The Ethereum Foundation is cutting its budget by 40%: Buterin explains the reasons and consequences
Ethereum co-founder Vitalik Buterin has officially confirmed that the Ethereum Foundation (EF) is cutting its spending by approximately 40% this year. According to him, this decision was already embedded in last year's treasury management policy, and the foundation is now transitioning to a long-term endowment model.
Buterin explained that previously, the EF spent about 15% of its remaining funds annually. The new strategy involves gradually reducing this figure to roughly 5% per year, to be achieved after 2030. The goal is to ensure the organization's resilience to external pressure without requiring colossal budgets.
It is important to understand that this is not just "optimization" or "efficiency improvement." Buterin speaks directly about losses. He refers to 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 institutional memory and expertise.
What is changing in priorities?
Despite the cuts, ambitions for protocol development are not diminishing. The key focus becomes the Ethereum Strawmap — a massive roadmap designed to replace and supplement every component of the protocol: consensus, proofs, privacy, account model, and state management. Essentially, this is the third iteration of Ethereum after The Merge.
One of the central changes will be a shift in the "multiple clients" model. Previously, security was built on redundancy: if one client had a bug, the network continued operating. Now, the EF is actively researching formal verification using artificial intelligence — a more complex but potentially more effective approach.
Other divisions also face changes. 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. The number of large-scale projects outside Ethereum funded by the foundation will decrease. As Buterin previously stated, he will personally cover some of these initiatives using his own funds.
Long-term vision: "Soft end"
In the long term, Buterin advocates for an approach he calls a "soft end." After the Strawmap roadmap is implemented, the foundation should mostly limit itself to security fixes and minor 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 "cumbersome projects with millions of lines of code." This signals a shift toward a more restrained and mature model of network development.
My analysis: This is the most significant strategic shift in Ethereum governance since The Merge. A 40% budget cut and the loss of key engineers is not just a financial adjustment but a sign that the ecosystem is entering a phase of "maturation." The EF is abandoning the role of a "giant sponsor" and transitioning to that of a "conservative custodian" of the protocol. This may slow the pace of innovation but will increase the network's resistance to censorship and attacks. The market should view this as a signal of long-term stability, not a crisis.