Ethereum Foundation cuts 20% staff, trims budget 40%

On June 23 the Ethereum Foundation announced it had dismissed 54 employees, about 20% of its workforce, and reduced its budget by roughly 40% after a months-long review of its structure, spending and long-term role in the ecosystem. The organization said it will concentrate on core protocol engineering and risk reduction.

The remaining staff have been organized into five functional divisions covering the protocol, access, user, community and institutional layers. The Protocol cluster will prioritize scaling work, user experience improvements and stronger layer-1 cryptographic guarantees. The foundation also plans to move some internal compensation and financial agreements into ETH and native stablecoins.

Foundation leaders said the reorganization aims to preserve capital and reduce sensitivity to crypto market swings so engineering work can proceed under tighter financial constraints. The group also intends to decline requests to change protocol parameters to satisfy short-term speculative interests or corporate appeal.

Network usage rose sharply in the first quarter even as market metrics weakened. 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 and throughput reached a record 25.78 transactions per second. At the same time, layer-1 transaction fees fell to $39.9 million, down nearly 48% from the previous quarter and about 82% year over year. Total value locked dropped to $316.2 billion, an 11% decline, and fully diluted market value fell to about $290 billion. Ether traded near $1,670, down more than 44% year-to-date.

Institutional use of the network grew alongside user activity. Tokenized assets on the network totaled $203.4 billion in the quarter, including $178.9 billion in stablecoins. Tokenized funds rose to $19.4 billion, a 73.1% increase year over year. Tokenized commodities and tokenized stocks also increased. Major financial firms including BlackRock, JPMorgan, Franklin Templeton and Fidelity have built tokenized funds or other offerings that use Ethereum infrastructure. US-listed spot Ether ETFs recorded seven straight weeks of outflows totaling nearly $1 billion.

The foundation identified technical defenses as a central engineering priority. It highlighted maximal extractable value, or MEV, as a key risk: MEV refers to profits that validators, block builders or others can gain by ordering, including or excluding transactions. Proposed protocol responses include Forward Inclusion Lists (FOCIL) to make selective censorship harder, enshrined proposer-builder separation (ePBS) to reduce reliance on external relays, and research into encrypted mempools to hide pending transaction details before execution. The foundation said it will assess privacy, fairness and added complexity when weighing these tools.

Ethereum co-founder Vitalik Buterin wrote that he respects the departing employees and acknowledged the loss: “They are brilliant people. They are dedicated engineers, some of whom have worked on the Ethereum protocol for nearly a decade.” He added he will personally fund certain large projects that the foundation will no longer cover and described a preference for a “soft lean-and-done” model for future protocol changes, where only high-value improvements are pursued after major planned work.

Bastian Aue, interim co-executive director, wrote that staff must live within the constraints of the system the foundation exists to improve and listed areas such as wallet user experience, volatility, accounting, privacy and recovery. He added that development will focus on engineering that reduces centralization or capture by concentrated interests.

To fit the smaller budget, the foundation will scale back several legacy initiatives. The Privacy and Scaling Explorations unit will be wound down as an independent research arm and cryptography experts will move toward protocol implementation. Work on the multi-client model will become more specialized, developers will explore AI-assisted formal verification, and the Devcon developer conference will be presented in a reduced format. The foundation also plans a long-term reduction in annual spending, moving from roughly 15% of its assets spent annually before 2026 to about 5% after 2030.