Ethereum Foundation Cuts Back Funding Amid Market Pressure and Long-Term Vision Shift

• The Ethereum Foundation is entering a period of austerity and will cut back funding for most projects to sustain long-term operations.
• Vitalik intends to become more involved in projects building on the network and to perform tasks that would have previously been designated to the Foundation’s staff.

The Ethereum Foundation is entering a period of ‘mild austerity’ for the next five years as it seeks to channel its focus towards developing its core mission.

The announcement was made by founder Vitalik Buterin, who says that this is the best alternative to the current blockchain industry model of ‘outspend your rivals or they will eat you up.’

In that time, the Foundation will work on an aggressive roadmap that strips out most of the lavishness and channels every effort to the core mission. According to Vitalik, this mission is to make Ethereum a scalable world computer that doesn’t compromise on decentralization, sustainability or robustness.

The cutbacks will also allow the Foundation to sustain its operations in the long term, Vitalk added. This includes protecting Ethereum’s mission and goals, “including both the core blockchain layer as well as users’ ability to access and use the chain with self-sovereignty, security and privacy.”

Vitalik Takes on Ethereum Foundation’s Special Projects

The Foundation’s decision to cut back on spending aligns with a broader trend in the crypto space where most projects are now slashing budgets and only focusing on the most vital initiatives.

Polkadot has been one of the trailblazers of this new model, as we reported. Since founder Gavin Wood returned to lead the project as CEO of Parity Technologies, its budget came down to $7.4 million in Q4 last year, dropping from $87 million in the first half of 2024.

The spending also focuses mostly on development and not marketing; in Q4, a third of the budget went to builders, while in 2024, the project had spent $37 million on advertising alone. Vitalik is also jumping back to take on new roles and work on projects that “might in another time have been ‘special projects’ of the Foundation,” he revealed.

He has further invested 16,384 ETH, worth over $45 million at current prices, to open-source privacy and security projects, he added, stating:

ETH trades at $2,750, dipping 5.5% in the past day for a $331.8 billion market cap.