Ethereum Foundation adjusts treasury approach, aligning with broader organizational transformation
The Ethereum Foundation Shares Their New Long-Term Treasury Management Strategy
The Ethereum Foundation's latest announcement focuses on a revamped treasury strategy, set to ensure a robust, sustainable ecosystem while fostering continued growth. Here's a peek at the key components shaping this dynamic policy.
Key Components of the Policy
- Financial Flexibility and Stability
- With an aim to maintain a buffer to cover 2.5 years of operating expenses, the Foundation sets aside funds for financial flexibility and stability.
- Annual spending is capped at 15% of the total treasury assets, anticipated to decrease to 5% over the next five years, aligning with endowment-based organizations.
- Managing Fiat Reserves and Token Sales
- The treasury management relies on a calculation that factors in both the annual operating expense percentage and the years of buffer, determining the timing and size of ETH sales for maintaining appropriate reserves while minimizing market volatility.
- Strategic On-Chain Investments
- The Foundation prioritizes on-chain investments within the DeFi ecosystem, focusing on audited and permissionless protocols. This includes solo staking and providing wETH to established lending protocols, with plans to venture into yield farming and tokenized real-world assets as DeFi matures.
- The Defipunk evaluation framework highlights security, open-source development, financial self-sovereignty, and privacy when vetting DeFi investments.
- Transparency and Oversight
- Enhanced accountability comes through a structured internal reporting system, featuring quarterly and annual financial reports reviewed by the board and management, promoting transparency and oversight in managing resources.
- Current Financial Standing
- As of October 31, the Ethereum Foundation's treasury balance stood at approximately $970.2 million, with 81% held in ETH, marking its dominance in the treasury.
2025-26: A Crucial Period for the Ethereum Ecosystem
The Foundation regards 2025-26 as a crucial juncture for Ethereum, emphasizing the importance of clear focus on critical deliverables while restructuring its research and development operations to support the ecosystem during this critical period.
This strategic approach is aimed at fostering growth and innovation across the Ethereum ecosystem while maintaining financial sustainability, with a particular emphasis on DeFi and privacy-enhancing technologies.
- The Ethereum Foundation is focusing on a revamped treasury strategy that will provide financial flexibility and stability for a robust, sustainable ecosystem, aiming to maintain a buffer for 2.5 years of operating expenses.
- The Foundation's annual spending is capped at 15% of the total treasury assets, which is expected to decrease to 5% over the next five years, following the model of endowment-based organizations.
- To manage fiat reserves and token sales, the treasury management relies on a calculation that factors in both the annual operating expense percentage and the years of buffer, determining the timing and size of ETH sales to maintain appropriate reserves while minimizing market volatility.
- The Foundation prioritizes on-chain investments within the DeFi ecosystem, focusing on audited and permissionless protocols, and plans to venture into yield farming and tokenized real-world assets as DeFi matures.
- The Defipunk evaluation framework is used to vet DeFi investments, emphasizing security, open-source development, financial self-sovereignty, and privacy.
- In 2025-26, the Foundation regards this period as crucial for Ethereum, emphasizing the importance of clear focus on critical deliverables while restructuring its research and development operations to support the ecosystem, with a particular emphasis on DeFi and privacy-enhancing technologies.
