Ethereum Foundation: Budget reduction of 40% and shift in priorities — analysis by Cryptalist
Ethereum co-founder Vitalik Buterin has officially confirmed that the Ethereum Foundation (EF) is cutting its operational budget by approximately 40% this year. According to him, this decision was embedded in the treasury management policy last year and is part of a strategic shift toward a long-term endowment model.
Details of the Budget Reform
Buterin explained that until 2026, the EF spent on average about 15% of its remaining funds annually. Now, the foundation is aiming for a target of 5% per year, which is planned to be achieved after 2030. This means the organization intends to remain resilient to external pressure without requiring large budgets or relying on a constant influx of funds.
Loss of Talent and Shift in Focus
The budget cut has inevitably led to the loss of key employees. Buterin spoke respectfully of departing colleagues, calling them "brilliant people and dedicated engineers," some of whom had worked on the protocol for nearly a decade. However, he emphasized that this is not merely about "increasing efficiency" — it is a deliberate choice in favor of a more focused and sustainable model.
The main emphasis is now on the Ethereum Strawmap roadmap — a large-scale plan designed to replace and supplement every part of the protocol: consensus, proofs, privacy, account models, and state management. Essentially, this is the third iteration of Ethereum after The Merge.
New Priorities: From Redundancy to Formal Verification
One of the key 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 EF is actively exploring another approach — formal verification using artificial intelligence. This will achieve higher reliability at lower costs.
Additionally, 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, and the number of large-scale projects outside of Ethereum supported by the foundation will decrease. As Buterin previously announced, he is taking on some of these initiatives using personal funds.
Long-Term Vision: "Soft Completion"
In the long term, Buterin advocates for an approach he calls "soft completion." After the Strawmap roadmap is implemented, the foundation should mostly limit itself to security fixes and minor valuable changes. The bar for adding new features to the protocol should be significantly higher. This approach will allow Ethereum to remain resistant to capture without requiring large budgets.
As a benchmark, Buterin suggested looking to Bitcoin rather than "bloated projects with millions of lines of code." This signals a shift toward a more restrained model of network development.
My analysis: This decision is not just a cut, but a strategic maneuver. The Ethereum Foundation is deliberately stepping away from the role of "universal sponsor" in favor of more targeted and efficient management. The departure of talented engineers is a painful but inevitable price for long-term sustainability. The question is whether the Ethereum community can independently compensate for this loss without losing development momentum.