The Ethereum Foundation has committed 50,000 Ether (approximately $165 million) to bolster Ethereum’s decentralized finance (DeFi) ecosystem. Co-founder Vitalik Buterin revealed the initiative on January 20 via a post on X, signaling a renewed focus on app developers and greater transparency within the Ethereum community.
According to Ethereum Foundation researcher Hsiao-Wei Wang, the funds will be secured in a three-of-five multisig wallet on Safe. The wallet has already completed a test transaction on the lending protocol Aave. However, Wang noted in a January 20 post on X that the wallet setup may take a few days to finalize.
Ethereum Foundation Treasury in Decline
The Ethereum Foundation’s treasury has seen a significant decrease, falling 56% from 617,000 Ether in January 2020 to 269,000 Ether (around $894 million today), according to Arkham Intelligence. The newly allocated 50,000 Ether represents 18.5% of the foundation’s current holdings, suggesting a strategic move to reinvigorate DeFi activity while addressing community concerns about the foundation’s priorities.
Community Criticism and Leadership Challenges
The Ethereum Foundation has faced criticism from some community members for its perceived disengagement with DeFi. Kain Warwick, founder of Infinix, has been particularly vocal, accusing the foundation of lacking interest in the space. Others have raised concerns over the Ether sell pressure created by the foundation to fund operations, including salaries and events.
Ethereum core developer Eric Conner highlighted that staking rewards could potentially cover much of the foundation’s budget, alleviating some of this sell pressure. However, some attribute the foundation’s limited engagement and leadership to Ether’s underperformance against Bitcoin and Solana in recent months.
Buterin Defends Neutral Approach
Vitalik Buterin pushed back against calls for an ideological pivot or regulatory lobbying, emphasizing the foundation’s goal to remain “credibly neutral.” This approach earned praise from CryptoQuant CEO Ki Young Ju, who commended Buterin and the foundation for focusing on creating long-term value rather than pursuing short-term profits, even as figures in the crypto world increasingly profit from trends like memecoin launches.
The Ethereum Foundation’s renewed commitment to DeFi may help reestablish its position in the space while addressing growing concerns from within the community. Time will tell whether this move signals a broader strategic shift for the nonprofit.
