The Ethereum Foundation under the knife: Buterin confirms 40% budget cut and departure of key developers
The Ethereum Foundation (EF) is entering a phase of strict financial optimization. Co-founder of the network, Vitalik Buterin, confirmed that the foundation's budget will be cut by approximately 40% this year. According to him, this decision was already embedded in last year's treasury management policy and marks a transition to a long-term endowment model.
Until 2026, the EF spent about 15% of its remaining funds annually. Now, the target is being reduced to 5% per year, with plans to reach this level only after 2030. Buterin emphasizes that the goal is to maintain the organization's resilience to external pressure without relying on large budgets. This is not just "increased efficiency," as some try to present it. This is a deliberate and painful contraction.
Personnel Losses and Shifting Priorities
Buterin did not hide that the cuts have also affected the team. He spoke respectfully of the departing employees, calling them "brilliant people and dedicated engineers," some of whom had worked on the Ethereum protocol for nearly a decade. The loss of such experience is a serious blow that cannot be compensated by simply reallocating resources.
Despite the staff reduction, ambitions for protocol development remain high. The key direction is the Ethereum Strawman roadmap—a major iteration aimed at rethinking consensus, proofs, privacy, account models, and network state management. Essentially, this is the third version of Ethereum after The Merge.
One of the main changes is the shift away from the "redundancy" strategy in favor of formal verification using AI. Previously, network security was ensured through multiple clients: if one failed, others would work. Now, the EF is betting on mathematically verified code correctness.
Additionally, the Privacy and Scaling Explorations (PSE) unit is being wound down as a separate entity, the Devcon conference will become more modest and cheaper, and the number of major projects outside Ethereum sponsored by the foundation will decrease. Buterin promised to fund some of these initiatives from his personal funds.
Vision of a "Soft End"
In the long term, Buterin advocates for the concept of a "soft end." After the Strawman implementation, the foundation should focus only on security fixes and minor valuable improvements. The bar for adding new features to the protocol should be significantly raised.
He suggests taking a cue from Bitcoin, rather than "bulky projects with millions of lines of code." This signals a shift toward a more restrained and mature model of network development.
Analyst's comment: The EF's decision to cut the budget and lose key engineers is a risky but strategically sound move. Ethereum is transitioning from a phase of aggressive growth to a phase of "stabilization and consolidation." If Strawman is successfully implemented, we will see a more resilient and secure protocol. However, the loss of talent could slow innovation in the short term, giving competitors like Solana and Avalanche a chance. The market will closely watch how the EF manages this transition.