Ethereum Foundation Cleared in $56M DeFi Deposit, ETH Drops 15%

The Ethereum Foundation (EF) has been cleared of involvement in a recent $56 million deposit into the decentralized finance (DeFi) protocol Sky. On March 10, a wallet address deposited 30,098 Ether (ETH), valued at approximately $56 million, into Sky, sparking speculation that the EF might have moved funds into the lending protocol as a strategic move to avoid selling ETH directly to fund its operations.

However, community members swiftly refuted these claims, asserting that the wallet in question does not belong to the Ethereum Foundation. Eric Conner, the co-author of Ethereum Improvement Proposal (EIP-1559), dismissed a report by Wu Blockchain as “completely fake,” indicating that the address is not associated with the EF. Anthony Sassano, host of The Daily Gwei, also confirmed that the wallet does not belong to the EF.

Wu Blockchain later clarified that while the account was initially suspected of belonging to the Ethereum Foundation, transaction history suggested it was more likely associated with an early Ethereum investor. The address received a 4 million Dai (DAI) transfer from the EF ETH Sale in May 2022, and initial ETH funding was traced back to a wallet called jonny.eth. The address deposited the $56 million into the Sky vault to avoid liquidation as ETH prices tumbled. On March 10, ETH dropped from a high of $2,138 to $1,813, a 15% decline. This move allowed the wallet to avoid liquidation, lowering its liquidation price to $1,127.14, 40.19% below ETH’s price of $1,896 at the time of writing.

Despite the recent deposit into Sky not being linked to the Ethereum Foundation, the EF has faced criticism in the past for selling ETH for stablecoins to fund team salaries and operations. In January, community members suggested that the foundation could instead borrow stablecoins against its ETH holdings rather than sell the assets. Sassano proposed that the foundation should consider using Aave to borrow stablecoins against ETH. Sky allows users to do something similar. By depositing ETH, users can borrow DAI.

On Feb. 13, the EF responded to community feedback and deployed 45