returns updated list of sidechain keys with no more than 1\3
 // of new keys from mainnet list. Function returns `errNotEnoughKeys` if
@@ -62,3 +65,29 @@ func newAlphabetList(sidechain, mainnet keys.PublicKeys) (keys.PublicKeys, error
 
 	return result, nil
 }
+
+// updateInnerRing function removes `before` keys from `innerRing` and adds
+// `after` keys in the list. If length of `before` and `after` is not the same
+// then function returns errNotEqualLen
+func updateInnerRing(innerRing, before, after keys.PublicKeys) (keys.PublicKeys, error) {
+	lnBefore := len(before)
+	if lnBefore != len(after) {
+		return nil, errNotEqualLen
+	}
+
+	result := make(keys.PublicKeys, 0, len(innerRing))
+
+	// O(n^2) for 7 nodes is not THAT bad.
+loop:
+	for i := range innerRing {
+		for j := range before {
+			if innerRing[i].Equal(before[j]) {
+				result = append(result, after[j])
+				continue loop
+			}
+		}
+		result = append(result, innerRing[i])
+	}
+
+	return result, nil
+}
diff --git a/pkg/innerring/processors/governance/list_test.go b/pkg/innerring/processors/governance/list_test.go
index d249ac22..8cc64cd0 100644
--- a/pkg/innerring/processors/governance/list_test.go
+++ b/pkg/innerring/processors/governance/list_test.go
@@ -52,6 +52,56 @@ func TestNewAlphabetList(t *testing.T) {
 	})
 }
 
+func TestUpdateInnerRing(t *testing.T) {
+	k, err := generateKeys(6)
+	require.NoError(t, err)
+
+	t.Run("same keys", func(t *testing.T) {
+		ir := k[:3]
+		before := k[1:3]
+		after := keys.PublicKeys{k[2], k[1]}
+
+		list, err := updateInnerRing(ir, before, after)
+		require.NoError(t, err)
+
+		sort.Sort(ir)
+		sort.Sort(list)
+		require.True(t, equalPublicKeyLists(ir, list))
+	})
+
+	t.Run("unknown keys", func(t *testing.T) {
+		ir := k[:3]
+		before := k[3:4]
+		after := k[4:5]
+
+		list, err := updateInnerRing(ir, before, after)
+		require.NoError(t, err)
+
+		require.True(t, equalPublicKeyLists(ir, list))
+	})
+
+	t.Run("different size", func(t *testing.T) {
+		ir := k[:3]
+		before := k[1:3]
+		after := k[4:5]
+
+		_, err = updateInnerRing(ir, before, after)
+		require.Error(t, err)
+	})
+
+	t.Run("new list", func(t *testing.T) {
+		ir := k[:3]
+		before := k[1:3]
+		after := k[4:6]
+		exp := keys.PublicKeys{k[0], k[4], k[5]}
+
+		list, err := updateInnerRing(ir, before, after)
+		require.NoError(t, err)
+
+		require.True(t, equalPublicKeyLists(exp, list))
+	})
+}
+
 func generateKeys(n int) (keys.PublicKeys, error) {
 	pubKeys := make(keys.PublicKeys, 0, n)