Changing Ethereum Foundation (Feat. New Treasury Policy)

Key Takeaways

• In June 2025, the Ethereum Foundation introduced a new financial policy, outlining ETH sale standards, spending limits, revenue strategies, reporting systems, and DeFiPunk principles. The foundation aims to quantify asset sales and enhance predictability and transparency in financial operations through this new structure.

• This shift signals a redefinition of the foundation from a mere sponsor to an active operator of the ecosystem. Notably, the DeFiPunk principles emphasize philosophy-driven investment, favoring value over profit.

• However, concerns remain over potential ecosystem centralization and regulatory risks from the SEC, making it crucial to watch how the foundation manages this transition.

1. Announcement of Ethereum Foundation's New Treasury Policy

Source: Ethereum Foundation

On June 4, 2025, the Ethereum Foundation announced a major shift in its treasury policy through a blog post titled “Ethereum Foundation Treasury Policy”. Moving away from informal and opaque asset management practices, the foundation introduced a new strategy based on explicit standards and a structured framework. This policy goes beyond improving financial operations—it presents a comprehensive strategy that also addresses governance, the foundation’s role as a central ecosystem actor, and its relationship with the community. The timing of this announcement is also significant, as the Ethereum Foundation has identified 2025–2026 as a critical inflection point for Ethereum, framing the policy shift as a proactive move to strengthen community trust and ensure the long-term sustainability of the ecosystem.

1.1 Past Treasury Management of the Ethereum Foundation

Source: stani.eth X, vitalik.eth X

For a long time, the Ethereum Foundation managed its assets based on “needs” and “circumstances.” However, this approach often felt opaque and unpredictable to the community and $ETH holders. One of the most prominent concerns was the Foundation’s large-scale $ETH sales without prior notice to the market.

For instance, in January 2025, the Ethereum Foundation sold an additional 100 $ETH at an average price of $3,364 through its sales wallet. This occurred amidst a growing sentiment within the Ethereum community emphasizing the need for organizational reform and clearer operations—an issue even Vitalik Buterin acknowledged was worth revisiting, reinforcing existing criticism. The move sparked controversy and renewed scrutiny of the Foundation’s influence on the market, with some alleging that such actions occasionally impacted the price of $ETH. Ultimately, the Foundation’s opaque decision-making around Treasury management eroded community trust.

Source: Ethereum Foundation

While the Foundation did publish periodic financial reports, these were primarily technical summaries of asset composition and budget execution. They rarely included asset management philosophy, decision-making criteria, or risk management strategies. For example, there appeared to be no consistent principles regarding DeFi or staking investments, nor a standardized approach to the timing and method of $ETH sales—decisions were seemingly made on an ad-hoc basis.

Ultimately, this method was considered too loose for an organization managing billions of dollars worth of $ETH. The lack of a structured treasury approach made it difficult to ensure accountability and efficiency amid community criticism, market volatility, and increasing regulatory scrutiny. As a result, the Ethereum Foundation faced mounting pressure to adopt a more mature and standardized operational model.

1.2 Newly Proposed Treasury Policy

At the core of the newly announced treasury policy is the systematization of operations and strategic alignment. Moving away from a laissez-faire approach to asset management, the Ethereum Foundation aims to institutionalize predictable and accountable financial operations through five key components:

1. Formalization of $ETH Sale Guidelines: The Foundation has committed to maintaining 2.5 years’ worth of operating funds in fiat terms and will only sell $ETH when holdings exceed this threshold. This move is intended to prevent unplanned asset sales, minimize market shocks, enhance predictability, and restore community trust.

2. Annual Spending Cap: An annual spending cap of 15% of total assets has been set, with plans to gradually reduce this to 5% over the next five years. This conservative financial strategy prioritizes long-term sustainability over short-term consumption, aiming to balance asset preservation with fiscal responsibility.

3. Revenue Generation via DeFi and Staking: A portion of the Foundation’s $ETH assets will be allocated to DeFi and staking protocols to generate revenue and strengthen operational self-reliance. Unlike the past, this signals a shift toward active asset utilization as a means of reinforcing long-term financial sustainability.

4. Enhanced Internal and External Reporting: Quarterly and annual financial reporting is now mandatory for the board and executive team, with key metrics transparently disclosed to the community. This system reinforces accountability and legitimizes financial operations beyond basic accounting practices.

