Ethereum Foundation proposed cutting validators’ staking rewards by up to 10% to fund annual expenses

A new financing proposal in the Ethereum ecosystem has sparked debate, as the Ethereum Foundation considers changing its funding model to extend its spending horizon. Under this plan, between 5% and 10% of validator staking income would be redirected annually to cover the Foundation’s operational expenses, reducing the Foundation’s reliance on ETH sales for funding.

New funding plan stirs community discussion

Dubbed the Validator Redirected Revenue proposal, this suggestion marks a sharp departure from the Ethereum Foundation’s past practices. Until now, the Foundation has allocated as much as $100 million each year to projects it deems high priority, selecting recipients at its own discretion. This approach, particularly its dependence on selling ETH holdings to raise capital, has prompted criticism from across the Ethereum community.

Data cited in the report shows that more than 32% of total ETH supply is currently staked by validators, with over 30 million ETH locked in the Beacon Chain contract. BitMine is noted as one of the significant entities in this ecosystem, holding a share equivalent to approximately 5% of the total ETH supply. Within this context, BitMine stands out among large-scale ETH holders.

Given the current price range, the proposed cuts would generate an estimated $62 million to $125 million annually for the Foundation. Additionally, the Foundation aims to lower its annual disbursements as a percentage of its reserves, bringing them down from 15% to closer to 5%.

Reserves, investments, and calls for transparency

The Foundation’s reserves have reportedly dwindled to 102,700 ETH. The article notes that over the years, the Foundation has generously backed both niche and prominent projects while also managing a portfolio of 21 investments. However, the report reveals that most of these investments have underperformed, resulting in a net loss of 82% overall.

Vitalik Buterin and the Foundation have also supported ventures in specialized areas such as biohacking and longevity research, but many of these initiatives have failed to achieve sufficient liquidity or widespread adoption. Following the new funding proposal, there are growing community calls for greater transparency regarding the Foundation’s spending plans.

Ethereum use cases and evolving research structure

According to the report, by 2026, Ethereum is primarily used for stablecoin transfers, various DeFi lending operations, and mainstream decentralized exchange transactions. However, despite factors like ETF momentum and mainstream capital flows, the price of ETH has remained range-bound around $1,700.

The Foundation continues to focus on research, individual sovereignty, and broader long-term objectives. Within this framework, it has begun supporting new groups to build a more cohesive ecosystem architecture.

Research and development activities are being consolidated under ETHLabs, the non-profit research arm concentrating on Ethereum and ETH initiatives. ETHLabs’ goal is to establish Ethereum as a foundational consensus layer for the global economy. Despite these updates, market reaction remained muted, and the ETH price slipped to $1,655.73.

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