Vitalik: EF budget reduced by 40%, shifting to a long-term focus and streamlining operations

Author: Vitalik Buterin, co-founder of Ethereum; Source: X, @VitalikButerin; Translation: Shaw, Golden Finance

This year's Ethereum Foundation (EF) budget will be reduced by approximately 40%, which means we have to make a series of difficult decisions. The funding management policy released last year has long set the core goal for this cut: The Foundation will transform into an organization focused on long-term investments and reliant on donation funds. Before 2026, the Foundation’s annual expenditure will consume about 15% of remaining funds; our long-term goal after 2030 is to keep annual spending around 5%.

Many organizations, when undergoing such contraction adjustments, tend to gloss over the facts: claiming no core values are lost, that this adjustment is merely about improving operational efficiency, that all laid-off staff are redundant and inefficient, and that everyone remaining is fully committed to working diligently, entering an ultra-efficient state, believing that the current team alone can make up for the reduction. But I will not deceive myself in this way. I sincerely respect every colleague at the Foundation and cannot pretend that this adjustment has not caused significant losses. They are all highly talented individuals, many of whom have been deeply involved in Ethereum protocols for nearly a decade. Through code, words, warmth in dealing with people, and concrete actions, they have brought light to the Ethereum ecosystem. I sincerely wish that whether they continue to deepen their work in Ethereum or turn to other fields, they will find a path to realize their self-worth and find happiness. I also hope many can bring their excellent professional skills and ideas to a broader Ethereum ecosystem, and even the entire CROPS field.

Next, I will objectively explain the major trade-offs we have made in this adjustment. The Ethereum Strawmap draft roadmap is no small matter; it is an ambitious project that plans to iterate and reconstruct almost all core modules of the protocol: consensus mechanism, zero-knowledge proofs, native privacy, account model, on-chain state, and so on. This is equivalent to Ethereum’s third comprehensive iteration, just as the merge upgrade was the second iteration; the difference is that this time, there will not be a large-scale hard fork all at once, but rather phased implementation of modules. In addition, the Foundation will increase investment in the access layer. We will not compromise; we aim to make Ethereum a top-tier underlying protocol capable of accommodating a future world where quantum computing, Mars space travel, cutting-edge biotechnology, and artificial intelligence coexist, confidently facing various challenges of this era.

Some of the budget gap will be filled by external development work contracted by the Foundation, but not entirely. So, what core trade-offs have we made to achieve leaner operations while implementing all of the above goals? Here are some key points (not an exhaustive list):

• Adjustment of multi-client development model: The core positioning of multiple clients will shift from redundancy fault tolerance to differentiation and specialization. Previously, parallel multi-client operation was Ethereum’s core security strategy: if a vulnerability appeared in one client, as long as its node share was below 33%, the entire chain could still produce blocks and complete finality. Now, we will gradually promote more protocol modules to switch to another security scheme—AI-assisted formal verification. Some small underlying components of Ethereum (such as BLS cryptography libraries) have already adopted this model, and more core modules will follow in the future. This will significantly reduce the resource consumption involved in deploying numerous Ethereum Improvement Proposals (EIPs). Client teams can save manpower and resources, which can then be targeted to meet various niche user needs and support the Foundation’s access layer development goals simultaneously.

• Reduction of the Privacy and Scalability Exploration Department (PSE): This independent department will be disbanded, and its core work (research and development of zero-knowledge proofs and supporting technologies to enable privacy and scalability) will shift from “broad exploratory efforts” to “targeted deployment of verified key technologies,” greatly reducing the required resources.

• Lightening the Devcon developer conference: Future conferences will continue to shrink in scale and become more streamlined, with deficits far lower than previous years, while also adjusting the conference’s focus to align with the Foundation’s mission requirements.

• Reducing internal development of large cross-Ethereum projects: As I announced earlier this year, some large cross-sector projects I believe have long-term value will be advanced independently using my personal funds.

• Focus on shrinking institutional collaborations: The Foundation’s institutional partnership activities will be scaled back, shifting focus to creating replicable, highly aligned demonstration cases that embody the CROPS (Community, Rights, Ownership, Privacy, Sovereignty) philosophy, even if the projects are smaller in scale.

The above adjustments do not fully explain all personnel departures; some measures are even unrelated to layoffs, merely reflecting reduced new investments in the future. But they are the core components of this budget contraction strategy.

In the long run, I personally favor Ethereum adopting a gentle, streamlined development approach—finishing projects once completed: after the full implementation of Strawmap, the protocol will only iterate for security fixes and a few high-value optimizations, with a much higher threshold for new feature proposals. This model will allow Ethereum to maintain its resistance to capture while avoiding huge annual budgets. Ethereum should learn more from Bitcoin’s development philosophy rather than engaging in massive, complex projects with millions of lines of code.

The past few years have been challenging for Ethereum. But both the Foundation and the external ecosystem are actively adapting and adjusting. I firmly believe Ethereum has enough resilience to continue developing and prospering.