Ethereum Foundation Declares Next 18 Months ‘Crucial’ With New Treasury Policy
The crypto world is buzzing following a significant announcement from the Ethereum Foundation. The organization supporting the Ethereum blockchain has revealed a new treasury policy. This move is designed to improve resource allocation and bolster its financial health, especially as it anticipates a critical period ahead. The Foundation describes the next 18 months as ‘pivotal’ for the network.
Why is the Ethereum Foundation Changing Its Treasury Policy?
The core reason behind the updated policy is to create a more structured and transparent approach to managing the Foundation’s assets. This involves directly linking operational costs and cash needs to its Ether (ETH) reserves and sales strategies. By doing this, the Ethereum Foundation aims to strengthen its financial position and ensure long-term sustainability.
Key aspects of the new policy include:
- Regular reassessment of annual operating costs as a percentage of the treasury.
- Evaluation of the Foundation’s cash runway (how long it can operate based on current funds).
- Factoring in market dynamics and community input into financial decisions.
According to Hsiao-Wei Wang, a Foundation director, the EF currently has approximately 2.5 years of cash runway. This limited timeframe underscores the importance of the upcoming 18 months, necessitating a more deliberate deployment of resources and enhanced support for the ecosystem. Wang stated, “This policy reflects our conviction that 2025-26 are likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables.”
How Does Transparency Address Past Concerns About ETH Sales?
The tightened treasury policy comes partly in response to community feedback regarding unexpected ETH price sales by the Foundation in recent months. Some critics felt these sales eroded trust. To rebuild and maintain confidence, the EF is committing to greater transparency.
The new policy includes a commitment to publishing regular reports:
- Quarterly reports outlining asset holdings and investment performance.
- Annual reports detailing significant financial developments.
As of October 31, the Foundation’s treasury held about $970.2 million. This was primarily split between $788.7 million in crypto assets (over 81% in ETH) and $181.5 million in non-crypto assets. While the exact current value fluctuates, CoinGecko data shows the ETH price has seen minor changes since that report.
Engaging with DeFi Protocols: A New Strategic Focus
A notable shift in the new policy is the Foundation’s intention to actively engage with permissionless DeFi protocols. Historically, the EF maintained a stance of credible neutrality, largely avoiding direct support for specific projects to prevent perceived favoritism. However, this approach drew criticism from some in the ecosystem who felt the Foundation was disconnected from the growing DeFi space.
The new strategy involves:
- Earning returns on treasury assets by participating in immutable and thoroughly audited protocols.
- Supporting protocols that align with ‘Defipunk principles’.
An example of this new approach is the Foundation setting aside 45,000 ETH (worth $120 million at the time) in February for deployment into various decentralized finance applications. Aave founder Stani Kulechov confirmed that the EF supplied ETH and borrowed $2 million worth of the GHO stablecoin from Aave’s lending protocol. Spark and Compound are also mentioned as recipients of support.
This engagement aims not only to earn potential returns but also to provide tangible support and validation to key DeFi protocols within the ecosystem.
What Else is Happening at the Ethereum Foundation?
Beyond the treasury policy, the Foundation also announced internal changes, including a restructuring of its development team which involved some layoffs. The specifics regarding the number of individuals affected were not disclosed.
These changes occur against a backdrop where ETH’s market performance has lagged behind other major cryptocurrencies like Bitcoin (BTC) and Solana (SOL) during the recent bull cycle. While BTC and SOL have reached new all-time highs, the ETH price remains significantly below its November 2021 peak.
The Significance of This Crypto News
This crypto news from the Ethereum Foundation highlights a proactive effort to ensure the long-term health and efficiency of the organization supporting one of the world’s leading blockchains. By adopting a more transparent and strategic treasury policy, engaging directly with DeFi protocols, and streamlining internal operations, the EF is positioning itself and the Ethereum ecosystem for what it believes will be a crucial period of development and adoption in 2025-2026. The focus on sustainability, transparency, and strategic resource allocation signals a maturing approach from the Foundation as Ethereum continues to evolve.