5. Introduction of “DeFiPunk” Standards: DeFi projects supported by the Foundation must meet specific criteria aligned with cypherpunk ideals. This standard serves not only as a technical benchmark but also as a bridge between the Foundation’s philosophical identity and financial strategy, enabling value-driven rather than profit-driven decision-making.

Through this comprehensive treasury policy overhaul, the Ethereum Foundation evolves from a passive asset holder into a philosophically grounded and strategically active decision-making entity.

2. Cut Waste, Increase Support

2.1 More Transparent and Tighter Financial Operations

The new treasury policy not only improves the reporting process but also shifts policy-making itself to a principle-based approach, reducing uncertainty in asset management and enabling responsible operations guided by a structured framework. For example, while it was previously impossible to predict when or how much $ETH the Foundation would sell, sales are now determined based on the Foundation’s “remaining lifespan relative to operating funds.” This change reflects a dual focus on internal risk management and external stakeholder trust.

More specifically, the Ethereum Foundation has established its financial principles around two key variables:

• A: Annual operating expenses (as a percentage of total assets)

• B: Duration of operating fund coverage (in years)

The product of A × B determines the target amount of fiat-denominated assets (held in cash or stablecoins), which in turn dictates the timing and size of $ETH sales. The remainder of the assets (total funds – A × B) is held in $ETH, and dividing this amount by the current $ETH price determines how much $ETH the Foundation will continue to hold. This model introduces a quantifiable and structured basis for asset liquidation, reducing arbitrary decisions and significantly enhancing predictability.

As of now, the Foundation has set A = 15% and B = 2.5 years, signaling that it views 2025–2026 as a “critical period” for Ethereum. This ensures stable short-term funding while allowing for strategic adjustments based on market cycles and community feedback. Additionally, the plan includes a gradual reduction of annual operating expenses to 5% over the next five years. This approach reflects a dual focus on the Foundation’s long-term sustainability and decentralization, and the figures are subject to revision depending on shifts in market and ecosystem conditions.

The spending cap also reflects this thinking: by explicitly committing not to exceed a set threshold, the Foundation signals its commitment to long-term viability over short-term ecosystem expansion. The cap is reported quarterly, and any excess expenditures can be challenged by the community or the board, creating a system of checks and balances.

This enhanced financial transparency by the Ethereum Foundation goes beyond mere disclosure. It strengthens internal accountability mechanisms and provides a consistent foundation for communication with the broader community.

2.2 Continued Support for the Ethereum Ecosystem

The Ethereum Foundation also explicitly outlines its plans to engage in DeFi and staking as part of its revenue-generation strategy. This is not merely a tactic to stabilize the Foundation’s finances, but more fundamentally, a move to establish a structure where the ecosystem can sustain long-term research and development without relying on external funding. Even in times of market instability, the Ethereum ecosystem can continue to fund core infrastructure, research grants, and community education through revenue generated from $ETH.

Crucially, this asset management approach prioritizes long-term public goods over short-term profit. Rather than simply chasing high-yield DeFi opportunities, the Foundation selectively supports protocols that align with the “DeFiPunk” standards—reinforcing both the technical foundation and philosophical vision of Ethereum.

The DeFiPunk standards include:

• Privacy-Centric: Systems that prioritize user anonymity and data protection

• Self-Custody: Architectures that allow users full control over their assets

• FLOSS (Free/Libre and Open Source Software): Open source codebases that are freely accessible, auditable, and open to contribution

• Trust-Minimized Logic: Smart contracts and systems designed to function without central administrators

• Decentralized User Interfaces (UI): Interfaces that are not dependent on any specific company or centralized server, allowing universal access

Projects that meet these criteria may become targets of the Foundation’s on-chain revenue strategies. This reflects a policy direction that prioritizes philosophical alignment over mere profitability.

3. Concerns Arising from a Systematized Treasury Policy

3.1 The Increasing Complexity of the “Security” Debate

While the Ethereum Foundation’s more structured and strategic financial operations may offer benefits in terms of market stability and decision-making clarity, they also risk intensifying the “security” issue. Specifically, the Foundation’s involvement in revenue-generating activities such as DeFi and staking, alongside its strategic management of $ETH sales, could be interpreted by the U.S. Securities and Exchange Commission (SEC) as “corporate-like behavior.” If such actions create an expectation of profit for $ETH holders, the SEC could gain grounds to classify $ETH as a security.

