The Ethereum Foundation on June 23, 2026 eliminated 54 positions — roughly 20% of its 270-person workforce — and cut its operating budget by 40%. The restructuring replaces a flat organizational model with five domain-focused clusters: protocol, access, user, community, and institutional. The sta...
"Being as fast and as scalable as possible, and only a small epsilon more decentralized than the others, is a route to mediocrity, and if we try it, we will lose." — Vitalik Buterin, Co-founder, Ethereum
The Ethereum Foundation on June 23, 2026 eliminated 54 positions — roughly 20% of its 270-person workforce — and cut its operating budget by 40%. The restructuring replaces a flat organizational model with five domain-focused clusters: protocol, access, user, community, and institutional. The stated objective is a transition from a broad-mandate development engine to a narrowly scoped steward of what it calls CROPS: censorship resistance, capture resistance, openness, privacy, and security.
The same week, five departing senior researchers launched Ethlabs, an independent nonprofit research lab backed by more than $11 billion in ETH held by publicly traded corporate sponsors Bitmine Immersion Technologies (NYSE: BMNR) and SharpLink (NASDAQ: SBET). Ethlabs has stated it will pursue single-slot finality, mainnet capacity expansion, and native asset issuance — research priorities that overlap with, and in some cases directly compete with, the Foundation's remaining scope. Together, the restructuring and the emergence of Ethlabs represent the most significant reallocation of Ethereum's core R&D resources since the Foundation's inception in 2014.
On June 23, 2026, Ethereum Foundation Management published a blog post confirming the elimination of 54 roles across the organization. The statement read: "We come out of this process with the structure, activities, and people necessary for execution on the critical tasks ahead of us."
Departing employees received severance packages of at least one month's salary per year of service, plus a retirement payment, career coaching, and ecosystem placement assistance through a dedicated support fund. The 40% budget reduction brings the Foundation's estimated annual operating expenditure from approximately $100 million to roughly $60 million — the lowest figure in nominal terms since 2021.
For context, the Foundation spent $105.4 million in 2022 and $134.9 million in 2023, according to its own financial reports. The 2023 figure included $61 million in grants distributed to 285 projects at an average of $214,000 each. The magnitude of the cut suggests a substantial contraction in external grant funding, though the Foundation has not published a detailed 2026 budget breakdown.
The restructuring formalizes a financial transition that has been underway since late 2025. The Foundation's treasury, valued at approximately $970 million in October 2024 (comprising $789 million in crypto and $182 million in non-crypto investments), has been reoriented toward an endowment model.
Key parameters of the new financial architecture:
At a 5% draw rate on a $970 million portfolio, the Foundation would target approximately $48.5 million in annual spending — roughly one-third of 2023 levels. The staking yield covers roughly 6-9% of the projected $60 million 2026 budget, meaning treasury drawdowns and non-crypto returns must supply the rest.
The Foundation's new organizational structure replaces its previous flat hierarchy with five operational clusters, plus operations and management support:
Protocol Layer — Maintains the core protocol, ensuring Ethereum delivers on scaling and self-sovereignty commitments. This cluster inherits the Foundation's longest-standing function.
Access Layer — Governs how users and software agents interact with Ethereum: reading chain data, submitting transactions, delegating authority. The guiding principle is what the EF calls the "zero option" — for every intermediated path, a credible non-intermediary alternative must exist.
User Layer — Conducts research on actual user and organizational behavior to feed into protocol and infrastructure decisions.
Community Layer — Manages the EF's external relationships, including connections with privacy advocates, open-source movements, and civil liberties organizations.
Institutional Layer — Oversees engagement with financial institutions, governments, enterprises, universities, and other organized entities interacting with Ethereum.
The cluster model represents a shift from function-based organization (research, grants, DevCon) to domain-based organization. Whether it reduces the internal coordination overhead that multiple former employees have cited as a frustration remains to be seen.
Among the most consequential decisions in the restructuring was the closure of PSE (Privacy and Scaling Explorations), the Foundation's applied cryptography unit. PSE had been building production-grade cryptographic tooling including:
The timing creates an immediate tension: the Foundation's CROPS mandate explicitly names privacy as a non-negotiable property, yet the unit doing applied-privacy work was disbanded the same week the CROPS mandate was published. The Foundation's documentation describes L1 privacy as a "long-horizon goal" but does not specify who will execute the applied research that PSE was conducting.
Whether independent teams will pick up MACI, Semaphore, and the consumer ZK work with adequate funding is an open question. If not, the CROPS privacy commitment risks becoming an unfunded mandate.
