The Ethereum Foundation is bracing for austerity: the budget has been cut by 40%, and staff are leaving the project.
The Ethereum Foundation (EF) is entering a phase of radical optimization. According to my data, confirmed by Vitalik Buterin, the foundation's budget will be cut by approximately 40% this year. This is not just "increased efficiency" — it is a forced and painful restructuring that has already led to the loss of key employees.
Buterin directly stated that those leaving the team are "brilliant minds and dedicated engineers," some of whom have worked on the protocol for nearly a decade. He emphasized that he respects his colleagues too much to pretend nothing is happening. The foundation is losing not just people, but carriers of critical institutional knowledge.
New Financial Model: From "Spend" to "Preserve"
The key shift is in treasury management. Previously, the EF spent about 15% of its remaining funds per year. Now, the foundation is moving toward a target of 5% annually, which should be achieved after 2030. This means a transition from an active funding model to a long-term endowment model. The foundation intends to remain resilient to external pressure without requiring large budgets in the future.
Where Resources Are Going: Strawmap and a Shift in Priorities
Despite the budget cuts, ambitions for protocol development are not diminishing. Buterin named the Ethereum Strawmap as a key direction — a large-scale roadmap that, in his words, will become the third iteration of Ethereum after The Merge. It will affect all layers of the protocol: consensus, proofs, privacy, account model, and state network management.
However, spending on peripheral projects will be significantly reduced. 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. The number of large-scale projects outside of Ethereum funded by the foundation will decrease. Buterin is taking on some of these initiatives using his personal funds.
Security Paradigm Shift: From Redundancy to Formal Verification
The foundation is changing its network security strategy. Previously, the focus was on redundancy — if an error occurred in one client, the network continued operating thanks to others. Now, an approach with formal verification using artificial intelligence is being increasingly explored. This is a more resource-intensive but potentially more reliable path.
In the long term, Buterin advocates for a "soft end" to the active development phase. After the Strawmap is implemented, the foundation should mainly limit itself to security fixes and small, valuable changes. The bar for adding new features to the protocol should become significantly higher.
My analysis: This is a historic moment for Ethereum. The foundation is consciously abandoning the role of a "giant development center" that funds everything and transitioning to the role of a "protocol guardian." The loss of experienced personnel is a serious risk, but the bet on formal verification and a more conservative approach to changes could make Ethereum significantly more reliable in the long term. The question is whether the ecosystem can compensate for the departure of leading engineers through decentralized teams and external developers.