David Edwards
The Ethereum Foundation (EF) has introduced a formalized treasury policy aimed at enhancing financial transparency and aligning short-term operational costs with its long-term strategic goals. This policy shift comes as the Foundation enters what it describes as a “pivotal” 18-month period for the Ethereum ecosystem.
One of the Foundation’s co-executive directors, Hsiao-Wei Wang, said on June 4 that the EF had roughly two and a half years left before depleting its cash reserves. The EF’s yearly running expenses, stated as a percentage of its treasury, will be routinely reevaluated under the new structure in light of community feedback and market conditions. The purpose is to maintain alignment with Ethereum’s larger development goals while ensuring safe resource deployment.
The community has criticized recent surprise ETH sales, which some felt undermined confidence, leading to this policy change. The EF will now release quarterly and annual financial reports outlining its asset holdings, investment performance, and any significant developments in order to allay these worries.
By October 31, the Foundation’s treasury was approximately $970.2 million, consisting of $181.5 million in non-crypto assets and $788.7 million in cryptocurrency, of which 81% was in ETH. Since then, ETH has lost about 1.8% of its value.
Contrary to previous practice, the EF is now using immutable and extensively audited decentralized finance (DeFi) protocols in an effort to generate returns on its treasury. The Foundation distributed 45,000 ETH, or $120 million at the time, to different DeFi platforms in February. Since then, it has borrowed $2 million in GHO stablecoins from Aave and deployed ETH. There has also been support for other protocols including Spark and Compound.
In order to preserve its impartiality, the EF has historically refrained from supporting particular initiatives. This approach has drawn criticism from individuals such as Kain Warwick, the inventor of Infinex, who called the Foundation “anti-DeFi.” In order to foster innovation inside DeFi without sacrificing the Foundation’s values, this new policy represents a strategic shift.
Internal reorganization initiatives, such as the recent rebranding of the EF’s core development team and the recruitment of new leadership, support the treasury strategy. These actions are a part of a larger plan to fortify Ethereum’s ecosystem and streamline operations during this crucial stage.
