The Ethereum Foundation spends approximately $100 million per year while holding a portfolio of around $650 million, aiming for a ten-year financial margin based on the price of Ether (ETH).
Financial Strategy and Expense Management
The Ethereum Foundation follows a cautious budget strategy, aiming to spend 15% of its funds each year. This approach is designed to ensure the longevity of the Foundation, with the goal of lasting indefinitely, even as its relative weight in the ecosystem decreases over time.
Transfers of Funds and Community Reactions
However, the Foundation has faced criticism from the community, particularly after a series of unexplained major fund movements. In August 2024, the Foundation transferred 35,000 ETH (approximately $94 million) to the Kraken exchange, an event that sparked strong reactions. Community members, already concerned about the lack of transparency, took to social media to demand explanations.
An X platform user, @antiprosynth, expressed frustration, stating surprise at these fund movements without prior notice. In response, Aya Miyaguchi, Executive Director of the Ethereum Foundation, explained that these transfers were part of the Foundation’s treasury management, specifically for grant and salary payments, often made in fiat currency. She clarified that the Foundation had been forced to delay certain management activities due to regulatory complications.
Increasing Demand for Transparency
The situation has also prompted broader discussions about the need for transparency from the Foundation. Several voices in the community have called for regular financial reports, detailing expenses, planned sales, and fund allocation. Many rightly wonder why the Foundation has not already been publishing quarterly reports with basic financial information such as expenses and upcoming sales, explaining their reasons.
As the Ethereum Foundation plays a key role in ecosystem development, it must address concerns while maintaining rigorous asset management.
With the imminent release of its financial report, the Foundation aims to dispel doubts and strengthen trust within the community. As the Ethereum Foundation continues to evolve in a constantly changing environment, it will need to make extra efforts to ensure that its financial decisions are understood and supported by those contributing to the Ethereum ecosystem. The challenge remains to strike a balance between innovation, risk management, and transparency towards its users and developers.
