Ethereum Foundation Under the Microscope: $100 Million Budget Raises Questions

TLDR:

• Ethereum Foundation’s annual budget increased from $41 million in 2021 to $100 million in 2024
• Vitalik Buterin disclosed his annual salary of ~$140,000 from the Ethereum Foundation
• The Foundation moved $94 million worth of ETH to Kraken exchange recently
• Community members are demanding more transparency around the Foundation’s spending
• Concerns raised about perceived lack of support for DeFi from Vitalik and the Foundation

The Ethereum Foundation, the non-profit organization supporting the development of the Ethereum blockchain, is facing increased scrutiny from the cryptocurrency community over its budget and spending practices.

Recent disclosures and actions by the Foundation have sparked debates about transparency and the allocation of resources within the Ethereum ecosystem.

Ethereum co-founder Vitalik Buterin revealed that he receives an annual salary of approximately $140,000 from the Ethereum Foundation.

182,000 SGD per year

— vitalik.eth (@VitalikButerin) August 27, 2024

This disclosure came as the organization prepares to release a new spending report amid growing public interest in its financial activities.

The Foundation’s annual budget has seen a significant increase, rising from $41 million in 2021 to around $100 million in 2024. Aya Miyaguchi, Executive Director of the Ethereum Foundation, stated that this budget “is largely made up of grants and salaries.”

A recent transfer of $94 million worth of ETH to the Kraken cryptocurrency exchange by the Foundation raised questions within the community. Miyaguchi explained that this was part of the organization’s treasury management activities, noting that some grant recipients can only accept payments in fiat currency.

Josh Stark, who works for the Ethereum Foundation, addressed some of the community’s concerns on social media.

He provided a preview of the Foundation’s spending breakdown for 2023, which showed that “new institutions” – organizations or entities that support the Ethereum ecosystem – accounted for the largest expense category at 36.5%. Layer-1 research and development followed at 24.9%, while community development represented 12.7% of the budget.

Updates from @0xstark on EF spending.

The key info is in this chart.

The “new institutions” category basically means @NomicFoundation, @TheDRC_ , @l2beat, @0xPARC etc – no World Economic Forum insect protein research here!

More info has been and will be published; see thread. https://t.co/sWVfQQ5XQF pic.twitter.com/FY2EPT7Wiz

— vitalik.eth (@VitalikButerin) August 27, 2024

The Foundation’s spending patterns and decision-making processes have come under scrutiny. Some community members have questioned the timing of ETH sales, noting that large transfers to exchanges often coincide with price rallies. Critics argue that this could potentially impact ETH’s market performance.

The Ethereum community is also debating the Foundation’s and Vitalik Buterin’s stance on decentralized finance (DeFi). Some developers and users have expressed concern over a perceived lack of support for DeFi projects from the Foundation and Buterin himself.

In response, Buterin clarified his position, stating that he supports sustainable and principled applications within the ecosystem.

The Ethereum Foundation has committed to releasing a comprehensive spending report covering 2022 and 2023 in the coming months.

This report is expected to provide more detailed information on the organization’s financial activities and allocation of resources.

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