The Ethereum Foundation: A 40% budget cut and the loss of key personnel — strategic restructuring or a crisis?
Ethereum co-founder Vitalik Buterin confirmed that the Ethereum Foundation (EF) is cutting its budget by approximately 40% this year. According to him, this decision was embedded in last year's treasury management policy: the foundation is transitioning to a long-term endowment model. However, behind these numbers lies not just financial optimization, but a deep reorganization that has already led to the loss of several key employees.
Buterin explained that until 2026, the EF spent on average about 15% of its remaining funds annually. Now, the target is being reduced to approximately 5% per year, which will be reached after 2030. The organization aims to remain resilient to external pressure without requiring large budgets. This is a fundamental shift in resource management philosophy.
What is the foundation losing and where are resources being directed?
Contrary to the usual rhetoric, Buterin refused to call the situation a simple increase in efficiency. He emphasized that he respects the departing colleagues too much to pretend nothing has been lost. He described those leaving as "brilliant people and dedicated engineers," some of whom had worked on the Ethereum protocol for nearly a decade.
Despite the cuts, the foundation does not intend to lower its ambitions for protocol development. The key focus is the Ethereum Strawmap — a large-scale roadmap designed to replace and supplement every part of the protocol: consensus, proofs, privacy, account model, and state management. This is, in essence, the third iteration of Ethereum after The Merge.
One of the main changes will be a shift in the "multi-client" model. Previously, the main 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 nuanced and potentially more effective, but also riskier, path.
Changes will also affect other areas. The Privacy and Scaling Explorations (PSE) unit is being wound down as a separate entity, the Devcon conference will become more modest and less costly over time, and the number of large-scale projects outside of Ethereum from the foundation will decrease. As Buterin previously announced, he is taking on some of these initiatives personally using his own funds.
Long-term vision for the protocol
In the long term, Buterin advocates for an approach he calls "soft completion." In his assessment, once the Strawmap roadmap is implemented, the foundation should largely limit itself to security fixes and small, valuable changes. The bar for adding new features to the protocol should become significantly higher.
As a benchmark, Buterin suggested taking inspiration from Bitcoin, rather than "bloated projects with millions of lines of code." This signaled a transition to a more restrained model of network development. Buterin acknowledged that recent years have been a difficult period for Ethereum. However, in his assessment, the ecosystem is adapting both within and outside the foundation. He believes the network is well-prepared to develop successfully.
Cryptalist Expert Opinion: The 40% budget cut by the EF is not just about saving money, but a strategic pivot. The foundation is moving away from the role of a "giant incubator" and focusing on the core protocol. The loss of experienced engineers who worked for nearly a decade is a serious blow to institutional memory. However, the shift towards formal verification and the bet on "soft completion" could make Ethereum more resilient and predictable in the long term. The market will likely perceive this as a positive signal of the project's maturity, but short-term risks of losing development momentum remain.