The Ethereum Foundation (EF) has announced a significant restructuring, including a 40% cut to its current annual budget and a 20% reduction in its workforce, eliminating 54 positions. These changes are part of a strategic shift towards a long-term endowment model, aiming to reduce annual spending from 15% of its treasury pre-2026 to a 5% target after 2030. Co-founder Vitalik Buterin noted that these cuts affect protocol work, reduce the scope of specific projects like PSE, and lead to smaller Devcon events, while still prioritizing privacy and scaling.
This restructuring comes at a time of increased scrutiny, with former EF coordinator Trent Van Epps warning of a looming $30 million annual funding shortfall for core development teams. This gap is exacerbated by the expiration of the Client Incentive Program in April 2026, which historically provided predictable funding for over a dozen client teams. While the EF has adopted a "stake-to-fund" model, staking approximately 70,000 ETH (worth about $143 million at the time), this generates an estimated $3.9 million to $5.4 million annually, covering only 13-18% of the projected $30 million deficit.
Adding to the organizational turbulence, co-executive director Hsiao-Wei Wang has stepped down, making her the latest of at least eight senior members to depart in the past five months. This talent exodus has sparked debate within the Ethereum community regarding the Foundation's leadership and long-term direction. Despite these challenges, the EF has outlined a new five-cluster structure, emphasizing "Protocol Layer" work including post-quantum security and L1 privacy research, aiming for a "leaner and more focused" organization less susceptible to short-term market fluctuations.
