The Ethereum ecosystem faces a funding crisis, staking taxation proposal sparks fierce controversy, new funding organization EthLabs breaks the deadlock

On June 24, according to Cointelegraph, the Ethereum ecosystem has recently been embroiled in a heated debate over funding sources, with the core of the controversy mainly revolving around how to raise funds for core development.

Previously, former contributor to the Ethereum Foundation Trenton Van Epps issued a warning that as the original ecosystem support policies expire gradually and the foundation continues to cut expenses, the Ethereum core development ecosystem may face a sustained funding crisis within 3 to 9 months.

It is estimated that Ethereum needs an annual investment of about $30 million to maintain the normal operation of more than ten clients, research teams, and ecosystem coordination teams. The current funding system can no longer support these expenses.

To address the ecosystem funding gap, Clément Lesaege, co-founder of Kleros, proposed the highly controversial “Validator Redirected Income” proposal, suggesting that 0% to 10% of validator staking rewards be transferred to the ecosystem fund pool for ecosystem development.

Based on the current total staked amount across the network, this mechanism could raise 50k to 70k ETH annually for the Ethereum ecosystem, providing a potential solution to alleviate development funding pressure.

However, the proposal has faced widespread opposition within the industry, with market critics arguing that this mechanism would entrench the influence of large validators, blur the boundaries between node operation and community governance, and pose obvious governance risks.

Meanwhile, different voices have also emerged within the community, with some believing that the Ethereum Foundation has ample reserves to support ecosystem operations for up to 30 years, and that the so-called funding crisis is unfounded.

In response to the funding controversy and industry disagreements, the Ethereum ecosystem has introduced a new breakthrough plan. This Monday, EthLabs, a non-profit research organization initiated by five former Ethereum Foundation researchers, was officially established. It will rely on funding support from large ETH holders in the ecosystem to directly finance Ethereum ecosystem development, providing a new funding channel for ecosystem growth.

At the same time, Ethereum founder Vitalik Buterin confirmed on Tuesday that the foundation is implementing a fiscal contraction policy, with an overall budget reduction of about 40%, and has completed layoffs of 54 employees, continuing to tighten expenses and promote a diversified ecosystem financing model.

#Ethereum Ecosystem Governance