The Ethereum Foundation cuts its budget by 40%: Vitalik Buterin explains the reasons and consequences
Vitalik Buterin has 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 transition to a long-term endowment model. The Foundation is consciously taking tough measures, including the loss of valuable personnel.
From 15% to 5%: A New Financial Discipline
Until 2026, the EF spent on average about 15% of its remaining funds annually. Now, the target is being reduced to 5% per year, which is planned to be achieved after 2030. This is a radical change in capital management approach. The goal is to make the foundation resilient to external pressure and independent of large, ever-growing budgets. Buterin emphasizes that this is not "optimization" or "efficiency improvement," but a deliberate reduction that entails the loss of "brilliant people and dedicated engineers," some of whom have worked on the protocol for nearly a decade.
What the Foundation is Losing and Where Resources are Directed
Despite the budget cuts, ambitions for protocol development are not diminishing. The key focus becomes the Ethereum Strawmap — a large-scale roadmap designed to replace and supplement every element of the protocol: consensus, proofs, privacy, account model, and state management. Buterin calls this the third iteration of Ethereum after The Merge.
One of the main changes will be a shift from the "multi-client" strategy to formal verification using artificial intelligence. The Privacy and Scaling Explorations (PSE) division is being wound down as a separate unit, 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 his personal funds.
Long-Term Vision and "Soft Completion"
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 become significantly higher. As a benchmark, he suggests taking inspiration from Bitcoin, rather than "cumbersome projects with millions of lines of code." This implies a shift to a more restrained and conservative model of network development.
Cryptalist Analysis: The 40% budget cut by the EF is not just financial optimization, but a statement of a new philosophy for Ethereum's development. Abandoning "gigantism" in favor of "soft completion" and formal verification is an attempt to create a maximally resilient and decentralized network that does not depend on a single funding center. However, the loss of experienced engineers could slow the pace of innovation in the short term, and the community will have to assess how justified this trade-off is.