Ethereum Foundation Announces New Treasury Policy Ahead of Key 18 Months

The Ethereum Foundation is adapting its treasury policy to connect operating costs to Ether reserves and sales, anticipating a crucial 18 months ahead. With an annual operating cost tied to its treasury, the foundation looks to assess its position regularly. Transparency reports on asset holdings will be shared, following criticism over recent Ether sales. Additionally, it plans to engage more with DeFi protocols to enhance its financial returns.

The Ethereum Foundation has revealed its intention to implement a more structured treasury policy due to what it describes as a critical 18 months ahead. This new strategy aims to link its operational expenditures and cash needs to the Ether reserves and sales, enhancing overall financial stability. A representative from the foundation, speaking on June 4, indicated that regular evaluations would take place, reflecting market dynamics and community insights, to keep short-term operations aligned with long-term objectives.

According to Hsiao-Wei Wang, a director at the foundation, the ETH reserves could only sustain operations for about 2.5 years. This timeline underscores the importance of the upcoming 18 months, during which the foundation plans to allocate resources more strategically while boosting ecosystem support. Wang emphasised that the years 2025-26 are critical for Ethereum, necessitating a stronger focus on key objectives.

This policy overhaul comes after considerable backlash regarding the Ethereum Foundation’s recent sales of Ether, which some critics argued diminished trust in the organisation. To address transparency concerns, the foundation has committed to providing detailed quarterly and annual reports on its asset holdings, investment outcomes, and significant operational changes. Currently, Ethereum Foundation’s treasury is valued at approximately $970.2 million, composed of $788.7 million in cryptocurrency and $181.5 million in traditional assets, with over 81% of this stake in ETH. Notably, ETH’s value has decreased about 1.8% since these figures were announced, according to CoinGecko.

In a bid to ensure better financial returns, the Ethereum Foundation plans to engage with decentralised finance (DeFi) protocols that are both immutable and thoroughly vetted. This engagement is intended to support the foundation’s adherence to so-called “Defipunk principles,” all while enhancing its treasury reserves. Earlier this year, for example, the EF allocated 45,000 ETH — roughly $120 million back then — to several DeFi projects. Recent reports indicate contributions to Aave’s lending protocol, where the foundation borrowed GHO stablecoin worth $2 million. Other DeFi projects like Spark and Compound have also received backing.

Historically, the Ethereum Foundation has chosen to remain neutral in the DeFi space, which aimed to keep credibility intact without favouring specific protocols. However, this approach met with criticism, particularly from ecosystem players wanting more support. Kain Warwick, the founder of Infinex, labelled the foundation as being anti-DeFi, signalling a disconnect between the foundation’s operational stance and community expectations.

In another related development, on June 2, the Ethereum Foundation undertook a restructuring of its internal development team, resulting in unreported layoffs. This reshuffle appears to be a response to Ethereum’s underwhelming performance, which has seen it lag behind other cryptocurrencies like Bitcoin and Solana — both of which have enjoyed recent highs. Currently, ETH is still trailing 46.5% below its all-time high of $4,878 reached in November 2021.