The Ethereum Foundation cuts its budget by 40%: Buterin acknowledges the loss of key personnel
Ethereum co-founder Vitalik Buterin confirmed that the Ethereum Foundation (EF) is cutting its annual budget by approximately 40%. According to him, this decision has already led to a number of difficult personnel losses, including the departure of "brilliant minds and dedicated engineers" who worked on the protocol for nearly a decade.
Buterin emphasizes that this is not just an "efficiency optimization," but a conscious transition to a long-term endowment model. Previously, the EF spent about 15% of its reserves annually. The new strategy aims to reduce this figure to a target of 5% per year, to be achieved after 2030. The goal is to create a sustainable structure that does not rely on large annual budgets and is resilient to external pressure.
Where are resources going and who is losing their jobs?
The cuts will affect several key areas. The Privacy and Scaling Explorations (PSE) unit is being wound down as a standalone entity. Large-scale Devcon conferences will become more modest and less costly. Additionally, the foundation is reducing funding for major projects outside the core Ethereum protocol. Buterin previously announced that he will personally finance some of these initiatives.
Despite the budget cuts, the EF does not intend to reduce its ambitions in developing the protocol itself. The key direction is the Ethereum Strawman roadmap — a large-scale iteration designed to update every component of the network: consensus, proofs, privacy, account model, and state management. Buterin calls this the "third phase" of Ethereum after The Merge.
One of the central changes will be a shift in security strategy. Previously, the focus was on redundancy — multiple clients where an error in one would not paralyze the network. Now, the foundation is more actively exploring formal verification using artificial intelligence.
Long-term vision: "soft end"
In the long term, Buterin advocates for the concept of a "soft end." After the implementation of the Strawman roadmap, the Ethereum Foundation should primarily focus on security fixes and minor valuable improvements. The bar for adding new features to the protocol should become significantly higher.
Buterin suggests taking a cue from Bitcoin, rather than from "cumbersome projects with millions of lines of code." This signals a shift toward a more restrained and conservative model of network development.
Cryptalist analytical commentary: The 40% budget cut by the EF is a painful but strategically sound move. The market has long demanded greater financial discipline and transparency from the Ethereum Foundation. The departure of veterans is a worrying signal, but if it is accompanied by a transition to a more sustainable and decentralized governance model, it will strengthen the network in the long term. The main risk is losing development momentum amid aggressive competition from rivals such as Solana and new L2 solutions.