The Ethereum Foundation is adopting a more structured and transparent reserve policy, linking its operating costs and cash needs to its Ether (ETH) reserves and sales to enhance its financial position, as it anticipates the next 18 months will be crucial.
A board member of the foundation stated on June 4 that its annual operating costs—calculated as a percentage of the foundation's reserves—and the sustainable duration of cash reserves will be regularly reassessed, taking into account market dynamics and community feedback, to ensure the foundation's short-term operations align with its long-term strategy.
Hsiao-Wei Wang indicated that the Ethereum Foundation currently has only 2.5 years of cash reserves, laying the groundwork for the critical period ahead, as the foundation aims to deploy resources more prudently and provide more ecosystem support:
"This policy reflects our belief that 2025 to 2026 may be a pivotal time for Ethereum, warranting a strengthened focus on key outcomes."
The tightened reserve policy was introduced following strong community backlash against the foundation's unexpected sale of Ether (ETH) in recent months, with some critics claiming that this series of actions undermined trust in the foundation.
To fulfill its commitment to transparency, the foundation will publish quarterly and annual reports outlining its asset holdings, investment performance, and any significant developments during each period.
As of October 31, the foundation's total reserves amount to approximately $970.2 million, which includes $788.7 million in crypto assets and $181.5 million in non-crypto assets.
Over 81% of the foundation's total holdings are in Ether (ETH). According to CoinGecko data, the price of ETH has dropped by about 1.8% since then.
The foundation stated that it aims to "achieve acceptable returns" from its reserve assets by participating in permissionless, immutable, and thoroughly audited protocols.
This approach allows the foundation to support protocols advocating what it calls the "Defipunk principles," while strengthening its reserve position.
In February, the foundation allocated 45,000 ETH—worth $120 million at the time—for deployment into various decentralized finance protocols.
Aave founder Stani Kulechov stated on May 29 that the foundation had provided ETH to Aave's lending protocol and borrowed $2 million worth of GHO (GHO) stablecoin.
Spark and Compound are among other DeFi protocols supported by the foundation.
The Ethereum Foundation has traditionally avoided supporting specific protocols to maintain credible neutrality and avoid favoritism towards any project. However, this stance has drawn criticism from some ecosystem innovators, including Infinex founder Kain Warwick, who accused the foundation of being anti-DeFi.
The foundation also announced on June 2 a restructuring of its internal development team, involving layoffs of some members.
The foundation did not disclose the number of affected individuals.
These changes come against the backdrop of ETH underperforming in the current bull market, lagging behind Bitcoin (BTC) and Solana (SOL), the latter of which recently reached an all-time high. In contrast, ETH remains 46.5% lower than its peak of $4,878 in November 2021.
Related: Ethereum Foundation lays off and restructures core team
Original: “Ethereum Foundation Calls Next 18 Months ‘Pivotal’ and Introduces New Reserve Policy”
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