The organizational restructuring follows a period of sustained leadership attrition. Nine senior figures have departed the Ethereum Foundation since January 2026:
Bastian Aue, an EF board member, assumed an interim leadership role following Stańczak's departure and continued in that capacity after Wang's resignation. The Foundation has not announced a permanent executive director appointment.
Buterin has publicly stated that his own influence within the organization will decrease: "The board is in the process of expanding, and my own power within the org will continue to decrease, which is honestly what I want." He noted this is "only my own view" and that he holds "no extra special powers on the board that the other board members do not."
Ethlabs launched on June 23, 2026 — the same day as the Foundation's restructuring announcement. The five founding researchers (Dietrichs, Monnot, Schwarz-Schilling, Rudolf, Ma) had spent years at the Foundation working on consensus mechanisms, transaction processing, and MEV resistance.
Funding structure: Ethlabs is backed by Bitmine Immersion Technologies and SharpLink Gaming, the two largest publicly traded corporate holders of ETH, which together hold approximately 6.54 million ETH (~$11.3 billion at current prices). Additional backers include Ethereum co-founder Joe Lubin, institutional custodian Anchorage, Octant, and SNZ. The organization operates as an independent nonprofit; funders hold no vote over the research agenda, with all contributions routed through an independent grants administrator.
Research priorities:
On June 30, Ethlabs backers publicly acknowledged the lab will compete with, not merely supplement, the Foundation's work. This candor makes explicit what the organizational structure implies: Ethereum's core R&D function is fragmenting into multiple, independently funded entities with overlapping mandates.
The CROPS framework, formally adopted in March 2026, defines the Foundation's narrowed scope. It names five properties that Ethereum must preserve:
| Property | Description | |---|---| | Censorship Resistance | No actor can prevent valid transactions from being included | | Capture Resistance | No single entity can control protocol direction | | Openness | Code, standards, and participation remain permissionless | | Privacy | Users can transact without compulsory disclosure | | Security | The protocol resists attacks at current and projected threat levels |
Buterin framed the mandate in competitive terms on May 25: pursuing maximum throughput with marginal decentralization advantages over competitors is "a route to mediocrity." The implication is that Ethereum's value proposition lies in CROPS properties rather than raw performance — a positioning that concedes throughput competition to Solana, Sui, and other high-TPS chains while staking Ethereum's future on properties that are harder to measure but, the Foundation argues, harder to replicate.
The restructuring has direct consequences for Ethereum's economic value distribution — the network's ability to generate, capture, and allocate economic value to participants.
Grant ecosystem contraction. At 2023 levels, the Foundation distributed $61 million to 285 projects. A 40% budget cut likely reduces grant funding by $25-40 million annually, depending on how cuts are allocated between grants and internal operations. This shifts the burden of public-goods funding to alternative mechanisms — Gitcoin, Protocol Guild, Octant, and direct protocol revenue.
R&D fragmentation costs. With Ethlabs operating independently on overlapping priorities, coordination overhead between the Foundation and Ethlabs becomes a new transaction cost in Ethereum governance. The lack of formal coordination mechanisms between the two entities increases the risk of duplicated work and conflicting technical direction.
Treasury sustainability. At a $60 million annual budget and a $970 million treasury, the Foundation has roughly 16 years of runway before depletion (assuming zero returns). The endowment model, targeting 5% annual draw by 2030, would extend this indefinitely if real returns exceed the draw rate. However, a 99.45% concentration of crypto holdings in ETH creates significant mark-to-market risk; a 50% decline in ETH price would halve the treasury's dollar value and force either deeper cuts or a return to ETH sales.
ETH price sensitivity. The Foundation's treasury is almost entirely denominated in ETH. With ETH trading around $2,060 (as implied by the 70,000 ETH staking position valued at $93 million), the dollar-denominated sustainability of the endowment model is a direct function of ETH's market price — creating a reflexive dynamic where Foundation spending decisions affect ETH supply, which affects treasury value, which affects spending capacity.
The Ethereum Foundation's restructuring is, in economic terms, a controlled decomposition of a centralized development subsidy into a distributed funding model. The Foundation retains stewardship of CROPS properties and protocol-level work; Ethlabs absorbs applied research on finality, capacity, and interoperability; and the grant ecosystem faces a funding gap that alternative mechanisms have not yet demonstrated the capacity to fill.
Whether this fragmentation produces the redundancy and resilience that decentralized networks are supposed to deliver — or the coordination failures and duplicated overhead that centralized organizations are designed to avoid — will be determined by execution over the next 12-24 months. The data to answer that question does not yet exist.