The Ethereum Foundation under the knife: Buterin confirms 40% budget cut and loss of key personnel
Ethereum co-founder Vitalik Buterin made an important statement shedding light on the current financial situation of the Ethereum Foundation (EF). This year, the foundation is cutting its budget by approximately 40%, and as Buterin himself admits, this entails a series of extremely difficult decisions. The goal of such a drastic move was embedded in last year's treasury management policy: the EF is purposefully transitioning to a long-term endowment model.
Until 2026, the foundation spent on average about 15% of its remaining funds annually. Now, the course is set for a target of 5% per year, planned to be achieved after 2030. This is a radical change in strategy aimed at ensuring the organization remains resilient to external pressure and independent of large, inflated budgets.
The Price of Optimization: Losing "Brilliant Minds"
Buterin did not sugarcoat the situation, calling it a simple "efficiency improvement." He emphasized that he respects his colleagues too much to pretend nothing was lost. The departing employees were described as "brilliant people and dedicated engineers," some of whom had worked on the Ethereum protocol for nearly a decade. This is not just a loss of manpower, but of deep institutional memory and expertise.
Despite the cuts, ambitions for protocol development are not diminishing. A key focus remains the Ethereum Strawmap — a massive roadmap aimed at updating every part of the protocol: consensus, proofs, privacy, account model, and state management. Buterin calls this the third iteration of Ethereum after The Merge.
New Direction: From Redundancy to Formal Verification
One of the main changes will be a shift in the "multi-client" model. Previously, the primary security strategy was redundancy: if an error occurred in one client, the network continued to operate. Now, the foundation is increasingly exploring another approach — formal verification using artificial intelligence. This is a more complex but potentially more reliable path.
Changes will also affect other areas. The Privacy and Scaling Explorations (PSE) unit is being disbanded as a separate entity, the Devcon conference will become more modest and less costly, and the number of large-scale projects outside of Ethereum from the foundation will decrease. As Buterin previously announced, he will take on some of these initiatives using personal funds.
Vision of a "Soft Endgame"
In the long term, Buterin advocates for an approach he called a "soft endgame." In his estimation, after the Strawmap roadmap is implemented, the foundation should mostly limit itself to security fixes and small valuable changes. The bar for adding new features to the protocol should be significantly raised. This approach, in his view, will allow Ethereum to remain resistant to capture without requiring large budgets.
As a benchmark, Buterin suggested taking inspiration from Bitcoin, rather than "bloated projects with millions of lines of code." This marked a transition to a more restrained model of network development.
Cryptalist Analysis: The 40% EF budget cut is not just financial optimization, but a fundamental reassessment of the foundation's role in the ecosystem. The loss of team veterans is a worrying signal that could slow the pace of innovation. However, the bet on formal verification and a "lightweight" network core could make Ethereum more resilient and decentralized in the long term. The market should closely monitor how these changes impact the development pace of L2 solutions and the network's overall competitiveness.