Ethereum Foundation cuts 20% of staff as ETH sinks 44% YTD despite record usage

The Ethereum Foundation has lower roughly 20% of its workforce and slashed its finances by roughly 40% as half of a broad reorganization, even as the blockchain it helps steward data its highest-ever ranges of consumer exercise and attracts deeper participation from main monetary establishments.

On June 23, the nonprofit revealed that it dismissed 54 staff following a months-long evaluate of its construction, spending, and long-term duties.

Speaking on this transfer, Vitalik Buterin, Ethereum co-founder, mentioned:

I respect my EF colleagues far an excessive amount of to faux that there was not a lot that’s misplaced. They are sensible individuals. They are devoted engineers, some of whom have labored on the Ethereum protocol for practically a decade. They have introduced a shiny mild to the Ethereum ecosystem with their code, their phrases, their heat as human beings and their actions.

The downsizing displays a widening divide throughout the Ethereum ecosystem. Data from Token Terminal confirmed that the community’s visitors and throughput reached data through the first quarter of 2026, whereas tokenized property continued to increase throughout the blockchain.

Yet, the blockchain’s price income, locked capital, and buying and selling exercise weakened, and ETH has fallen more than 43% this year to trade near $1,670.

While the Foundation didn’t blame the layoffs on ETH’s decline, it mentioned the adjustments had been supposed to create a corporation succesful of executing its mandate with out being repeatedly disrupted by short-term market actions.

Ethereum’s progress has but to carry ETH

Ethereum entered 2026 with extra customers, transactions, and institutional exercise, however these features have but to translate into stronger monetary outcomes for the community or sustained demand for its native token.

Data from blockchain analytics agency Token Terminal confirmed that month-to-month lively customers reached 13.2 million within the first quarter, up 53.5% from the earlier three months and 85.9% from a yr earlier. Transaction depend rose 38% quarter over quarter to 200.4 million, whereas throughput elevated to a record 25.78 transactions per second.

However, this surge in exercise produced much less income for Ethereum’s base layer.

Layer-1 transaction charges fell practically 48% from the earlier quarter to $39.9 million, an 81.9% decline from a yr earlier. Total worth locked throughout the ecosystem dropped 11% to $316.2 billion, whereas Ethereum’s absolutely diluted market worth contracted 30.3% to $290 billion.

Meanwhile, the identical disconnect is seen in Ethereum’s growing role within traditional finance.

The whole worth of tokenized property on the community stood at $203.4 billion within the first quarter, together with $178.9 billion in stablecoins, Token Terminal mentioned. Tokenized funds elevated 4.9% from the earlier quarter and 73.1% from a yr earlier to $19.4 billion.

Tokenized commodities rose 60% quarter over quarter to $4.7 billion, whereas tokenized shares elevated 16.5% to $365.1 million.

The growth has been supported by monetary establishments, together with BlackRock, JPMorgan, Franklin Templeton, and Fidelity, which have developed tokenized funds or expanded different blockchain-based choices utilizing Ethereum.

Joseph Chalom, chief govt of Ethereum treasury firm SharpLink, mentioned the community’s place rests on a decade of amassed builders, infrastructure, requirements, liquidity, and functions.

He famous:

“Ethereum has turn into the default working system for programmable finance and internet-native capital formation.”

Yet Wall Street’s willingness to construct on Ethereum has not produced an equal urge for food for ETH.

This is evidenced by the truth that US-listed spot Ethereum exchange-traded funds (ETFs) recorded seven consecutive weeks of outflows totaling virtually $1 billion, pointing to weak investor demand for direct publicity to the asset.

Financial corporations can difficulty tokenized funds, transfer stablecoins, and use Ethereum as a settlement community with out accumulating ETH in proportion to that exercise. However, they could want solely sufficient of the token to pay transaction prices, that are declining as the community turns into extra environment friendly.

That leaves Ethereum’s institutional adoption and ETH’s market efficiency transferring on separate tracks.

Asset managers are increasing their use of the community’s infrastructure, however the corresponding shopping for stress has not been enough to carry the token, leaving it uncovered to broader market weak spot and competitors from different digital property.

Ethereum Foundation reorganizes round core defenses

To navigate this panorama, the Ethereum Foundation has completed an internal reorganization, shifting its structural framework away from common ecosystem promotion towards a extremely specialised cluster mannequin.

The group’s remaining personnel have been partitioned into 5 practical divisions spanning the protocol, entry, consumer, neighborhood, and institutional layers.

The restructured Protocol cluster will double down on core engineering priorities, particularly scaling, user-experience enhancements, and hardening layer-1 cryptographic ensures.

Additionally, the coverage shifts point out that the inspiration plans to maneuver its inner compensation and monetary agreements straight into ETH and native stablecoins.

