Ethereum Foundation Cuts 20% of Staff and Slashes Budget by 40%

On June 23, the Ethereum Foundation (EF) announced the layoff of 54 employees, about 20% of its total headcount. Vitalik Buterin confirmed the news the same day with a post on X, revealing plans to cut the foundation's annual budget by roughly 40%. For the Ethereum project, this is the most significant internal restructuring in the organization's ten-year history.

Why Is the EF Cutting Now?

The decision had been building for months. Since early 2026, the foundation had been gradually reducing costs, and reports estimated roughly 19 people had already left EF before June, including co-executive director Hsiao-Wei Wang. The June 23 layoffs brought that process to a head.

In his X post, Buterin explained the core issue. At the current spending pace of around 15% of remaining reserves per year, the foundation's runway is limited. The endowment model EF is targeting calls for spending roughly 5% of reserves annually after 2030, similar to how major university endowments operate by living on returns rather than principal. "The past years have been a challenging era for Ethereum. However, the ecosystem is adapting, both inside and outside the EF," he wrote.

How Do the New Clusters Work?

Instead of a centralized structure, the EF is reorganizing around five specialized areas:

• Protocol: the core Ethereum stack (sharding, consensus, scaling, privacy, censorship resistance)
• Access: network entry tools (wallets, nodes, RPC infrastructure)
• User: UX, education, and end-user support
• Community: grants, conferences, and developer relations
• Institutional: partnerships with institutions and regulatory engagement

Management and operations remain a separate function outside the clusters. Each cluster will have its own budget and mandate, turning the EF from a single large headquarters into a federation of focused teams.

What Happened With the EF Treasury?

Alongside the staffing changes, the EF revised its staking strategy. In April it unstaked 17,000 ETH from validators and in May another 21,270 ETH. Separately, on May 1 the EF sold 10,000 ETH to BitMine in an over-the-counter deal. Over two months, the foundation moved over 38,000 ETH in total. These moves reflect a need for liquidity to cover operating costs during the transition period.

Former EF contributor Trenton Van Epps called the situation a "slow-burning funding crisis" last week. His argument: the Client Incentive Program that supports Ethereum client developers is winding down, and some teams are searching for alternative funding sources. The restructuring does not fix this directly, but it does push the broader ecosystem to develop new funding models.

Ethlabs and Ethereum's New Development Map

Just before EF's announcement, five former EF researchers (Ansgar Dietrichs, Barnabe Monnot, Caspar Schwarz-Schilling, Josh Rudolf, and Julian Ma) launched Ethlabs. The new independent nonprofit focuses on protocol scaling and interoperability and is backed by BitMine, SharpLink, and Ethereum co-founder Joe Lubin.

Buterin wrote that "more and more work will be done outside the EF." He framed distributed development as consistent with Ethereum's original philosophy. A protocol less dependent on a single foundation is theoretically more resilient to internal organizational shifts.

ETH Down 5%: What Does the Market Say?

ETH fell more than 5% on the day of the announcement, trading around $1,650. That said, the drop was not isolated to the EF news: Bitcoin also fell over 3% the same day as broader tech sector selling weighed on US markets.

For long-term Ethereum holders, the shift to an endowment model signals more predictable EF spending and less dependence on ETH price. Those looking to sell ETH for Ukrainian hryvnia or buy on the dip can check current exchanger rates on Kurslog.