The Ethereum Foundation (EF) stands as a pivotal non-profit organization dedicated to supporting and nurturing the Ethereum ecosystem. Composed of a diverse community of organizations, individuals, and companies, it provides crucial funding for protocol development, fosters community growth, and promotes the broader adoption of Ethereum.
Positioned at the forefront of a new organizational model, the EF supports the blockchain ecosystem without exerting control over it. This unique stance requires continuous reflection on the foundation's role in bolstering Ethereum's long-term development.
The EF is structured into numerous small, autonomous teams, believing this to be the most effective way to accomplish its goals. New teams often emerge organically from existing ones to address the ecosystem's evolving needs.
These teams contribute to various facets of Ethereum, from building core software and exploring roadmap frontiers to cultivating global developer communities and communicating Ethereum's utility and potential to the world.
Core Values of the Ethereum Foundation
Over the past decade, the EF has navigated the highs and lows of Ethereum's journey. This experience has crystallized into three core values that guide its decisions and actions: long-term thinking, subtraction, and values-based governance.
Embracing Long-Term Thinking
While the crypto space often fixates on short-term market cycles, the EF is committed to a long-term perspective. This means undertaking actions today whose benefits may not be realized for years or even decades, accepting that some efforts might not yield immediate, or any, tangible results.
The Principle of Subtraction
Subtraction is the conscious effort to avoid accumulating power and prestige. The EF measures its success through the achievements of the entire Ethereum ecosystem, not its own accolades. It prefers to credit others, support independent organizations, and work diligently behind the scenes. This principle is a direct countermeasure to the natural tendency of organizations to centralize power—a trend incompatible with supporting a decentralized blockchain.
Upholding Values-Based Governance
Ethereum is more than just technology; it's a community bound by shared values and a vision for a better world. The ecosystem builds upon the rich history of open-source and cypherpunk communities, and the EF is dedicated to upholding these foundational principles.
EF Activities and Strategic Expenditures
The EF's work is executed through specialized teams and a robust grants program, all aimed at strengthening Ethereum's infrastructure and community.
Key Internal Teams
The foundation comprises teams focused on critical areas of development:
- Robust Incentives Group (RIG): This team focuses on Ethereum's mechanism design and cryptoeconomics. RIG's research explores how incentives directly and indirectly affect users and stakeholders, proposing mechanisms to restore incentive compatibility and system optimization.
- Protocol Support Team: This team ensures Ethereum has the right talent, processes, and perspectives for long-term maintenance. It facilitates network upgrades, helps attract and retain protocol contributors, and manages projects related to the network's sustainable development.
- Developer Conferences (Devcon): This team organizes and supports flagship events like Devcon to foster collaboration, education, and advocacy for Ethereum's values. It also expands Ethereum's global reach through community-driven meetups like Devconnect and regional grant programs.
The Grants Program
The EF provides financial support to vital projects across the ecosystem through its grants program, managed in part by the Ecosystem Support Program (ESP). Grants vary in size and scope.
- WTF Academy: Received a $30,000 grant in November 2022 to expand its free, open-source Web3 development tutorials, particularly for Solidity and Ethers, with a focus on creating and translating Chinese content.
- Security Alliance: Awarded $130,000 between 2022-2023 for initiatives like the Seal 911 emergency response, the White Hat Security Agreement, and security frameworks designed to create a safer ecosystem and prevent fund loss.
- Devcon University Roadshow: Granted $10,000 in April 2024 to host events at five Thai universities, introducing students to Ethereum, providing education, and connecting them with job opportunities.
Fostering an Independent Ecosystem
A key EF strategy is to avoid centralization by nurturing a vibrant ecosystem of independent organizations that share the responsibility for Ethereum's health and development. In the last two years, the EF has actively supported the growth of new entities.
- Argot Collective: A non-profit formed by former EF members focused on core infrastructure development like Solidity and Formal Verification, emphasizing long-term sustainability and transparency over profit.
- Geodework: A public-good organization dedicated to Ethereum's geographical decentralization by building community and educational infrastructure worldwide. It is currently being developed within the EF.
- L2BEAT: Provides transparent analytics and research on Layer 2 scaling projects, focusing on security and trust-minimization for users.
- Nomic Foundation: A non-profit providing open-source engineering software to ensure a high-quality, reliable developer experience for the Ethereum ecosystem.
- 0xPARC: Accelerates the development and deployment of programmable cryptography, including zero-knowledge proofs, for applications like autonomous worlds and identity.
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A Deep Dive into EF Spending (2022-2023)
The Ethereum Foundation's expenditures are meticulously categorized to reflect its strategic priorities.
Expenditure Categories
- L1 Research & Development: Includes work on mainnet upgrades, core clients (like Geth), internal security research, cryptography R&D, and economic modeling. It also covers grants to external client teams and projects for network stress testing.
