The Ethereum Foundation is cutting its budget by roughly 40% and reducing staff by about 20%, concluding a planned shift toward a leaner, endowment-style organization with a narrower set of priorities.

Co-founder Vitalik Buterin called the cuts a deliberate trade, not an efficiency drive. Solana co-founder Anatoly Yakovenko went further, arguing the leaner foundation will move faster and prove bullish for Ethereum.

What the Budget Cut Removes

The foundation confirmed it is cutting 54 roles, close to one-fifth of its staff. It is reorganizing into a seven-cluster structure built around protocol security, censorship resistance, and privacy.

Buterin did not frame the reductions as pure efficiency. He named concrete losses. These include a smaller Devcon, the wind-down of Privacy and Scaling Explorations, and fewer projects beyond Ethereum.

The Ethereum co-founder also signaled his diminishing influence on the board.

The foundation’s June 2025 treasury policy set annual spending at 15% of holdings, with a 2.5-year cash buffer. It mapped a glide path to a 5% endowment baseline by about 2030.

To sell less ether (ETH), it now leans on staking and DeFi yield instead of principal.

“This year, the EF is decreasing its budget by roughly 40%, which entails some difficult decisions… the EF is transitioning into being a long-term-oriented endowment-based organization…” Vitalik Buterin wrote.

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Buterin tied the budget to Ethereum’s Strawmap, which he calls the network’s third iteration after the Merge.

He wants that core protocol overhaul finished, then a higher bar for new features. He also expects leaner shipping.

Buterin said more of the protocol will shift from client redundancy to AI-assisted formal verification, reducing upgrade costs.

Solana Co-Founder Sees Upside

Not everyone reads the cuts as a decline. Solana co-founder Yakovenko argued that tight budgets force focus.

“Bullish… Budget constraints force prioritization and focus. Ethereum isn’t going away. A smaller and leaner EF will be more decisive and will move faster and will be able to course correct faster,” the Solana executive wrote.

Skeptics see risk. Former foundation contributor Trent Van Epps warned of a roughly $30 million annual funding gap for core development.

BitMine chairman Tom Lee dismissed the crisis talk, betting private backers and stakers will step in.

That bet is already taking shape. Days earlier, five former foundation researchers launched an independent nonprofit, Ethlabs. Lee and Ethereum co-founder Joe Lubin backed it to push institutional adoption.

Ethereum reflected the unease. Ether’s price action slid below $1,660, down about 5% over 24 hours. It retained its rank as the second-largest cryptocurrency, valued at about $200 billion.

The next treasury reports and protocol milestones will test the bet.

They will show whether a smaller foundation ships faster, as Yakovenko predicts, or whether the lost talent slows Ethereum’s most ambitious upgrade yet.

Source: BeInCrypto