Ether-Linked Nonprofit Cuts Budget 40% In ‘Challenging Era’

The Ethereum Foundation (EF) has announced a significant budget reduction of approximately 40% for the current year, alongside a 20% workforce reduction, impacting 54 employees. This move is part of a strategic shift to an endowment model, aiming for a long-term annual spending target of 5% of its treasury after 2030, down from around 15% pre-2026. Vitalik Buterin, co-founder of Ethereum, elaborated on these cuts, which include scaling back protocol work outlined in the Strawmap, reducing the scope of the Protocol Support Ecosystem (PSE), and holding smaller Devcon events.

These organizational changes come at a time when the Foundation is grappling with a projected $30 million annual funding gap, as highlighted by former coordinator Trent Van Epps. This shortfall is attributed to the expiration of the Client Incentive Program in April 2026, which historically funded core development teams, and the Foundation's deliberate policy to reduce spending over time. While the EF has allocated 70,000 ETH (approximately $143 million at the time) to a "stake-to-fund" model, generating an estimated $3.9 million to $5.4 million annually, this only covers 13-18% of the identified funding deficit.

The restructuring also involves forming five new thematic clusters: Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer, in addition to an operations and management support group. The Protocol Layer, in particular, is focused on fundamental scaling and hardening of the core Ethereum protocol, including post-quantum security and L1 privacy research, explicitly not for short-term market interests. However, these changes coincided with a series of high-profile departures, including co-executive director Hsiao-Wei Wang and at least eight other senior members over the past five months, sparking debates within the community about the Foundation's leadership and strategic direction. Departing employees are receiving severance packages of at least one month per year of service, along with transition grants and job placement support within the ecosystem.