After the Foundation steps back and Ethlabs moves forward: Ethereum faces the largest reorg in history

Author: Gu Yu, ChainCatcher

On June 23rd, the recently questioned Ethereum ecosystem received two major news updates.

First, several former Ethereum Foundation researchers established an independent non-profit organization, Ethlabs, which received significant funding support from major ETH holders such as Bitmine, SharpLink, and others. According to their introduction, Ethlabs’ early work will focus on key needs for large-scale institutional on-chain adoption, including faster settlement speeds, native asset issuance, cross-chain transactions based on robust infrastructure, mainnet capacity expansion, and foundational research supporting ETH’s monetary properties.

Soon after, the Ethereum Foundation announced the end of a months-long restructuring, laying off 54 people, about 20% of its previous staff. This adjustment continues the “streamlining Ethereum” strategic transformation, repositioning the Ethereum Foundation as a lighter protocol governance and maintenance entity rather than the primary core builder.

Between advances and retreats, Ethereum is signaling clearly: the foundation is proactively ceding its dominant position, allowing ecosystem organizations to take on more execution functions. Ethereum is no longer trying to be driven by a centralized non-profit to determine the route, build, promote, and adopt.

This may be the most significant governance correction in Ethereum’s past decade-plus.

Over the past year, external criticism of Ethereum has shifted from its ETH price performance to its organizational efficiency, strategic clarity, and ecosystem mobilization capabilities. Ethereum once appeared overly “correct,” too slow, and overly reliant on the Foundation and Vitalik’s implicit endorsement.

Today’s two changes are precisely responses to these criticisms: Ethereum is not without direction, but is trying to change how that direction is generated.

1. Ethlabs Gains Ecosystem Support, but Vitalik Absents

The establishment of Ethlabs first indicates that the Ethereum ecosystem is developing a new organization closer to an “industrial execution layer.”

Unlike traditional research institutions, Ethlabs’ goal is not merely to propose new cryptographic directions or long-term roadmaps, but to address concrete issues such as institutional on-chain adoption, financial asset issuance, cross-chain transactions, mainnet capacity, and ETH’s monetary properties. Behind these issues lies Ethereum’s core anxiety over the past few years: it remains the most important smart contract network, but its advantages in real institutional adoption, on-chain financial scaling, and user experience are not as solid as market imagines.

Ethereum is not lacking in research or ideas. What it lacks is an intermediary layer that transforms research into market adoption. This is the significance of Ethlabs’ emergence.

On Ethlabs’ official website, the list of supporters includes many influential figures in the Ethereum ecosystem, including key personnel from the Ethereum Foundation, investors from Dragonfly, Electric Capital, and others, as well as contributors from Base, Flashbots, Uniswap. But notably, Vitalik is not on this supporter list.

This does not necessarily mean Vitalik disagrees with Ethlabs. Instead, it’s more reasonable to interpret that he is intentionally avoiding giving this new organization too strong personal endorsement or path interference.

Over the past years, Vitalik has been a highly symbolic figure for Ethereum. He proposed ideas like soul-bound tokens, DeSoc, privacy, account abstraction, and public goods funding, many of which are forward-looking, but few have achieved large-scale market adoption.

The issue is not that these directions lack value, but that when Vitalik’s every expression is seen as “Ethereum’s next narrative,” the entire ecosystem risks falling into implicit dependence, leading to over-investment of time and resources.

Since the beginning of this year, Vitalik has published only 2 articles on his official blog, compared to at least 15 per year previously. This change itself is noteworthy. It does not mean Vitalik’s influence on Ethereum is waning, but rather a conscious restraint: shifting Ethereum from a “founder-driven public narrative” to a “multi-organization, multi-team, multi-stakeholder collaborative technological network.”

If Ethlabs is to undertake stronger institutionalization, financialization, and execution functions, it cannot simply be an extension of Vitalik’s will. It must prove it can earn ecosystem trust without direct founder endorsement and respond to the market with tangible results.

2. The Ethereum Foundation’s New Structure and Positioning

While Ethlabs takes a step forward, the Ethereum Foundation steps back.

