The Ethereum Foundation enters austerity mode: budget cut by 40%, governance structure restructured
The Ethereum Foundation (EF) has officially announced a deep reorganization affecting both its governance structure and financial strategy. Ethereum co-founder Vitalik Buterin confirmed that the foundation is cutting operational expenses by approximately 40%, transitioning to a long-term capital management model. This is not just optimization — it is a shift in philosophy.
New Governance Architecture: Three Pillars
According to the updated plan, EF's activities will be structured around three key areas: core protocol development (Protocol), accelerating technology adoption and ecosystem scaling (Acceleration), and ensuring long-term network and community sustainability (Stewardship). The goal is to increase transparency and accelerate strategic decision-making, especially ahead of the large-scale Strawmap upgrade program, which will affect virtually all network components.
Financial Strategy: From Spending to Capital Management
Buterin disclosed the key parameters of the new financial model. While before 2026 EF spent about 15% of its remaining reserves annually, after 2030 this figure should drop to 5%. "The Ethereum Foundation is turning into an organization living off a long-term capital fund," he explained. The 40% budget cut has already led to personnel changes and the winding down of several initiatives.
Focus on AI and Formal Verification
One of the most significant changes will be a revision of the approach to Ethereum client security. Instead of a model based on redundancy across multiple clients, the ecosystem will more actively adopt formal verification and AI-based tools for bug detection. According to Buterin, this will reduce the costs of supporting a large number of protocol implementations and accelerate the rollout of updates.
Closure of PSE and Priority Reassessment
The Privacy and Scaling Explorations (PSE) division, which focused on research in privacy and scaling, has been cut. However, work on zero-knowledge proof technologies is not stopping — the emphasis shifts from experimental research to implementing already developed solutions directly into the protocol and user infrastructure.
Devcon Will Become More Modest
The changes will also affect the ecosystem's largest conference, Devcon. Future events will be smaller in scale and less costly for the foundation. Additionally, 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 using his own funds.
After Strawmap — A Course Toward Stability
In the long term, the Ethereum co-founder advocates for a more conservative approach to network development. After the Strawmap program is completed, he proposes focusing primarily on fixing vulnerabilities and making small improvements with high practical value, significantly raising the bar for introducing new features. "We should look less to multi-million-line codebases and more to Bitcoin," Buterin noted.
My analysis: This decision is not a crisis response but a well-thought-out strategic maneuver. The Ethereum Foundation is essentially acknowledging that the era of "unlimited research funding" is coming to an end. The shift to a long-term capital model and the focus on formal verification are signs of network maturity, which must now prove its efficiency rather than just promise innovation. If this plan works, Ethereum will become not only technologically but also financially sustainable.