Ethereum Foundation Announces Layoffs and Treasury Reforms, Signaling a Pivotal 2025-26 for the Ecosystem

The Ethereum Foundation (EF), the nonprofit organization behind the world’s leading smart contract blockchain, has announced a significant restructuring, including staff layoffs and a strategic overhaul of its treasury management.

Announced in blog posts on June 2, 2025 and June 4, 2025 and covered by mainstream media, these moves mark a critical shift as the foundation aims to bolster the Ethereum ecosystem during what it describes as a “pivotal” period in 2025 and 2026.

Layoffs and Protocol Restructuring

On June 2, 2025, the EF revealed a reorganization of its Protocol Research & Development division, now rebranded simply as “Protocol.” The restructuring, aimed at sharpening focus on scalability, blobspace, and user experience, has resulted in a leaner organization due to staff layoffs. While the EF did not disclose the exact number of affected employees, Core Developer Danno Ferrin suggested that at least four blockchain engineers were let go via social media. “We hope these individuals continue in the Ethereum ecosystem and encourage others building out their teams to seek them out,” the foundation stated in its blog post.

EF’s Struggles: Controversies and Market Pressures

The EF’s recent layoffs and treasury reforms come amid growing community frustration and a series of controversies that have undermined confidence in its leadership.

A pivotal scandal erupted in May 2024, when senior EF researchers Justin Drake and Dankrad Feist were revealed to have served as paid advisors to EigenLayer, a restaking protocol, earning millions in token incentives. This conflict of interest, which raised concerns about the impartiality of integrating EigenLayer’s proof-of-stake protocol into Ethereum, sparked intense community backlash. Drake and Feist did not resign from their EigenLayer roles until November 2024, a sluggish five-month delay that intensified community perceptions of mismanagement.

Additionally, the foundation’s leadership transition in March 2024—where Aya Miyaguchi stepped down as executive director to become foundation president, replaced by co-executive directors Hsiao-Wei Wang and Tomasz Stanczak—failed to fully address criticisms of the EF’s persistent ETH sell-offs and operational opacity.

These challenges have been exacerbated by market and community discontent. The Cancun upgrade in March 2024 reduced Layer 2 transaction fees, a technical success, but Token Terminal data showed a 99% drop in Ethereum’s Layer 1 network revenue by summer 2024, frustrating investors expecting economic gains.

Community sentiment, voiced on X by users like @jason_chen998 link, criticizes the EF’s “idealistic” culture, which prioritizes vision over financial viability, alienating developers and investors.

The transfer of 35,000 ETH ($94 million) to Kraken in August 2024, described by Miyaguchi as routine “treasury management,” further inflamed accusations of opacity.

Against this backdrop, the foundation projects 2025-26 as a “pivotal” period, aiming to stabilize the ecosystem with renewed DeFi optimism—evidenced by Aave’s $30 billion TVL and Ethereum-based stablecoin volume reaching $908 billion—while addressing internal dysfunction through layoffs and governance reforms.

Treasury Management Reforms

In a parallel announcement on June 4, 2025, the EF outlined a major reform of its treasury management strategy, emphasizing a more deliberate approach to depleting its substantial ETH reserves.

The policy includes a refined asset-liability management strategy and a commitment to supporting the ecosystem during critical periods.

Key highlights of the policy include:

• Maintaining a financial buffer equivalent to 2.5 years of operational expenses.

• Gradually reducing annual operational expenses to a baseline of 5% over the next five years.

• Increasing transparency with quarterly and annual financial reports.

• Enhancing engagement with DeFi protocols and exploring new yield opportunities.

The EF has identified 2025-2026 as a critical period for the Ethereum ecosystem, emphasizing the need for heightened focus on key deliverables while adopting a counter-cyclical approach—stepping up support during market downturns or pivotal moments and moderating it during bull runs.

Vitalik Buys ETH, Foundation Seeks Major Investors

On June 4, 2025, Consensys CEO and Ethereum co-founder Joe Lubin revealed to Decrypt that the company is in discussions with a “major nation’s” sovereign wealth fund and bank to explore building infrastructure within the Ethereum ecosystem.

This move signals the foundation’s push to attract significant institutional backing to bolster Ethereum’s development, particularly as it navigates a competitive blockchain landscape. Meanwhile, On-Chain Data Analyst @EmberCN reported that Ethereum co-founder Vitalik Buterin actively purchased 205.5 ETH using 317,000 DAI and 33,000 UNI, and transferred a total of 693.9 ETH ($1.83 million) and 340,000 USDC via the privacy-focused Railgun protocol through the 0x1810 address.

These transactions, occurring on the same day, suggest a renewed confidence in Ethereum’s value from its co-founder, contrasting with the foundation’s past ETH sell-offs and raising questions about its financial strategy.

Ethereum Faces a Rocky Road Ahead with Challenges to Overcome

The EF’s latest strategy clarifies its commitment to pragmatic development, but its success depends on effective execution.

While prioritizing practicality, the foundation must address persistent challenges in ensuring transparent disclosure and balancing decentralized ideals with centralized management — core issues for the ecosystem’s growth.

To restore market confidence, Ethereum needs more than a price increase; it requires deep, transformative reforms to rebuild trust and drive progress in 2025 and beyond.