The Ethereum Foundation: A 40% Budget Sequestration and Shift in Priorities — Analysis by Vitalik Buterin
Ethereum co-founder Vitalik Buterin has officially confirmed that the Ethereum Foundation (EF) is entering a phase of austerity. The foundation's budget will be cut by approximately 40% this year, inevitably leading to a series of painful but necessary decisions. This is not just "cost optimization," but a fundamental shift in treasury management strategy, laid out in last year's policy.
From 15% to 5%: A New Endowment Model
Buterin explained that until 2026, the EF spent on average about 15% of its remaining funds annually. Now, the foundation is moving toward a target of roughly 5% per year, which will be reached after 2030. The organization aims for long-term sustainability, seeking to remain independent from external pressure and not require large budgets. This is a classic transition to an endowment model, where capital works for the long term rather than being consumed in the present.
Buterin refused to call the process a simple "efficiency improvement." He emphasized that he respects departing colleagues too much, calling them "brilliant people and dedicated engineers," some of whom have worked on the Ethereum protocol for nearly a decade. Losing such talent is a serious challenge that cannot be masked with euphemisms.
Focus on Strawmap and Abandoning Redundancy
Despite the cuts, ambitions for protocol development are not diminishing. A key direction becomes the Ethereum Strawmap — a massive roadmap designed to replace and supplement every part of the protocol: consensus, proofs, privacy, account model, and state management. Buterin calls this the third iteration of Ethereum after The Merge.
One of the main changes will be a shift in the "multiple clients" model. Previously, the security strategy was built on redundancy: if an error occurred in one client, the network continued to operate. Now, the foundation is increasingly exploring another approach — formal verification using artificial intelligence. This is a more elegant but also more complex path.
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, and the number of large-scale projects outside of Ethereum from the foundation will decrease. Buterin previously announced that he will personally fund some of these initiatives with his own resources.
Soft Finality and Benchmarking Bitcoin
In the long term, Buterin advocates for an approach he calls "soft finality." In his assessment, once the Strawmap roadmap is implemented, the foundation should largely limit itself to security fixes and minor valuable changes. The bar for adding new features to the protocol should become significantly higher. This approach will allow Ethereum to remain resistant to capture without requiring large budgets.
As a benchmark, Buterin suggested looking to Bitcoin as an example, rather than "bloated projects with millions of lines of code." This signals a shift toward a more restrained and conservative model of network development. In his assessment, the ecosystem will adapt both within and outside the foundation, and the network is well-prepared to thrive in the new reality.
Analyst Comment: The 40% budget sequestration of the EF is not just a forced measure but a strategic step that could lead to two scenarios. Either we will see a more focused and efficient development of the Ethereum core, or the loss of key personnel will slow down the implementation of the ambitious Strawmap roadmap. The bet on formal verification and the abandonment of redundancy is a long game that could either strengthen Ethereum's position as the most reliable smart contract protocol or open the door for more agile competitors.