Ethereum Foundation rolls out new treasury policy

The Ethereum Foundation is adopting a more structured and transparent treasury policy that ties operational costs and cash needs to its Ether reserves and sales to strengthen its financial position as it anticipates a pivotal 18 months ahead.

Its annual operating cost — measured as a percentage of the EF’s treasury — and the number of years of runway will be reassessed regularly, factoring in market dynamics and community input to ensure the foundation’s short-term operations remain aligned with its long-term strategy, one of the foundation’s directors said on June 4.

Hsiao-Wei Wang said the Ethereum Foundation currently only has 2.5 years before it runs out of cash, setting the stage for a crucial 18 months as it seeks to deploy resources more deliberately and provide more ecosystem support:

“This policy reflects our conviction that 2025-26 are likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables.”

The tightened treasury policy follows community backlash over the EF’s unexpected Ether (ETH) sales in recent months, a series of moves which some critics claimed have undermined trust in the Foundation.

To uphold its transparency commitment, the EF will publish quarterly and annual reports outlining its asset holdings, investment performance and any significant developments during each period.

As of Oct. 31, the foundation’s treasury totaled approximately $970.2 million, split between $788.7 million in crypto and $181.5 million in non-crypto assets.

Over 81% of the foundation’s total position was in ETH. Since then, ETH has fallen roughly 1.8%, CoinGecko data shows.

Foundation to engage more with DeFi

The EF said it will aim to “earn acceptable returns” on treasury assets by engaging with permissionless protocols that are immutable and thoroughly audited.

This approach allows the EF to support protocols that champion what it calls “Defipunk principles” while strengthening its treasury position.

In February, the Foundation set aside 45,000 ETH — worth $120 million at the time — to deploy to various decentralized finance protocols.

It has already supplied ETH and borrowed $2 million worth of the GHO (GHO) stablecoin from Aave’s lending protocol, Aave founder Stani Kulechov said on May 29.

Spark and Compound were among the other DeFi protocols that received support from the foundation.

The Ethereum Foundation historically refrained from supporting specific protocols to maintain credible neutrality and avoid favoring any projects. However, this stance drew criticism from some ecosystem innovators, including Infinex founder Kain Warwick, who accused the foundation of being anti-DeFi.

The EF also announced a restructuring of its internal development team on June 2, which involved some members being laid off.

It didn’t disclose how many individuals were affected.

The changes come amid ETH’s underperformance this bull cycle, lagging behind the likes of Bitcoin (BTC) and Solana (SOL), which recently notched all-time highs. ETH, by contrast, remains 46.5% below its November 2021 peak of $4,878.

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