Ethereum Foundation cuts 20% of staff, trims budget

The Ethereum Foundation dismissed 54 employees, roughly 20% of its workforce, and cut its annual budget by about 40% on June 23 following a months-long review of structure, spending and responsibilities. The organization said the changes aim to prioritize core engineering, security and long-term financial resilience while the protocol team narrows its focus.

Data for the first quarter showed rising network activity alongside weaker financial metrics. Monthly active users reached 13.2 million, up 53.5% from the prior quarter and 85.9% year-over-year. Transaction count rose to 200.4 million, a 38% quarterly increase, and throughput hit a record 25.78 transactions per second. At the same time, layer‑1 transaction fees fell nearly 48% from the prior quarter to $39.9 million and declined 81.9% from a year earlier. Total value locked in the ecosystem dropped 11% to $316.2 billion, and Ethereum’s fully diluted market value was about $290 billion at quarter-end. Ether has fallen more than 44% year-to-date.

Remaining staff have been reorganized into five functional clusters: protocol, access, user, community and institutional. The protocol cluster will concentrate on core engineering work, cryptographic guarantees and defenses against concentrated influence on the chain. The foundation announced a multiyear plan to lower its annual spending rate from about 15% in prior years toward an eventual target near 5% after 2030.

Co-founder Vitalik Buterin paid tribute to departing colleagues, writing that he respected their work and the contributions they made to the ecosystem. Buterin added he would personally fund some larger projects that fall outside the foundation’s narrowed scope.

Institutional activity on Ethereum grew even as ETH’s market performance lagged. Tokenized assets on the network reached $203.4 billion in the first quarter, including $178.9 billion in stablecoins. Tokenized funds rose to $19.4 billion, up 73.1% year-over-year, and tokenized commodities climbed to $4.7 billion. Several major financial firms have developed tokenized funds and other offerings on Ethereum; industry executives described the network as a primary platform for programmable finance.

Spot Ether exchange-traded funds listed in the United States recorded seven consecutive weeks of outflows totaling nearly $1 billion, reflecting limited direct investor demand for the token. The foundation noted that financial firms can use tokenized funds and stablecoins without holding large ETH balances and that lower transaction costs reduce the amount of ETH needed for activity on the network.

Technical priorities under the new structure include reducing maximal extractable value, or MEV, which allows certain participants to profit by controlling transaction ordering. Proposed responses include stronger transaction-inclusion guarantees, lower barriers for block building, and greater transparency in transaction routing. Specific proposals under review are Forward Inclusion Lists (FOCIL) to make censorship harder, enshrined proposer-builder separation (ePBS) to formalize the relationship between validators and block builders, and encrypted mempools to hide pending transaction details and limit front-running. Researchers have warned that some solutions could create new technical or competitive risks.

Privacy protections are being elevated alongside those MEV efforts. The foundation aims to provide stronger user privacy while enabling targeted disclosure for identity or compliance when required. Bastian Aue, interim co-executive director, wrote that compensation and financial agreements will increasingly be paid in ETH and native stablecoins so staff operate within the system’s constraints. Aue added the foundation will decline requests to alter protocol parameters for short-term financial gain and will prioritize engineering designed to defend the ledger from centralization and capture.

To deliver the Ethereum Strawmap, the foundation will scale back several legacy initiatives, wind down its Privacy and Scaling Explorations unit as an independent research arm, shift cryptography experts into direct protocol implementation, and reduce the scale of its Devcon conference. Developers plan greater use of AI-assisted formal verification to lower engineering costs. Buterin described a longer-term “soft lean-and-done” approach in which future protocol changes focus mainly on security fixes and a limited set of high-value improvements.