- L2 Research & Development: Encompasses internal team support and external grants for improving the L2 ecosystem, including educational resources, block explorers, developer tools, and security reviews.
- Applied ZK R&D: Funds teams working on zero-knowledge applications like MACI and Anon Aadhaar, plus grants for ZK development tools and proof-of-concept projects.
- Developer Platform: Supports tools and libraries that enhance Ethereum for developers, including Solidity, Remix, Ethers.js, Web3.js, and support for the Python ecosystem.
- Community Development: Covers a wide range of community support, from core protocol and staking communities to Next Billion initiatives, Devcon/Devconnect events, Ethereum.org, and grants to local communities globally.
- Internal Operations: Includes general overhead supporting all EF teams: legal, accounting, financial services, organizational subscriptions, and salaries for operational staff.
- New Institutions: Features grants allocated to support new, independent organizations within the ecosystem, such as Nomic Foundation, 0xPARC, and L2BEAT.
Ethereum Foundation Financial Reserves
As of October 31, 2024, the Ethereum Foundation's total treasury reserves amounted to approximately $970.2 million.
This substantial reserve is strategically allocated:
- $788.7 million in crypto assets.
- $181.5 million in non-crypto investments and assets.
A dominant 99.45% of the crypto holdings are in ETH, representing 0.26% of the total ETH supply at the time of reporting.
This heavy weighting in ETH demonstrates the Foundation's deep confidence in Ethereum's long-term potential. However, managing this reserve is a balance between conviction and prudence. The goal is to provide stable, long-term funding for crucial public goods within the ecosystem.
To achieve this, the EF follows a conservative treasury management policy. This involves periodically selling portions of its ETH holdings to build up fiat currency reserves during bullish markets. This strategy ensures the Foundation has ample resources to continue its operations and grant-making activities even during prolonged market downturns, securing its mission for years to come.
A Thriving Ecosystem Facing the Future
The Ethereum ecosystem has matured significantly, now supported by a diverse array of organizations—including companies, non-profits, and DAOs—all contributing to its growth. The collective strength of this ecosystem is greater than ever.
Ecosystem Treasury Overview
As of 2024, the combined treasuries of projects within the Ethereum ecosystem, including the EF and other major organizations, represent a multi-billion dollar war chest for future development.
It is crucial to understand that most project treasuries are predominantly held in their native tokens. This means the total nominal value is much larger than the amount of capital that can be immediately deployed in fiat without affecting the market. This depth of resources, even if deployed gradually over the next decade, provides a significant foundation for Ethereum's ongoing development and maintenance.
Total Capital Deployed (2022-2023)
A broad analysis indicates that organizations within the Ethereum ecosystem deployed over $497 million in 2022 and 2023 to support projects across the community.
This figure includes funding for public goods and grants for projects building within the ecosystem. It excludes equity investments, token generation events, or airdrops. Data was gathered from public sources and direct contact with 94 organizations, though it is acknowledged to be incomplete due to non-responses and the difficulty of tracking internal expenditures.
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Frequently Asked Questions
What is the primary goal of the Ethereum Foundation?
The Ethereum Foundation's primary mission is to support the long-term development and health of the Ethereum ecosystem. It does this by funding critical research, development, and community projects without attempting to control or direct the protocol's evolution, adhering to principles of decentralization.
How does the EF decide which projects to fund?
Funding decisions are made through a collaborative process involving various internal teams. The Ecosystem Support Program (ESP) plays a key role in evaluating and awarding grants to external projects that align with Ethereum's needs, such as those improving security, scalability, developer experience, or community education.
Why does the EF hold most of its treasury in ETH?
Holding reserves primarily in ETH is a strategic choice that demonstrates the Foundation's long-term belief in the success of the Ethereum network. It aligns the EF's financial health directly with the ecosystem's growth. A careful treasury management policy involves converting some ETH to fiat to ensure operational stability during market cycles.
What is the difference between EF grants and funding from other organizations?
While the EF is a major funder, it actively encourages a diverse funding landscape. Other organizations, like Protocol Guild or various DAOs, provide funding based on their specific mandates. This multi-faceted support system reduces reliance on any single entity and strengthens the ecosystem's resilience.
How does the EF support decentralization?
A core strategy is "subtraction" – actively avoiding centralization of influence. The EF supports the rise of independent organizations and teams to which it can eventually delegate responsibilities. This includes spinning out internal teams into separate entities and providing grants to other groups doing essential work.
Are the financial reports from the EF audited?
The Foundation maintains transparency through its annual reports, which detail its finances and activities. While this provides a clear overview, those seeking granular financial details should look for the specific reports for the most accurate and verified information.