Structured Financial Management and DeFi Engagement Aim to Strengthen Ethereum’s Strategic Outlook

The Ethereum Foundation (EF) has announced a revised treasury management policy designed to improve financial transparency, stabilize operations, and prioritize critical initiatives, with leadership declaring the upcoming 18 months as “pivotal” for the Ethereum ecosystem.

The new framework, introduced on June 4, reflects a more structured approach to managing the Foundation’s $970 million treasury, tying spending and cash runway to ETH reserves, market dynamics, and ecosystem feedback. The move follows mounting community pressure over recent Ether (ETH) sales and perceived lack of strategic clarity.

Shortened Runway and Operational Adjustments

EF Director Hsiao-Wei Wang stated that the Foundation currently has 2.5 years of financial runway, which prompted the policy shift toward deliberate and performance-aligned resource allocation. Wang emphasized that the 2025–2026 period will likely be decisive for Ethereum’s evolution and long-term positioning:

“This policy reflects our conviction that 2025–26 are likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables.”

Announcing the Ethereum Foundation Treasury Policyhttps://t.co/bU566m1zX5

— Ethereum Foundation (@ethereumfndn) June 4, 2025

Going forward, EF will regularly reassess its operational costs as a percentage of its treasury and adjust its funding strategies based on market conditions and community sentiment.

Treasury Breakdown and Transparency Measures

As of October 31, 2024, the Ethereum Foundation’s treasury stood at approximately $970.2 million, composed of:

• $788.7 million in crypto assets

• $181.5 million in non-crypto holdings

Over 81% of total assets were held in ETH, making the foundation’s financial stability closely tied to Ethereum’s market performance. Since the last disclosure, ETH has declined approximately 1.8%, according to CoinGecko.

To uphold its commitment to transparency, the EF will begin publishing quarterly and annual reports, detailing asset allocations, treasury performance, and major developments — a move designed to rebuild community trust following criticism over unscheduled ETH sales earlier this year.

Increased Engagement With DeFi

In a strategic shift, the Foundation will now actively participate in DeFi protocols to generate “acceptable returns” on its treasury assets. EF emphasized that any engagement will be limited to “immutable and thoroughly audited” permissionless protocols, aligning with the organization’s “Defipunk principles.”

This marks a departure from the Foundation’s traditional stance of credible neutrality, where it avoided direct financial support for any one protocol. The shift comes amid ongoing criticism from ecosystem leaders who have accused the Foundation of being detached from DeFi innovation.

“We aim to support protocols that reflect Ethereum’s core values while responsibly strengthening our treasury,” the EF stated.

Notable Deployments and Partnerships

In February 2025, EF allocated 45,000 ETH (approximately $120 million at the time) to be deployed across select DeFi platforms. Among these:

• EF supplied ETH to Aave and borrowed $2 million in GHO stablecoins, according to Aave founder Stani Kulechov.

• Additional allocations were made to Spark Protocol and Compound, among others.

These actions mark the Foundation’s first known DeFi deployments and signal a broader willingness to utilize Ethereum-native financial infrastructure for capital management.

Internal Restructuring and Team Reductions

On June 2, the Foundation also announced an internal restructuring of its development team, which involved layoffs. While EF did not disclose the number of affected employees, the move suggests a renewed focus on core priorities and budget optimization.

The restructuring is viewed as part of the Foundation’s broader response to the crypto market’s shifting dynamics, particularly Ethereum’s underperformance relative to competitors like Bitcoin and Solana.

ETH currently trades around $2,620, remaining 46.5% below its November 2021 all-time high of $4,878, while BTC and SOL have recently reached or approached record highs.

Community Reaction and Outlook

The updated policy comes after community backlash over ETH sell-offs in recent months. Critics argued that the lack of communication and transparency undermined the Foundation’s role as a steward of Ethereum’s future.

The Foundation’s latest moves — including clearer financial disclosures, DeFi engagement, and internal restructuring — appear designed to rebuild confidence and reorient its strategy toward long-term sustainability.

Industry participants are watching closely to see how EF will navigate:

• The rollout of Ethereum scaling solutions like Danksharding

• Regulatory developments affecting DeFi and staking

• The evolving role of the Ethereum roadmap, especially amid layer 1 competition

Conclusion

As Ethereum enters what the Foundation calls a “pivotal” phase, the Ethereum Foundation is adopting a more disciplined financial posture, leveraging DeFi-native tools and increasing transparency in an effort to stabilize operations and accelerate ecosystem development.

While the Foundation’s past ETH sales drew scrutiny, its renewed focus on strategic funding, internal accountability, and active participation in DeFi suggests a more agile and responsive leadership structure — one that may be critical for Ethereum’s competitiveness in the years ahead.

With the next 18 months expected to shape Ethereum’s trajectory, the EF’s success in implementing its new treasury policy may well determine the platform’s resilience, relevance, and reach in the evolving Web3 landscape.