Ethereum Foundation: Budget cut by 40% and shift in priorities — Cryptalist analysis
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 the treasury management policy last year and entails a number of difficult but necessary steps. The foundation is transitioning from an annual spending model to a long-term endowment model.
From 15% to 5%: A New Financial Reality
Buterin explained that until 2026, the EF spent on average about 15% of its remaining funds annually. Now, the target is approximately 5% per year, to be achieved after 2030. This is a radical change in capital management strategy aimed at ensuring the foundation's resilience to external pressure without the need for large budgets. Essentially, the EF is preparing for long-term existence, minimizing dependence on market conditions.
Personnel Losses and a Shift in Focus
Buterin did not describe the situation as a simple "efficiency improvement." He spoke respectfully of the employees leaving the foundation, calling them "brilliant people and dedicated engineers," some of whom had worked on the Ethereum protocol for nearly a decade. This acknowledgment underscores that the budget cut is not just optimization but a painful restructuring process.
Despite the budget reduction, ambitions for protocol development remain undiminished. A key focus becomes the Ethereum Strawmap — a comprehensive roadmap designed to replace and enhance every part of the protocol: consensus, proofs, privacy, account model, and state management. Buterin calls this the third iteration of Ethereum after The Merge.
Technological Shifts: From Redundancy to Formal Verification
One major change will be a shift in the "multi-client" model. Previously, security strategy relied on redundancy: if an error occurred in one client, the network continued operating through others. Now, the EF is actively exploring another approach — formal verification using artificial intelligence. This is a more complex but potentially more reliable and less resource-intensive path.
Changes will also affect other areas. The Privacy and Scaling Explorations (PSE) unit is being disbanded as a separate entity, the Devcon conference will become more modest and less costly, and the number of large-scale projects outside Ethereum supported by the foundation will decrease. As Buterin previously announced, he will personally fund some of these initiatives using his own resources.
"Soft Endgame" and a Bitcoin Benchmark
In the long term, Buterin advocates for an approach he calls a "soft endgame." After implementing the Strawmap roadmap, 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 raised. As a benchmark, he 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.
Cryptalist Analytical Commentary: The EF's decision to implement such a radical budget cut is not a sign of weakness but rather a demonstration of maturity and strategic thinking. The transition to an endowment model and the focus on fundamental protocol improvements, such as formal verification, indicate that Ethereum is preparing for decades of existence, not a race for short-term trends. The loss of talented personnel is an inevitable cost of such a transformation, but the network's long-term sustainability will only benefit from it.