Ethereum Foundation Unveils Treasury Plan To Support DeFi

The Ethereum Foundation (EF) has implemented a comprehensive treasury management plan to reduce long-term operational costs, collaborate closely with decentralised finance (DeFi) protocols, and strengthen privacy and decentralisation within the Ethereum ecosystem.

Cutting Costs, Securing Sustainability

A major part of the new treasury plan is to intentionally reduce spending to ensure it lasts for a long time. By 2030, the Foundation will cut its yearly spending from 15% of its entire assets to 5%. The goal of this transformation is to keep the Foundation stable and able to sustain Ethereum across different market cycles by keeping a financial runway of 2.5 years.

The Ethereum Foundation has set up a rule-based system for treasury withdrawals to make this happen. The Foundation will only sell ETH if its liquid reserves drop below the 2.5-year spending limit. Every three months, these reserves will be looked at to see whether any asset rebalancing is needed. This approach makes sure that ETH isn’t sold for no reason and that the treasury stays strong even when the market is unstable.

Utilising DeFi to Grow Reserves

The Foundation wants to manage and build its treasury with secure, audited, and permissionless DeFi protocols in addition to saving costs. This comprises staking alone and lending wrapped ETH (wETH) to well-known DeFi protocols. All DeFi roles will be open to the public, which is in line with Ethereum’s values of openness and decentralisation.

EF made it clear that it will work with DeFi protocols to help reserves expand, but it will stay away from techniques that are too risky or go against decentralisation. The goal is not to get the most money back but to develop the funds in a responsible way that is loyal to Ethereum’s values.

The Defipunk Philosophy

The Foundation is not only developing a financial plan, but it is also creating a guiding philosophy called “Defipunk.” This idea comes from the early cypherpunk movement and is based on the idea that decentralised systems must defend people’s freedom, especially through financial privacy and open-source development.

The Defipunk ideology will help us decide which initiatives and collaborations in the Ethereum ecosystem are worth our time and money. The Foundation is intended to give money to teams that share these ideals, which will help create a DeFi environment that values freedom, resistance to censorship, and new ideas.

Transparency and Reporting

To build trust and accountability, the Foundation will start putting out financial reports every three months and every year. These reports will show how much money is in the reserves, what investments are being made, and how the treasury is doing. The goal of the transparency project is to show both the community and stakeholders exactly how EF handles its money.

Internal Restructuring For Clarity

Along with the financial changes, the Ethereum Foundation has changed the way its internal teams work. The research and development department is now called “Protocol.” Its main goals are to improve user experience across the board, scale Ethereum Layer 1, and move forward with Layer 2 ecosystems. The purpose of this restructuring is to make things clearer within the Foundation by matching technological advancement with its larger financial aims.