Source: SEC X

The SEC typically assesses whether an asset qualifies as a security using the well-known Howey Test, derived from a 1946 U.S. Supreme Court case. The test includes four key criteria:

1. There is an investment of money

2. In a common enterprise

3. With the expectation of profit

4. To be derived from the efforts of others

If all four criteria are met, the asset may be classified as a security.

When these standards are applied to $ETH and the Ethereum Foundation’s activities, the security classification becomes more plausible than before. While some $ETH buyers may claim their intent is to use the network, many also purchase it with expectations of price appreciation. Additionally, the Foundation’s proactive asset management and profit-generating activities through DeFi could be seen as enabling profit “from the efforts of others.” If the Foundation is seen allocating funds to specific projects under the Defipunk framework, it could enhance the perception of a “common enterprise,” thereby satisfying that condition of the Howey Test. This not only raises potential issues for the approval of an Ethereum ETF but also poses broader legal risks.

That said, recent SEC adjustments suggest a more relaxed stance on staking activities by general participants, which could offer some buffer. Moreover, the Ethereum Foundation does not distribute profits, and $ETH maintains technological utility—points that could serve as counterarguments. Still, given the Foundation’s significant influence over Ethereum’s future within a proof-of-stake (PoS) framework, questions may continue to arise. Thus, the new Treasury Policy must be crafted with both technical precision and political sensitivity—overemphasizing profitability could invite unforeseen legal challenges.

3.2 Centralization Risks from Selective Ecosystem Support

While the “DeFiPunk” standards may appear ideal in theory, their practical application could unintentionally spark centralization concerns. If certain protocols are excluded from receiving support simply because they do not meet criteria such as being privacy-focused, open-source, or self-custodial, those projects may struggle to secure development funding from the Ethereum Foundation—regardless of their utility or popularity within the community or market. This could stifle technological diversity and lead some within the community to view the Foundation as overly political or prescriptive.

A broader concern is that the act of selection itself could be interpreted as a form of centralization. No matter how principled the criteria may be, the Foundation’s authority to determine which projects receive support inherently introduces a top-down element that risks straying from Ethereum’s core principle of decentralization. This stands in contrast to the Foundation’s historical stance of avoiding direct project involvement and maintaining “credible neutrality.”

In this latest policy, however, the Foundation explicitly commits to participating in DeFi and allocating assets based on what it deems to be the right standards. This shift toward a more active and opinionated role raises questions about the potential impact of its influence.

That influence could have tangible consequences. For instance, if the Foundation does not consider a project “worthy of support,” it may struggle to gain visibility or funding, jeopardizing its survival. While it’s true that encouraging projects to evolve in alignment with these standards can be beneficial for the ecosystem, such a model could also dampen experimentation and foster a perception that projects misaligned with specific values are being sidelined.

In other words, the DeFiPunk framework could evolve into a tool for selectively shaping the decentralized ecosystem—a contradiction that underscores the need for careful balancing between Ethereum’s philosophical ideals and the operational realities of Foundation-led support.

4. Ethereum Is Changing—Can You Feel It?

Source: imgflip.com

Since late 2024, the Ethereum Foundation has been undergoing gradual but unmistakable transformation. Through internal team restructuring and strategic reorganization, the Foundation began redefining its scope of operations and refocusing on its core competencies. This trajectory culminated in the recent overhaul of its treasury policy—a move that signals more than just an operational shift. It reveals the Foundation’s intent to manage Ethereum more strategically as a public good.

Most notably, this announcement marks the first time Ethereum’s long-held values of decentralization and openness are being explicitly embedded into its asset management strategy. From formalized $ETH sale guidelines and annual spending limits, to revenue generation through DeFi and the introduction of the philosophically grounded DeFiPunk framework, the Foundation is stepping forward—not as a passive bystander, but as an accountable and active player in the ecosystem.

Naturally, concerns persist. The DeFiPunk criteria could narrow the diversity of the ecosystem, and the Foundation’s increasingly hands-on financial role may draw further attention from regulators like the SEC. Yet, where there is hope, there is also hesitation. The true test will be whether the Ethereum Foundation can guide this new phase with the balance and integrity that the Ethereum community has come to expect.

5. Resource

Related Articles, News, Tweets etc. :

• https://blog.ethereum.org/2025/06/04/ef-treasury-policy

• https://x.com/ethereumfndn/status/1930352951459229970