The Ethereum Foundation is in austerity mode: Buterin confirmed a 40% budget cut and the loss of key personnel.
The Ethereum Foundation (EF) is entering a phase of radical financial discipline. According to statements by Vitalik Buterin, the foundation is cutting its operational expenses by approximately 40% this year. This is not just "optimization," but a deliberate and painful transition to a long-term endowment model, which will entail serious personnel and structural changes.
Buterin directly stated that the reduction was embedded in treasury management policy last year. 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 by 2030. This means the foundation intends to live off the interest from its capital, minimizing dependence on external funding and large budgets.
The Cost of Restructuring: Losing "Brilliant Minds"
Vitalik did not sugarcoat reality or euphemistically call it "improving efficiency." He openly admitted that the foundation is losing "brilliant people and dedicated engineers," some of whom have worked on the Ethereum protocol for nearly a decade. This is not just staff turnover—it is the departure of key network architects, which cannot help but cause concern in the community.
Despite the budget cuts, ambitions for developing the protocol itself are not diminishing. Buterin confirmed that the main priority remains the Ethereum Strawman roadmap—essentially the third iteration of Ethereum after The Merge. This plan aims to update and enhance every component of the network: consensus, proofs, privacy, account model, and state management.
One of the key changes will be abandoning the "multi-client redundancy" strategy in favor of formal verification using artificial intelligence. This is a fundamental shift in the approach to network security.
What Is Being Scaled Back, and What Remains?
The restructuring will affect many related areas. The Privacy and Scaling Explorations (PSE) unit will cease to exist as a separate entity. The Devcon conference will become more modest and less costly. The number of major projects outside of Ethereum sponsored by the foundation will be reduced. Notably, Buterin is taking some of these initiatives under his personal funding.
In the long term, Vitalik advocates for a "soft end" to the active phase of protocol development. After the Strawman implementation, the foundation should focus only on security fixes and minor valuable changes. The bar for adding new features to the protocol should become significantly higher.
My analysis: This is not a crisis, but an inevitable maturation of Ethereum. The transition to an endowment model and the abandonment of large-scale grants is an attempt to create a sustainable structure independent of market cycles. However, the loss of key engineers is a worrying signal. The community should closely monitor who exactly is leaving the foundation and how this will affect the pace of Strawman implementation. The Bitcoin approach to protocol management may be effective, but the path to it will be rocky.