Ethereum co-founder Vitalik Buterin stated on Tuesday that the Ethereum Foundation (EF) would be making significant cuts, slashing about 40% of its budget this year. This move symbolizes the foundation's shift towards a leaner operational model, akin to a university's Endowment Fund, relying on investment returns to sustain long-term operations.
While tightening the belt, there’s also a major shake-up in personnel. On the same day the budget cuts were announced, the Ethereum Foundation confirmed it would be laying off 20% of its staff; additionally, co-executive director Hsiao-Wei Wang announced her resignation last week. Since her departure, a total of 9 top executives have left the foundation since January, highlighting the internal turbulence and restructuring the organization is undergoing.
Regarding this major move to downsize, Vitalik Buterin explained that the primary goal is to make the foundation’s financial structure more sustainable. Before 2026, the foundation consumes about 15% of its treasury remaining funds each year; for the longer-term goal, it hopes that after 2030, the annual spending proportion will be reduced to about 5%.
Vitalik Buterin noted, “I have a great deal of respect for my colleagues at the foundation, so I can’t pretend that we haven’t lost anything precious.”
He said this is a “difficult decision,” and it also means that many senior engineers who have devoted years to Ethereum will leave the team. Between the lines, there’s a sense of reluctance and helplessness toward the team.
Despite facing budget tightening, the foundation will still keep making sure funds keep flowing to support Ethereum’s grand development blueprint. Vitalik Buterin calls this phase the “third iteration” of the underlying protocol after “The Merge.”
To this end, resources will be significantly consolidated to reduce non-core overhead: this includes gradually winding down the “Privacy and Scaling Exploration (PSE)” department, reducing the scale and cost of the annual Devcon conference, converging the cooperation strategy with external institutions, and shifting toward a professional client team supported by “AI-assisted formal verification.”
Vitalik Buterin also reiterated his ultimate vision for Ethereum’s future: once the current roadmap is fully implemented, Ethereum will enter a state of “streamlined yet complete.” At that time, the protocol’s development focus will no longer be on expanding new features, but on concentrating on foundational security fixes and a small number of upgrades with major impact.
Behind this reorganization announcement is a reflection of the pressures Ethereum is currently facing from both inside and outside. Externally, Ethereum must maintain its leading position in the “public chain war” as numerous players fight for dominance, and withstand increasingly heavy competitive pressure. Internally, it needs to get through this period of upheaval in leadership staffing, and re-establish the Ethereum Foundation’s crucial role across the entire crypto ecosystem.
Can this “break and rebuild” transformation allow Ethereum to evolve again? The cryptocurrency market is holding its breath.
“Turning to a long-term operating model! Ethereum Foundation’s major downsizing: this year’s budget cut by 40%, layoffs of 20%.” This article was first published on (Blockcast).