Ethereum News Today: Ethereum Foundation's DeFi-Driven Treasury Strategy Sparks Debate Over Funding Methods

The Ethereum Foundation has executed a $4.5 million conversion of 1,000 Ether (ETH) into stablecoins through CoWSwap's Time-Weighted Average Price (TWAP) feature, aligning with its treasury strategy to fund research, grants, and decentralized finance (DeFi) initiatives. The transaction, disclosed via the foundation's social media channels, follows a similar but larger swap of 10,000 ETH in September 2025, valued at approximately $43.6 million at the time. Both moves reflect the foundation's ongoing efforts to balance liquidity management with ecosystem stewardship, as outlined in its June 2025 treasury policyThe Block^[1].

The recent 1,000 ETH conversion was structured to minimize market impact by leveraging CoWSwap's decentralized liquidity aggregation, which executes trades over time to achieve an average priceTronWeekly^[2]. This approach contrasts with the September 10,000 ETH sale, which utilized centralized exchanges. The foundation emphasized that the funds will support "ongoing work to fund R&D, grants, and donations," while also showcasing DeFi's utility in managing institutional-scale transactionsCoindesk^[3].

The treasury policy, updated in June 2025, establishes a framework for maintaining a 2.5-year operating expense buffer and targeting annual spending at 15% of total treasury assets. Over the next five years, the foundation aims to reduce this ratio to 5%, mirroring traditional endowment modelsEthereum Foundation Treasury Policy^[4]. The policy also prioritizes low-risk DeFi applications, such as stablecoin lending and synthetic assets, to generate sustainable returns while supporting Ethereum's core principles of decentralization and open-source innovationThe Coin Republic^[5].

The move has drawn mixed reactions from the Ethereum community. While some praised the strategic use of DeFi tools like CoWSwap, others criticized the foundation for not exploring alternative funding methods, such as borrowing against its ETH holdings via lending platforms or engaging in over-the-counter deals with digital asset treasuriesThe Block^[6]. Critics also noted that the foundation paused or scaled back several grant programs earlier in 2025 to reduce its burn rate, raising questions about the prioritization of its funding allocationsCoindesk^[7].

Ethereum's broader ecosystem has seen significant growth in stablecoin adoption, with total stablecoin supply on the network exceeding $170 billion in September 2025The Coin Republic^[8]. The foundation's increased reliance on stablecoins aligns with this trend, as they provide a stable funding source for multi-year projects and reduce exposure to ETH's price volatility. Notably, USDC and USDT dominate Ethereum's stablecoin market, though newer protocols like Ethena and USDS are gaining tractionEthereum.org^[9].

The foundation's leadership restructuring in 2025, including the appointment of co-executive directors Hsiao-Wei Wang and Tomasz K. Stańczak, underscores its focus on strategic and operational efficiencyCoinotag^[10]. This shift coincides with broader institutional interest in Ethereum, exemplified by Fidelity's $159.4 million ETH purchase for its spot Ethereum ETF and the resurgence of net inflows into Ethereum ETFs following the Federal Reserve's rate cut in September 2025The Coin Republic^[11].

As Ethereum continues to solidify its dominance in DeFi-accounting for 68% of total value locked (TVL) across the sector-the foundation's treasury decisions will likely influence the trajectory of ecosystem developmentCoindesk^[12]. By prioritizing DeFi infrastructure and liquidity management, the foundation aims to foster innovation while ensuring long-term financial stability for Ethereum's research and grant programs.