Layla Zulfa
The Ethereum Foundation (EF), a pivotal non-profit organization supporting the development and growth of the Ethereum ecosystem, has concluded a months-long reorganization process, significantly restructuring its operations and reducing its workforce by approximately 20%. Fifty-four colleagues will be departing the organization as part of this strategic realignment, which the EF states is necessary for implementing its recently established Mandate and Treasury Management Policy. This overhaul aims to equip the Foundation with a leaner, more focused structure, optimized for executing critical long-term tasks while enhancing resilience against short-term market fluctuations.
Background and Context: The Ethereum Foundation’s Evolving Role
Since its inception, the Ethereum Foundation has played a crucial role in nurturing the Ethereum blockchain, providing essential funding, research, and coordination for core protocol development. As the Ethereum network matured from its proof-of-work origins to the more energy-efficient proof-of-stake consensus mechanism and continued to scale through various upgrades, the ecosystem expanded dramatically. This growth led to a proliferation of independent development teams, research initiatives, and applications, moving Ethereum towards a more decentralized and self-sustaining model.
The EF’s historical remit often involved a broad spectrum of activities, from core protocol research to supporting various community initiatives and infrastructure projects. However, the increasing maturity and complexity of the ecosystem, coupled with the inherent volatility of the cryptocurrency market, have necessitated a clearer strategic focus for the Foundation. The reorganization reflects a conscious effort to refine the EF’s mission to address challenges that only an entity with its unique position and resources can effectively tackle, particularly those pertaining to the long-term health and foundational principles of the protocol.
The Mandate and Treasury Management Policy: Guiding Principles
The reorganization is directly driven by the implementation of two foundational documents: the EF Mandate and the Treasury Management Policy. While the full text of the Mandate outlines the EF’s overarching purpose and strategic direction, it underscores a renewed commitment to Ethereum’s core properties: censorship and capture resistance, open source principles, privacy, and security. These principles collectively contribute to what the EF terms "self-sovereignty"—the ability of individuals and entities to control their own digital lives without reliance on intermediaries.
The Treasury Management Policy, in turn, provides a framework for the EF’s financial stewardship. Given the Foundation’s substantial holdings in Ether and other assets, a robust policy is critical for ensuring long-term financial stability, enabling it to fund crucial, often long-horizon, research and development independent of market cycles. The decision to reduce staff, though difficult, is framed as a necessary step to align operational costs with this policy, ensuring the EF can sustain its mission without excessive disruption from the crypto market’s characteristic booms and busts. This move signals a more conservative and strategic approach to resource allocation, prioritizing essential, unique contributions over a broader, potentially less focused, range of activities.
Strategic Realignment: A New Operational Framework
The core of the EF’s reorganization is the establishment of a new operational structure comprising five distinct "clusters" focused on different domains of work, alongside dedicated clusters for operations and management. Each domain is designed with a specific approach, accountability metrics, and internal structure tailored to its unique objectives. This layered approach is intended to bring greater clarity, efficiency, and impact to the EF’s diverse initiatives.
The five strategic clusters are:
- Protocol Layer: Dedicated to the foundational integrity and scalability of the Ethereum protocol.
- Access Layer: Focused on ensuring practical, self-sovereign access and interaction with the blockchain for individuals.
- User Layer: Grounding the EF’s work in the real-world needs and experiences of Ethereum users.
- Community Layer: Managing the EF’s external presence and fostering strategic alliances beyond the immediate crypto space.
- Institutional Layer: Engaging with established institutions to facilitate responsible and principle-aligned integration of Ethereum technology.
Deep Dive into the New Clusters
The Protocol Layer: Safeguarding Core Principles
This cluster embodies the EF’s enduring commitment to Ethereum’s foundational promise: scaling self-sovereignty. Its primary objective is to harden and scale the Ethereum protocol itself, ensuring that its core properties—censorship resistance, capture resistance, open source ethos, openness, privacy, and security—remain non-negotiable guarantees. The Protocol Layer is explicitly not geared towards marketability or short-term financial interests. Instead, its mandate is to make Ethereum more resilient against corruption and capture, reinforcing its reliability when traditional intermediaries, platforms, or governments fail or overreach.
Key activities include safely shipping protocol upgrades (forks), reducing unnecessary complexity, minimizing trusted dependencies, defending the transaction pipeline against toxic Maximal Extractable Value (MEV) and privileged order flow, and accelerating long-horizon research. This research encompasses critical areas such as post-quantum security, zero-knowledge Ethereum Virtual Machine (zkEVM) advancements, and Layer 1 privacy solutions, all aimed at preserving and enhancing self-sovereignty at scale.
The Access Layer: Enabling Self-Sovereignty for All
The Access Layer is where the theoretical promise of self-sovereignty translates into practical utility for individuals. This cluster focuses on making the "CROPS" properties—Censorship Resistance, Openness, Privacy, and Security—tangible and survivable in real-world use cases. Its mission is to ensure that individuals can perform key actions on Ethereum, such as reading chain data, transacting, proving ownership, delegating authority, and exiting the system, without relying on unverifiable intermediaries.
A core principle of this layer is the "zero option": for every intermediated path, a credible, intermediary-free alternative must exist and remain accessible. This involves identifying areas where stronger CROPS properties can be applied to existing infrastructure and developing credible alternatives where economic incentives tend to favor aggregation and control. The Access Layer strives to ensure that interfaces, from hardware to frontends, are verifiable, understandable, and recoverable, regardless of a user’s technical expertise or frequency of use. Users should be able to transact privately, free from censorship, with guaranteed or cost-free outcomes, while retaining control over their intents and custody of their assets, even when engaging agents.
