Ethereum Foundation Under the Knife: Buterin Confirms 40% Budget Cut and Loss of Key Personnel
The Ethereum Foundation (EF) is entering a phase of austerity. Network co-founder Vitalik Buterin has officially confirmed that the foundation's budget will be cut by approximately 40% this year. According to him, this decision was embedded in last year's treasury management policy and entails a series of difficult but necessary steps.
Buterin details the scale of the changes: while before 2026 the EF spent on average about 15% of its remaining funds annually, the target is now shifting to a 5% annual rate. The goal is to reach this benchmark by 2030. According to the founder, this strategy is intended to ensure the foundation's resilience to external pressure without requiring inflated budgets.
It is important to emphasize: what is happening is not simply "increased efficiency," as is often portrayed. Buterin speaks directly of losses. He describes departing employees as "brilliant people and dedicated engineers," some of whom have worked on the Ethereum protocol for nearly a decade. This is a serious blow to the foundation's institutional memory and expertise.
Despite the staff and budget cuts, the EF is not reducing its ambitions for developing the protocol itself. The key direction announced is the Ethereum Strawman roadmap — essentially the third iteration of Ethereum after The Merge. It aims to fundamentally rework consensus, proofs, privacy, the account model, and state management. One of the main changes will be moving away from the "client redundancy" strategy in favor of formal verification using artificial intelligence.
What the foundation loses and where resources go
The restructuring will also affect other areas. 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. The number of large-scale projects outside of Ethereum funded by the foundation will decrease. Buterin announced that he will personally finance some of these initiatives.
In the long term, Buterin advocates for an approach he calls a "soft endgame." After the implementation of Strawman, he estimates the foundation should largely limit itself to security fixes and small, valuable changes. The bar for adding new features to the protocol should become significantly higher. As a benchmark, he suggests looking to Bitcoin rather than "bloated projects with millions of lines of code."
My analysis: This is not just optimization, but a fundamental shift in the Ethereum governance paradigm. The transition from a model of "active development and hiring" to one of "endowment and conservation" is risky but perhaps an inevitable step for a mature protocol. The loss of key engineers is a worrying signal that could slow the implementation of innovations like Strawman. However, if the EF can maintain its focus on security and stability, it could strengthen trust in Ethereum as a long-term asset, similar to Bitcoin. The market will be closely watching how this "lean" model affects the network's development pace over the next 2-3 years.