Ethereum Foundation Implements New Treasury Policy for 18-Month Runway

The Ethereum Foundation has implemented a new treasury policy, marking the next 18 months as a crucial period for the blockchain. This strategic shift aims to bolster the foundation's financial stability and optimize resource allocation. The policy involves regularly reassessing operational costs and cash needs, aligning them with Ether reserves and sales. This approach ensures that short-term operations support the foundation's long-term strategy, with a focus on the pivotal years of 2025 and 2026.

Hsiao-Wei Wang, a director of the Ethereum Foundation, highlighted the significance of this period, stating that the foundation currently has 2.5 years of runway before it exhausts its cash reserves. This underscores the importance of deploying resources more deliberately and providing enhanced support to the ecosystem. The new policy follows community backlash over recent unexpected Ether sales, which some critics argued undermined trust in the foundation.

To maintain transparency, the Ethereum Foundation will publish quarterly and annual reports detailing its asset holdings, investment performance, and significant developments. 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 (ETH).

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The foundation aims to "earn acceptable returns" on its treasury assets by engaging with permissionless protocols that are immutable and thoroughly audited. This strategy supports protocols that align with what the foundation calls "Defipunk principles" while strengthening its treasury position. In February, the foundation allocated 45,000 ETH, worth $120 million at the time, to various decentralized finance protocols. It has already supplied ETH and borrowed $2 million worth of the GHO stablecoin from Aave’s lending protocol. Spark and Compound were among the other DeFi protocols that received support from the foundation.

Historically, the Ethereum Foundation has avoided supporting specific protocols to maintain neutrality. However, this stance drew criticism from some ecosystem innovators, including Infinex founder Kain Warwick, who accused the foundation of being anti-DeFi. The foundation's new approach reflects a shift in its strategy to better support the DeFi ecosystem. Additionally, the Ethereum Foundation announced a restructuring of its internal development team, which involved some members being laid off, although the exact number was not disclosed. This restructuring comes amid ETH's underperformance in the current bull cycle, lagging behind other cryptocurrencies like Bitcoin and Solana. ETH remains 46.5% below its November 2021 peak of $4,878.