The User Layer: Grounding Development in Real-World Needs
The User Layer serves as a vital bridge, ensuring that the EF’s technical and strategic work remains anchored in the realities of those who use Ethereum. It focuses on understanding the diverse needs and vital interests of individuals and organizations committed to self-sovereign use of the platform. By developing user segments and personas, creating educational materials, conducting use-case research, and evaluating impact, this cluster helps the EF understand which capabilities matter most, identify serious failure modes, and determine acceptable trade-offs when necessary.
Crucially, this layer’s role is not to turn the EF into a product development studio. Instead, it acts as an advocate for the user, ensuring that decisions made within the Protocol and Access Layers are informed by real current and potential users, practical constraints, and measurable improvements in self-sovereignty. It grounds the EF’s efforts in tangible impact, preventing the Foundation from becoming detached from the very people it aims to serve.
The Community Layer: Cultivating Identity and External Relations
This cluster defines how the Ethereum Foundation presents itself to the world, both within the vibrant Ethereum ecosystem and beyond. Its task is to articulate clearly what the EF stands for, differentiating its mission from speculative, "zero-sum financial crypto" or "corpo-compromised crypto" that may compromise core principles. It also distinguishes the EF from generic non-profits susceptible to external influences or "laundering geopolitical interests," emphasizing the Foundation’s commitment to maximizing community value through independence.
Beyond the crypto sphere, the Community Layer builds crucial relationships with allied movements. Self-sovereignty inherently aligns with free and open-source software (FOSS), secure and local-first software and hardware, privacy and cryptography research, civil liberties advocacy, decentralized web initiatives, and public-interest technology. This cluster works to ensure these overlaps are fruitful, unforced, and contribute meaningfully to shared goals, expanding Ethereum’s impact and understanding in broader societal contexts.
The Institutional Layer: Strategic Engagement for Broader Adoption
The Institutional Layer focuses on the EF’s engagement with established institutions that shape intermediated paths for end-users interacting with Ethereum. This includes a wide array of entities: financial institutions (payments, insurance), non-financial enterprises (manufacturing, social, publishing), government bodies, universities, and other non-profit groups.
The overarching goal is to foster showcases of effective integration of Ethereum and cryptographic technologies that maximize CROPS properties and the guarantees extended to both institutions and users. This involves promoting fair and correct execution, ensuring data portability and the practical ability to exit, protecting privacy, proving data authenticity, and improving the detection and prevention of misbehavior. The EF believes that many institutions will recognize that serving users in ways that strengthen self-sovereignty, while retaining necessary guarantees, aligns with their mission and value creation. This cluster will pursue these ends through direct engagement, establishing and communicating best practices, standards, reference architectures, and educational materials for institutional adoption. Additionally, it will work with academics and advocacy organizations globally to ensure Ethereum is accurately understood in its current form and potential, and to track and respond to policy and regulatory developments that could impact Ethereum’s commitment to self-sovereign use and its core principles.
Workforce Reduction: A Difficult But Necessary Step
The most immediate and impactful consequence of the reorganization is the departure of 54 colleagues, representing approximately 20% of the Ethereum Foundation’s workforce. The EF acknowledged the difficulty of these decisions but emphasized their necessity for ensuring the organization remains adequately resourced and strategically organized. The objective is to concentrate on the unique, critical work that only the EF can undertake in the coming years, while building resilience against the inherent volatility of the crypto market.
The Foundation is providing a comprehensive support package for the departing employees. This includes severance pay, calculated as the higher of one month’s salary per year worked at the EF or the amount mandated by the individual’s local jurisdiction. This severance aligns with packages offered to previous employees who left the EF in recent months. In addition to financial support, the package includes transition assistance, such as help in finding new opportunities within the broader Ethereum ecosystem, and a small transition grant earmarked for individual expenses like career coaching. The EF expressed gratitude for the talent, dedication, and time contributed by these individuals, and conveyed optimism about their continued contributions to the Ethereum ecosystem in new capacities.
Implications for the Ethereum Ecosystem
The Ethereum Foundation’s significant reorganization carries several implications for the broader ecosystem. Internally, the EF is poised to become a leaner, more agile organization, potentially increasing its efficiency in its newly defined core areas. This sharpened focus could lead to accelerated progress in critical, long-horizon research and development that is vital for Ethereum’s future.
Externally, the reorganization reinforces the narrative of decentralization within the Ethereum ecosystem. As the EF pares back its broader activities, it implicitly signals that other entities, teams, and community initiatives are expected to take on a greater share of the development and support burden. This distributed responsibility is a hallmark of a maturing decentralized network. The influx of 54 skilled professionals into the wider ecosystem could also act as a significant talent injection, strengthening various independent projects and companies.
From a market perspective, the EF’s emphasis on financial prudence and long-term sustainability, as outlined in its Treasury Management Policy, could be viewed positively by institutional investors and other stakeholders seeking stability and responsible governance in the crypto space. By insulating itself from short-term market movements, the EF aims to maintain consistent progress on its core mission, regardless of market sentiment.
Ultimately, this strategic shift by the Ethereum Foundation underscores a profound commitment to its foundational principles of self-sovereignty, censorship resistance, and privacy. The new structure and refined focus aim to ensure that Ethereum continues to evolve as a robust, resilient, and user-centric platform, capable of delivering on its ambitious vision for a decentralized future. The coming weeks and months are expected to bring further details on how the ecosystem can best engage with the EF’s new structure and its evolving work.
