Ethereum Foundation’s Treasury Shrunk 39% Over 2 1/2 Years to $970M

As a researcher with years of experience in the crypto space, I find the recent financial report from the Ethereum Foundation both intriguing and reassuring. The $970.2 million treasury, while down 39% from earlier this year, still represents a significant war chest for the second-largest blockchain’s development.

On Friday, the Ethereum Foundation, responsible for overseeing the growth of the world’s second-biggest blockchain, unveiled their much anticipated financial statement. This report showed that they held approximately $970.2 million in their reserves as of October 31st.

The figure has decreased by approximately 39% since March 31, 2022, which was the last date for which data was previously published.

The revelation emerges amidst calls from several community members for increased transparency regarding the foundation’s financial assets, considering its significant function and far-reaching impact on the Ethereum network. Notably, the foundation’s last financial report was released in April of this year.

Approximately 81.3% of the foundation’s wealth, amounting to around $788.7 million, is stored in cryptocurrency, with a large proportion (99.45%) being ether (ETH). The rest, which totals approximately $181.5 million, consists of non-cryptocurrency investments and assets.

The report states, “We opt to primarily store our funds in Ether (ETH), reflecting our confidence in Ethereum‘s prospects. The Ethereum Foundation views Ethereum as a long-term investment, and our ETH holdings embody this perspective. Our treasury aims to finance crucial infrastructure for the Ethereum community over extended periods. To achieve this goal, we adhere to a cautious approach in managing our treasury, aiming to preserve resources even during prolonged market slumps.

In the timeframe since March 2022, when Ethereum (ETH) was approximately $3,300 per coin on the market, its value has decreased by about 22%, bringing it down to around $2,600, as reported by CoinMarketCap.

The foundation spent $105.4 million in 2022 and $134.9 million last year, it revealed.

According to findings from a September analysis by foundation researcher Justin Drake, who discussed this on Reddit’s AMA, the organization annually expenditures around $100 million and possesses approximately $650 million in its primary wallet. Drake estimated that the foundation could continue operations for roughly another decade at that rate.

The foundation is adopting a fresh policy regarding potential conflicts of interest, requiring its researchers and developers to disclose any external jobs they intend to accept and investments they plan to make in funds. If the external work exceeds $25,000 yearly or if they wish to invest, these matters will be reviewed by a discussion panel.

The report underscores that individuals employed by the foundation are strictly prohibited from engaging in external jobs and accepting payment in unliquid assets, such as advisory tokens or other assets with uncertain market values, prior to the commencement of a project.

Last week, it was disclosed that two leading Ethereum researchers, Drake and Dankrad Feist, were stepping down from their advisory positions at EigenLayer – a significant restaking platform on Ethereum. In response to this development, the conflict-of-interest policy has been implemented.

The Eigen Foundation granted these individuals substantial compensation from EigenLayer upon assuming their roles, which sparked worries about potential conflicts of interest when they announced their new positions in May.