For a long time, although the Foundation nominally only supported the Ethereum ecosystem as a non-profit, it has in practice played multiple roles: strategic coordinator, research funder, protocol roadmap setter, and cultural hub. It neither wants to be a traditional corporate headquarters nor has it avoided functions similar to a headquarters on many key issues.

This structure once helped Ethereum maintain neutrality and decentralization, but also caused side effects: slow decision-making, vague expression, unclear responsibility boundaries. The outside world both hopes the Foundation provides clearer strategies and criticizes it for having too much influence.

Meanwhile, internal disagreements have been reported. The Guardian previously mentioned that the Foundation had significant disagreements over strategic direction, leadership adjustments, and institutional adoption; tensions between “cypherpunk” and “pragmatic business” camps; and in March 2025, the appointment of Hsiao-Wei Wang and Tomasz Stańczak as co-Executive Directors was seen as a compromise between these cultures.

But clearly, after both executives left, the Foundation’s 2025 team restructuring was a failure. Core figures like Josh Stark, Trenton Van Epps, Dankrad Feist left one after another. Coupled with persistent low token prices and growing doubts, the Foundation had to reorganize again.

Post-restructuring, the Foundation will split into clusters such as protocol layer, access layer, user layer, community layer, and institutional layer, and cut 54 staff, about 20% of its previous size. This is not just cost-cutting; it’s a boundary contraction: the Foundation is repositioning itself as a lighter protocol governance and maintenance entity, not the main builder of all ecosystem directions.

In fact, besides Ethlabs, the Ethereum ecosystem has seen the emergence of organizations like Ethereum Applications Guild, The Ethereum Economic Zone, and Argot Collective over the past year, each contributing from different angles—driving applications, Rollup collaboration, maintaining Solidity, etc.

“Managing the privilege of Ethereum should not be monopolized, but shared cautiously with those committed to building sovereign infrastructure, whether old friends or newcomers,” the Foundation clearly states in its latest post.

3. Turning “Correct” into “Effective”

In the past, Ethereum’s advantages came from its developer community, DeFi liquidity, L2 ecosystem, and protocol security. But over the last two years, these advantages have not fully translated into ETH’s market performance. Community criticism of the Foundation is essentially a form of “shareholder anxiety.”

Paul Brody, Chair of the Enterprise Ethereum Alliance, once commented that the Ethereum community behaves somewhat like ordinary shareholders, “they want returns.” Though harsh, it’s quite accurate.

A month ago, Ryan Sean Adams, co-founder of Bankless, tweeted: “Ethereum’s future can no longer rely on the Ethereum Foundation (EF). EF is important, but Ethereum needs new institutions to step in and fill the gap. We need an organization that genuinely wants ETH to succeed—grow in number—and is willing to speak out and execute. EF is not that, and never will be.”

Today, Ethlabs is born to meet the expectations of major ETH holders like Bitmine, SharpLink, and the large coin-holding groups. These two companies hold over 6 million ETH combined. Their demands for Ethereum are not just about the technical roadmap but whether ETH can bring substantial returns to their shareholders.

This is inherently different from the Foundation’s positioning. EF must maintain trustworthiness and neutrality; it cannot serve ETH’s price like a listed company, nor reduce protocol governance to maximizing holder interests. But organizations like Ethlabs can undertake clearer market-oriented functions.

In other words, the Ethereum Foundation is responsible for keeping Ethereum “correct,” while Ethlabs needs to prove that Ethereum remains “effective.”

Ethereum could respond to market doubts with “long-termism” in the past. But when Hyperliquid takes over derivatives narratives, Solana captures meme narratives, and Bitcoin seizes asset narratives, Ethereum must prove it is not only the safest smart contract platform but also the most capable network to support the next wave of on-chain financial expansion.

Of course, this shift is not without risks. Ethlabs gaining support from large ETH holders and institutional forces might trigger new concerns about “Ethereum centralizing from the Foundation to large holders.” Institutional adoption could also conflict with Ethereum’s original cypherpunk spirit.

But for today’s Ethereum, the greater risk is not moving too fast, but remaining stuck between technical correctness and organizational sluggishness.

The market ultimately rewards networks that can maintain trustworthiness while continuously attracting capital, applications, developers, and institutions.

The establishment of Ethlabs and the Foundation’s restructuring are key steps in Ethereum’s move toward this goal.