Tao Zhu, Golden Finance

Abstract: In the past week, multiple major events have occurred in the Ethereum ecosystem. The Ethereum Foundation cut its budget by 40%, announced large-scale layoffs and unveiled a new structure, and the establishment of ETHLabs, among other actions, have collectively released a signal: Ethereum is undergoing a profound transformation.

1. What are the recent big moves in Ethereum

1. EF budget reduced by 40%

On June 24, Vitalik posted on X announcing that "this year, EF will reduce its budget by approximately 40%." The anticipated budget reduction was already spelled out in last year’s Fund Management Policy: EF is transforming into an endowment-based organization with a long-term orientation, moving from spending an average of around 15% of remaining funds per year until 2026 to a target of around 5% per year after 2030. This means that EF is transforming from a "high-expenditure operating institution" to a "long-term capital management institution."

For details, please see"Vitalik: EF budget will be reduced by 40% and will transform into a long-term orientation to achieve streamlined operations"

2. Large-scale layoffs and announcement of new structure

On June 23, the Ethereum Foundation officially issued a document, officially announcing that the Ethereum Foundation (EF) will undergo organizational restructuring.

After the completion of this reorganization, the Foundation has equipped the organizational structure, business sectors and personnel teams needed to promote subsequent core work, but at the same time has reduced its employees by 54, accounting for approximately 20% of the Foundation's total headcount. In the coming weeks, most of these departing personnel will choose to continue to contribute to the Ethereum ecosystem outside the foundation.

The Ethereum Foundation is currently divided into five major business clusters, corresponding to different business areas: protocol layer, access layer, user layer, community layer and institutional layer; another cluster is responsible for operational affairs, and the last cluster is composed of management and a team that directly provides support to the management.

After this adjustment is completed, the Ethereum Foundation will become more streamlined and more focused. In the coming weeks and months, we will continue to release more details on the direction of business adjustments and how ecosystem participants will adapt to the new architecture.

For details, please see"The Ethereum Foundation's New Organizational Structure: Five Business Layer Frameworks, Streamlining 20% of Staff"

3.Ethlabs was officially established

On June 23, Ethlabs, a non-profit research and development organization initiated by a former senior researcher at the Ethereum Foundation, was officially established. It is supported by Bitmine Immersion Technologies, Sharplink, Joe Lubin, Anchorage, Octant, SNZ, etc., aiming to promote Ethereum into the "super cycle" of institutional adoption.

Ethlabs aims to ensure that the Ethereum network can meet the needs of stablecoins, tokenized real-world assets, funds and autonomous artificial intelligence transactions to be moved on the Ethereum chain at scale, promoting the rapid development and trustworthy interoperability of Ethereum, so that institutions building business on Ethereum can obtain the neutrality, resiliency, privacy and security they need.

Ethlabs’ early work will focus on the needs of institutions for large-scale on-chain: faster settlement speeds, native issuance and cross-chain transactions based on strong infrastructure, mainnet capacity, and research to lay the foundation for ETH’s currency properties.

For details, please see "Paving the Way for the Next Decade - Ethlabs Officially Launched"

4. Discussion of “Verifier Tax”

Discussions surrounding the sources of funding for Ethereum development also continue to heat up.

On June 22, Ethereum’s long-standing debate over the supply of ecological funds ushered in a new proposal: requiring the verifiers who guard this world’s leading smart contract public chain to bear more network public expenses. This proposal proposes a validator revenue diversion mechanism, which is a set of underlying mechanisms of the protocol that allows network node operators to use part of the pledge rewards for ecological funding. The diversion ratio ranges from 0% to 10% of the pledge revenue.

This caused huge controversy. Supporters believe that developers create value and should receive a stable source of funding; opponents believe that this is equivalent to taxing validators and may undermine the neutrality principle of Ethereum.

For details, please see"Ethereum New Proposal: Verifiers can use up to 10% of staking income for ecological funding"

2. Interpretation of Ethereum series actions

1. EF tends to retreat

Many people believe that EF has played the role of decision-maker for Ethereum in recent years, but this is actually a staged development need.

In the process of continuous development and improvement, EF supports the development of the Ethereum core protocol, provides ecological funds, funds research (cryptography/scalability/security), and organizes developer ecology and conferences (Devcon)... EF is more like a "strong-arm executor" during this period. But EF does not control Ethereum, but supports Ethereum.

In the past ten years, the Ethereum Foundation has undertaken a large number of ecological construction responsibilities. However, as the ecosystem matures, continuing to maintain this model may lead to centralization, so the foundation began to actively retreat behind the scenes. The new organizational structure is split into five major layers: protocol layer, access layer, user layer, community layer, institutional layer, plus an operation layer and management layer. This structure itself is also deverticalizing; Vitalik's proposed 40% budget reduction and long-term expenditure reduction from 15% to 5% are weakening E F’s financial capabilities have shifted from ecological developers to ecological coordinators; Vitalik said that most of the reduced 54 employees will choose to continue to contribute to the Ethereum ecosystem outside the foundation. EF has never left, but is on the way to retreat, trying to bring more possibilities to the Ethereum ecosystem.

