Ethereum Foundation Faces Criticism for Lack of Transparency in Managing Treasury
The Ethereum Foundation’s (EF) financial activities have come under scrutiny following a notable transfer of 35,000 ETH (equivalent to $94 million) from the Foundation’s treasury to Kraken. EF Executive Director Aya Miyaguchi clarified that this transfer was part of the Foundation’s treasury management and not necessarily a sale, citing regulatory constraints that prevented prior disclosure. Miyaguchi assured that future sales would be planned and gradual.
Josh Stark of the EF recently offered a preliminary breakdown of the Foundation’s spending over the past two years, with a comprehensive report slated for release before Devcon 2024. Notably, 25-30% of the annual budget was allocated to “L1 R&D,” encompassing internal investments in EF-affiliated projects like Geth, Privacy + Scaling Explorations, Solidity, Devcon, and Ethereum.org.
The “New Institutions” category accounted for the second largest portion of spending, directing funds to external entities such as L2Beat, 0xPARC Foundation, Nomic Foundation, and the Decentralization Research Centre, among others. Stark emphasized that the objective of these grants is to fortify and bolster the Ethereum ecosystem in the long term. Internal spending constituted around 38% of the budget, with the remaining 62% allocated to external grants, totaling approximately $62 million based on the Foundation’s annual budget of $100 million.
Given the EF’s treasury of 273,274 ETH (equivalent to $687.5 million), it is estimated that at current ETH prices, the Foundation could sustain its operations for 6-7 years if the annual budget is fully utilized. In the first quarter of 2024, the Ecosystem Support Program allocated $11.4 million to support 109 developers, research initiatives, events, and community projects.
Vitalik Buterin disclosed receiving approximately $139,600 annually as an EF member. To contextualize the EF’s expenditures, Arbitrum DAO disbursed $70 million for its Short-Term Incentive Program and an additional $23.7 million for the Long-Term Incentives Pilot Program. Moreover, Arbitrum recently approved a $215 million grant to enhance its gaming ecosystem.
In comparison, the Interchain Foundation allocated $30.8 million in 2023, primarily focusing $8.2 million on the “IBC Protocol.” Polkadot expended $87 million in the first half of 2024, with a significant portion directed towards advertising, media, community building, and events. Notably, the Solana Foundation and Aptos Foundation have yet to release formal annual spending reports, with the Sui Foundation contemplating future treasury disclosures.
It is important to note that Blockworks Research acts as a delegate to Arbitrum DAO.
