Ethereum Foundation Announces New Treasury Policy Amid 46.5% Price Drop

The Ethereum Foundation has announced a new treasury policy aimed at strengthening its financial position over the next 18 months, which it deems pivotal for the Ethereum ecosystem. The policy focuses on tying operational costs and cash needs to its Ether reserves and sales, ensuring a more structured and transparent approach to financial management.

One of the foundation’s directors, Hsiao-Wei Wang, highlighted that the foundation currently has a 2.5-year runway before it exhausts its cash reserves. This underscores the importance of the next 18 months, during which the foundation aims to deploy resources more deliberately and provide enhanced support to the ecosystem. Wang emphasized that this period is crucial for Ethereum, requiring a heightened focus on critical deliverables.

The new policy comes in response to community backlash over the foundation’s recent Ether sales, which some critics argued have eroded trust in the organization. To address these concerns, the Ethereum Foundation will publish quarterly and annual reports detailing its asset holdings, investment performance, and any significant developments. This commitment to transparency aims to rebuild trust and provide the community with a clearer understanding of the foundation’s financial health.

As of October 31, the foundation’s treasury totaled approximately $970.2 million, with $788.7 million in crypto assets and $181.5 million in non-crypto assets. Over 81% of the foundation’s total position was in Ether. The foundation plans to engage with permissionless protocols that are immutable and thoroughly audited to earn acceptable returns on its treasury assets. This approach aligns with the foundation’s support for protocols that champion what it calls “Defipunk principles,” while also strengthening its treasury position.

In February, the foundation allocated 45,000 Ether, worth $120 million at the time, to various decentralized finance protocols. It has already supplied Ether and borrowed $2 million worth of the GHO stablecoin from Aave’s lending protocol. Other DeFi protocols that received support from the foundation include Spark and Compound. This shift in strategy marks a departure from the foundation’s historical stance of maintaining credible neutrality and avoiding support for specific protocols. The change was prompted by criticism from ecosystem innovators who accused the foundation of being anti-DeFi.

Additionally, the Ethereum Foundation announced a restructuring of its internal development team on June 2, which involved some members being laid off. The foundation did not disclose the number of individuals affected by these changes. These adjustments come amid Ethereum’s underperformance in the current bull cycle, where it has lagged behind other cryptocurrencies such as Bitcoin and Solana. Ethereum remains 46.5% below its November 2021 peak of $4,878.