2. From single-center funding system to multi-institutional collaboration

The current Ethereum has already developed from a single EF to being jointly funded and promoted by multiple independent organizations. In addition to EF, there are also the following independent organizations worthy of attention.

1) ETHLabs

On June 23, Ethlabs, a non-profit research and development organization initiated by a former senior researcher at the Ethereum Foundation, was officially established to promote Ethereum into the "super cycle" of institutional adoption.

ETHLabs mainly does four things: promote core protocol research and development (L1 improvement); build institutional-level infrastructure; support on-chain applications such as stablecoins/RWA/AI; and enhance Ethereum's "global settlement layer capabilities." The core role of ETHLabs is to transform institutional needs into protocol research and development input.

Although the establishment of Ethlabs failed to boost the ETH market in the short term, in the long term, Ethlabs can enhance the future development potential of Ethereum as a financial infrastructure: Stable coins require a trustworthy underlying network; RWA issuers require long-term governance infrastructure; AI Agents require unified settlement standards... The significance of Ethlabs is not to promote the short-term rise of ETH, but an infrastructure construction for the next ten years.

2) Ethereum Applications Guild (EAG)

On April 29, EAG (Ethereum Application Alliance) was announced. EAG is a global non-profit cooperative organization that aims to support the development of the Ethereum application ecosystem and promote its expansion from the infrastructure stage to the application layer. It will work around the following four main directions: promoting the realization of practical applications, connecting cross-domain ecosystem networks, establishing a unified evaluation and development framework, and building a sustainable funding mechanism.

EAG adopts a dual-track system: first, a member contribution system based on institutional size (such as valuation, market capitalization or asset management scale); second, a mechanism to donate ETH staking rewards to the ecosystem development fund. Ethereum has long had the problem of unstable base layer development, and EAG aims to allow applications to feed back into the Ethereum ecosystem. EAG also launched the 2026 Global Apps and Developers Program, which will showcase developer education, hackathons, and research projects, as well as strengthen local developer communities through regional roadshows and ecosystem demos.

3) Etherealize

In January 2025, Etherealize was officially launched as an Ethereum promotion and infrastructure organization for traditional financial institutions. Core responsibilities include promoting Ethereum to Wall Street, promoting institutional assets on the chain, building trading and settlement infrastructure, and promoting privacy and compliance technology. Key directions include tokenized treasury bonds/stocks, stable currency financial systems, institutional-level transaction settlement systems, zk privacy financial infrastructure, etc. In short, Etherealize is responsible for connecting traditional finance and the Ethereum ecosystem.

4) Ethereum Community Fund (ECF)

In 2018, ECF (Ethereum Community Fund) was launched, which is Ethereum’s ecological-level public goods funding system. Main responsibilities include funding open source development, supporting education and research, supporting community activities (hackathons, conferences), supporting infrastructure construction, etc. Funding sources include EF Grants, protocol funds (such as Gitcoin-like mechanisms), DAO capital pools, public goods funding plans, etc.

The emergence of the above four major institutions is a reflection of Ethereum's transition from a centralized situation dominated by one foundation to a multi-institution distributed development model. Ethereum is changing from an EF single-center funding system to a multi-institutional collaborative funding network.

3. Cater to development needs

Why has Ethereum not undergone such frequent structural adjustments before? One of the primary reasons is the continued expansion of the Ethereum ecosystem. Ethereum has long become a bridge between traditional finance and crypto-finance. There are hundreds of billions of dollars in assets, countless protocols and L2 ecosystems on the Ethereum network. If we only continue the foundation's original model, we will not be able to bear the burden of continuing to promote the development of Ethereum. Secondly, public chains such as Solana and Sui are rising day by day. Development incentives, VC support, user growth subsidies, etc. are all new ways of playing. If we just follow the old foundation path, Ethereum will not develop as fast as the demand.

3. Opinions of industry insiders

• Etherealize founder Vivek Raman believes: The Ethereum Foundation should not play the role of a central coordinator, but should focus on maintaining Ethereum's core values - security, censorship resistance, privacy and open standards - while continuing to advance long-term priorities such as zero-knowledge technology and quantum resistance.

• Solana co-founder Yakovenko believes that budget constraints force teams to focus. "Optimistic... Budget constraints force teams to prioritize and focus. Ethereum is not going away. A smaller, leaner Ethereum Foundation (EF) will be more decisive, move faster, and be able to correct course faster."

• Trent Van Epps, a former donor to the foundation, warned that core development will face an annual funding gap of about $30 million. Ethereum may be headed for a “slow-burn funding crisis.” This will happen as key funding sources dry up. He believes that this is not just a temporary budget gap, but a deeper structural challenge in how Ethereum funds and supports its core contributors.

• BitMine Chairman Tom Lee believes that private investors and stakers will intervene in Ethereum’s lack of funds. Lee and Ethereum co-founder Joe Lubin support the organization, which aims to drive institutional adoption of Ethereum.

Conclusion

While EF is cutting budgets, laying off employees, and decentralizing power, the era of non-profit foundations seems to be gone forever; the rise of organizations such as ETHLabs and EAG means that Ethereum is entering a new decentralized future.