Ethereum Foundation Unveils New Treasury Management Strategy

The Ethereum Foundation (EF) has announced a comprehensive overhaul of its treasury management practices, outlining key measures to optimize its financial operations. The new policy aims to ensure the long-term sustainability and growth of the Ethereum network.

• Strategic Spending Reduction: The Foundation plans to gradually decrease its spending while actively seeking opportunities to maximize the yield from its assets.
• Enhanced Transparency: A new system of quarterly and annual reports will be implemented to provide greater transparency and accountability in the Foundation’s financial activities.
• “Defipunk” Framework: The EF is introducing a decentralized finance (DeFi) framework called “Defipunk” to uphold core Ethereum principles like privacy, security, and open-source development.

Reforming Treasury Plans

The Ethereum Foundation is taking proactive steps to strengthen its role in supporting the Ethereum network. These policies focus on reforming operations, including spending habits, yield generation, and transparency.

The EF has identified the 2025-2026 period as “likely crucial for Ethereum,” leading to a heightened focus on short-term deliverables. The Foundation intends to reduce its spending from a target of 15% over 2.5 years to a baseline of 5% over the next five years.

To generate returns, the Foundation will leverage its cryptocurrency assets through ETH staking and lending/borrowing activities via DeFi protocols that align with Ethereum’s values. Security, risk management, and reward potential will be key considerations. The goal is to support DeFi projects within the network while simultaneously generating revenue.

“We will reallocate funds between protocols frequently for reasons such as changing market conditions, diversification, or new yield opportunities,”

The Foundation previously deployed approximately 45,000 ETH across Aave, Compound, and Spark Protocol in February to initiate this process.

Fiat-based assets will be maintained in liquid cash for daily operations, as well as in fixed-term deposits, bonds, and tokenized real-world assets (RWAs).

The EF Finance team is also tasked with producing structured quarterly and annual reports detailing the organization’s key activities, performance, and treasury allocations.

Furthermore, EF aims to deepen its commitment to cypherpunk ideals through the “Defipunk” framework. This approach seeks to maintain the fundamental principles of DeFi within Ethereum protocols through guidelines including privacy, security, free and open-source software (FLOSS), self-custody, distributed user interfaces, and maximally trusted core logic.

The Foundation also emphasized its increased focus on research and advancement of privacy solutions, recognizing it as a key challenge that DeFi protocols have yet to fully address.

The treasury policy arrives amidst changes at EF following the appointment of Tomasz Stańczak and Hsiao-Wei Wang as co-executive directors in March. The Foundation previously announced a restructuring and rebranding of its Protocol Research & Development (PR&D) team to “Protocol” earlier this week.

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