Bastian Aue, Ethereum Foundation’s interim director, mentioned this choice would drive its staff to function solely inside the sensible parameters and technical limitations of the ecosystem. He added:

“If the EF’s work is to make Ethereum usable as infrastructure for self-sovereignty, everybody on the EF will more and more reside contained in the constraints of the system the EF exists to enhance: pockets UX, volatility, accounting, privateness gaps, fee friction, stablecoin belief assumptions, restoration, dependency danger, and many others. If we will’t use these instruments ourselves, it’s unrealistic to anticipate others to.”

This institutional realignment additionally alerts an ideological hardening.

Aue acknowledged that the Foundation will reject requests to regulate protocol parameters to fulfill short-term speculative pursuits or company enchantment. Instead, developmental priorities will lean towards defensive software program engineering designed to protect the ledger from institutional seize or centralization.

He acknowledged:

“We are right here to defensively strengthen locations the place Ethereum is, or can nonetheless turn into, extractive, totalizing, or susceptible to cartel or state seize, or authoritarian instruments of surveillance or coercion.”

MEV and Privacy transfer up the Foundation’s agenda

In view of the above, one of the Foundation’s primary technical priorities shall be decreasing the dangers created by maximal extractable value, or MEV.

MEV refers to earnings that validators, block builders, and different market members can extract by controlling how transactions are ordered, included, or excluded. Some varieties come up naturally from arbitrage, however opaque routing and concentrated transaction stream may give a small quantity of operators disproportionate affect over the community.

Aue argues that Ethereum might stay permissionless in idea whereas changing into closely intermediated on the level the place customers transfer worth.

Its proposed responses embody stronger transaction-inclusion ensures, decrease obstacles to dam constructing and validation, and larger transparency across the assumptions customers make when routing transactions.

Forward Inclusion Lists, identified as FOCIL, are supposed to make it tougher for builders to censor transactions by permitting validators to require the inclusion of chosen transactions in future blocks.

Enshrined proposer-builder separation, or ePBS, would transfer the connection between validators and specialist block builders into the protocol, decreasing reliance on exterior relays. The design wouldn’t eradicate focus dangers, nevertheless it might take away some trusted parts from the present provide chain.

Researchers are additionally learning encrypted mempools, which might cover pending transaction particulars earlier than execution and make front-running harder.

Such programs could introduce new technical and aggressive dangers, together with benefits for specialised operators, leaving the Foundation to weigh privateness and equity towards extra complexity.

Privacy will become a parallel priority. The Foundation desires customers to have entry to robust privateness protections earlier than selectively disclosing data for identification, auditing, or compliance functions.

That strategy might battle with the preferences of establishments and regulators looking for larger visibility into blockchain transactions. The Foundation’s place is that Ethereum ought to help programmable disclosure with out making fixed surveillance the community’s default.

Layoffs start a interval of tighter spending

The staff discount additionally begins a stricter strategy to the Foundation’s funds and exterior funding.

Ethereum co-founder Vitalik Buterin said the Foundation is decreasing its finances by roughly 40% this yr as it begins a multiyear shift towards a smaller, endowment-style group.

The discount follows the treasury coverage adopted final yr, which seeks to maneuver the Foundation away from spending about 15% of its remaining property yearly, its common earlier than 2026, towards a fee of roughly 5% a yr after 2030.

The aim is to protect sufficient capital to support Ethereum development over an extended interval and cut back the group’s publicity to crypto market cycles.

According to Buterin, the Foundation is making these reductions whereas pursuing the third main iteration of Ethereum. That program, identified as the Ethereum Strawmap, is meant to reshape main components of the blockchain, together with consensus, transaction proofs, privateness, consumer accounts, and the way in which community state is managed.

To execute this third iteration of Ethereum on a constrained finances, the inspiration is scaling again a number of legacy initiatives.

The community’s longstanding multi-client mannequin, which traditionally relied on redundant software program shoppers to make sure chain stability throughout bugs, will pivot towards specialization. Developers are more and more seeking to synthetic intelligence-assisted formal verification to safe protocol upgrades, which might considerably cut back the engineering sources required to ship new software program proposals.

Simultaneously, the inspiration is winding down its Privacy and Scaling Explorations unit as an impartial analysis arm, shifting its cryptography specialists towards direct implementation inside the protocol.

The group’s flagship developer conference, Devcon, shall be scaled right down to a extra spartan format, and institutional outreach will slim its focus to extremely particular, replicable deployment take a look at instances.

Buterin additionally famous he would personally fund sure broader megaprojects that fall exterior the inspiration’s newly constrained scope.

Over the long run, Buterin mentioned he favors what he known as a “tender lean-and-done” mannequin for Ethereum. Once the Strawmap is accomplished, protocol growth would focus totally on safety repairs and a restricted quantity of high-value enhancements, with a a lot larger threshold for including new options.

Such an strategy might cut back the everlasting price of sustaining Ethereum and restrict the quantity of openings by which corporations, governments, or concentrated curiosity teams may affect its growth.

Ultimately, Buterin mentioned Ethereum ought to study much less from sprawling software program initiatives and extra from Bitcoin’s narrower strategy to protocol adjustments.

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