The Ethereum Foundation cuts its budget by 40%: a survival strategy or a loss of talent?
Ethereum co-founder Vitalik Buterin confirmed that the Ethereum Foundation (EF) is reducing its operational budget by approximately 40% this year. According to him, this decision was embedded in treasury management policy last year and is part of a transition to a long-term endowment model.
Buterin explained that until 2026, the EF spent on average about 15% of its remaining funds annually. The new strategy involves gradually reducing this figure to a target level of 5% per year, which will be achieved after 2030. The foundation aims to maintain resilience to external pressure without relying on large budgets. This is not just cost optimization—it is a fundamental restructuring of the organization's financial model.
What the foundation is losing and where resources will go
Buterin refused to call the situation a simple "efficiency improvement." He stressed that he respects his colleagues too much to pretend nothing has been lost. He described the departing employees as "brilliant people and dedicated engineers," some of whom had worked on the Ethereum protocol for nearly a decade. This is a serious blow to institutional memory and expertise.
Despite the cuts, the EF does not intend to lower its ambitions in protocol development. The key focus is Strawmap—a massive roadmap designed to replace and enhance every part of the protocol: consensus, proofs, privacy, account model, and state management. Essentially, this is the third iteration of Ethereum after The Merge.
One of the major changes will be a shift in the "multi-client" model. Previously, the security strategy relied on redundancy: if one client had an error, the network continued operating. Now, the foundation is actively exploring another approach—formal verification using artificial intelligence.
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 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 for the protocol
In the long term, Buterin advocates for an approach he calls "soft finality." According to his assessment, after the Strawmap roadmap 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 be significantly raised. This approach will allow Ethereum to remain resistant to capture without requiring large budgets.
As a benchmark, Buterin suggested looking to Bitcoin rather than "cumbersome projects with millions of lines of code." This signals a shift toward a more restrained model of network development. Vitalik 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. The network is well-prepared to develop successfully.
My analysis: The 40% budget cut by the EF is a sign of maturity, but also a warning bell. The departure of key engineers who worked for nearly a decade could slow the pace of new technology adoption. However, the focus on formal verification and AI, along with a shift toward the Bitcoin model, suggests that Ethereum is prioritizing stability and security over rapid growth. In the long term, this could strengthen trust in the network, but in the short term, the market may react to uncertainty.