Ethereum Foundation Shifts Treasury to DeFi, Reduces ETH Sales by 46%

The Ethereum Foundation (EF) has implemented a new treasury management strategy, transitioning its reserves into decentralized finance (DeFi) platforms and significantly reducing the sale of its native cryptocurrency, Ether (ETH). This strategic shift is designed to bolster the growth and development of the Ethereum ecosystem, with a particular focus on the rapidly expanding DeFi sector.

Previously, the foundation relied heavily on selling ETH to fund its operations and various projects within the Ethereum network. By moving its treasury to DeFi platforms, the EF aims to capitalize on the advantages of decentralized financial services, including enhanced liquidity, transparency, and security. This move aligns with the foundation's overarching goals of promoting decentralization and fostering innovation within the Ethereum network.

Under the new policy, the EF will link its operating costs and financial runway to its ETH holdings, with regular reassessments to ensure prudent capital deployment. Hsiao-Wei Wang, a representative from EF, emphasized that the current treasury provides the Foundation with approximately 2.5 years of operational runway, underscoring the importance of more deliberate financial management moving forward.

As part of this transition, the EF will deploy its treasury assets across audited DeFi protocols such as Aave, earning yield and actively engaging with the Ethereum ecosystem. This development is seen as bullish for ETH, as it reduces the need to sell tokens while supporting secure, open-source decentralized applications (dApps). The EF has already lent ETH and borrowed $2 million in stablecoins from Aave, and it may explore real-world assets (RWAs) via platforms like Securitize in the future.

While ETH sales may still occur quarterly to meet fiat needs, the foundation will do so less aggressively now that DeFi income streams are active. Additionally, the EF is considering diversifying its fiat reserves into low-risk instruments such as Treasury bills and bonds. To maintain community trust, the foundation will publish quarterly reports detailing asset performance, positions, and major events, enhancing transparency following recent Ether sales that sparked backlash.

This revamped strategy signals the EF's long-term commitment to Ethereum's growth, especially as ETH remains 46% below its 2021 high and trails behind other cryptocurrencies like Bitcoin (BTC) and Solana (SOL). By directly supporting "Defipunk" principles and ecosystem builders, the foundation is laying the groundwork for Ethereum's next growth chapter. This strategic move is expected to have a positive impact on the Ethereum ecosystem, providing more opportunities for developers and users to engage with decentralized financial services.