The Ethereum Foundation reduces expenses by 40% and transitions to a new governance model: analysis by Cryptalist
The Ethereum Foundation (EF) is entering a new era. The organization has announced a radical restructuring that will affect not only internal processes but also its financial strategy. Ethereum co-founder Vitalik Buterin confirmed that the foundation's budget will be cut by approximately 40%, and the structure itself will transition to a long-term capital management model. This is not just optimization — it is a fundamental reassessment of how one of the key institutions in the crypto industry operates.
New Structure: Three Pillars of Development
The EF reorganization is built around three key areas: core protocol development (Protocol), accelerating technology adoption and ecosystem growth (Acceleration), and ensuring the long-term sustainability of the network and community (Stewardship). The goal is to increase transparency and speed of decision-making. These changes come amid preparations for the next major phase of Ethereum's evolution — the Strawmap upgrade program, which will affect virtually all components of the network.
Financial Discipline: From Spending to Capital Management
Buterin revealed details of the new financial strategy. While before 2026 the EF spent about 15% of its remaining reserves annually, after 2030 this figure will drop to 5%. The 40% budget cut has already led to personnel decisions and the scaling back of several initiatives. As Buterin explained, "The Ethereum Foundation is turning into an organization that lives off a long-term capital fund." This means the foundation will be less dependent on market cycles and more reliant on prudent asset management.
Focus on AI and Formal Verification
One of the most notable changes will be a revision of the approach to security. Instead of redundancy across multiple clients, the ecosystem will more actively use formal verification and AI-based tools for bug detection. According to Buterin, this will reduce protocol maintenance costs and accelerate the implementation of updates. The Privacy and Scaling Explorations (PSE) division has been cut, but work on zero-knowledge proof (ZK-proof) technologies will not stop — the focus shifts from research to practical implementation.
Devcon and the Future: Less Scale, More Stability
The changes will also affect the ecosystem's largest conference, Devcon — future events will be less large-scale and costly. Additionally, the EF plans to reduce the number of major initiatives that go beyond the development of Ethereum itself. Buterin intends to support some of these projects personally with his own funds. In the long term, the Ethereum co-founder advocates for a more conservative approach: after the completion of Strawmap, he suggests focusing on fixing vulnerabilities and making small improvements, taking a cue from Bitcoin. "It's worth looking less at multi-million-line codebases and more at Bitcoin," he noted.
Expert opinion: The EF restructuring is a signal of the ecosystem's maturity. The shift from a "spend while you have it" model to capital management and a focus on stability rather than expansion is what Ethereum needs for long-term sustainability. However, the 40% budget cut could slow innovation in the short term. The question is whether the community can compensate for this through decentralized initiatives and personal contributions from key figures like Buterin.