The Ethereum Foundation on June 23, 2026 eliminated 54 positions — roughly 20% of its ~270 workforce — cut its operating budget by 40%, and shuttered its Privacy and Scaling Explorations (PSE) applied cryptography lab. The announcement capped a five-month period in which nine senior figures depar...
"The Foundation should be one of many guardians of Ethereum, not its primary operator." — Vitalik Buterin, Ethereum Co-Founder
The Ethereum Foundation on June 23, 2026 eliminated 54 positions — roughly 20% of its ~270 workforce — cut its operating budget by 40%, and shuttered its Privacy and Scaling Explorations (PSE) applied cryptography lab. The announcement capped a five-month period in which nine senior figures departed, including both co-executive directors. ETH trades at $1,636, down 44% year-to-date, while network daily fee revenue has fallen 98% from 2021 highs to approximately $500,000 per day.
One day before the Foundation's announcement, five former EF researchers launched Ethlabs, a new nonprofit backed by Ethereum co-founder Joseph Lubin, BitMine, and SharpLink, with a mandate to prepare Ethereum's infrastructure for institutional adoption. On June 29, Loopring — one of Ethereum's earliest ZK rollup projects — shut down its DEX entirely, citing failed adoption. The convergence of organizational downsizing, talent migration, and protocol-layer attrition raises structural questions about Ethereum's governance model and development capacity at a time when its Layer 2 networks capture the majority of fee value generated on the ecosystem.
The Ethereum Foundation's restructuring, announced June 23, 2026, produces the following changes:
| Metric | Before | After | Change | |--------|--------|-------|--------| | Headcount | ~270 | ~216 | -20% | | Positions eliminated | — | 54 | — | | 2026 operating budget | ~$100M est. | ~$60M est. | -40% | | Treasury spend rate target | ~15%/yr | 5%/yr by 2030 | -67% glide path | | Organizational units | Dispersed teams | 5 focused clusters | Consolidated | | Applied crypto lab (PSE) | Active | Shut down | Eliminated |
The restructuring reorganizes remaining staff into five domain-focused clusters: protocol, access, user, community, and institutional layers, with separate operations and management support functions. According to the Foundation, this structure replaces a historically dispersed operating model and aligns with a 38-page organizational mandate published in March 2026.
The budget reduction follows a Treasury Management Policy adopted in June 2025, which formalized a glide path from spending approximately 15% of remaining treasury assets annually to a target of roughly 5% per year after 2030. At the lower rate, the Foundation describes the model as capable of sustaining operations indefinitely.
Between January and June 2026, at least nine senior figures left the Ethereum Foundation:
Board member Bastian Aue has stepped into an interim leadership role. The Foundation has not announced a permanent replacement for either co-executive director position. According to CoinDesk, a $30 million annual funding gap looms as the organization searches for stable leadership.
Four of the nine senior departures subsequently co-founded Ethlabs, suggesting the talent outflow is not a dispersal into unrelated projects but a directed migration toward a competing organizational structure for Ethereum development.
The Privacy and Scaling Explorations unit — most recently rebranded as Privacy Stewards of Ethereum — was the Foundation's in-house applied cryptography team. PSE built production-grade cryptographic tooling including:
The Foundation's restructured Protocol Cluster lists "L1 privacy" as a long-horizon research goal, but the applied execution capacity that PSE represented has been disbanded. This is a resourcing decision with direct implications: the team that built and maintained Ethereum's most advanced privacy tooling no longer exists within the Foundation's organizational structure.
According to Buterin, the cuts were "financially necessary and strategically aligned" with the Foundation's narrower role. Whether the remaining organizational structure can deliver on the privacy research mandate without the team that previously executed it remains an open question.
The Foundation's treasury, as of its most recent comprehensive disclosure (October 2024), totaled approximately $970 million: $788.7 million in cryptocurrency holdings and $181.5 million in non-crypto investments and assets.
As of April 2026, Arkham Intelligence data shows approximately $270.9 million in tracked assets across 14 Foundation addresses, with roughly 102,400 ETH ($210.9 million at current prices) as the dominant holding. The Foundation completed its previously announced 70,000 ETH staking target in April 2026, deploying approximately $143 million worth of ether into staking and generating an estimated $3.9–5.4 million per year in yield income.
The arithmetic is straightforward: at a 15% annual spend rate against a treasury that has declined materially in dollar terms alongside ETH's price, the current trajectory was unsustainable. ETH's 44% year-to-date decline has compressed the dollar value of the Foundation's crypto-denominated holdings proportionally. The 40% budget cut and transition toward an endowment model are less strategic choices than forced responses to a shrinking asset base denominated in a declining token.
On June 22, 2026 — one day before the Foundation's restructuring announcement — five former EF researchers launched Ethlabs as an independent nonprofit. The founding team includes Ansgar Dietrichs, Barnabé Monnot, Caspar Schwarz-Schilling, Josh Rudolf, and Julian Ma. Backers include Ethereum co-founder Joseph Lubin, BitMine, and SharpLink.
Ethlabs' stated mandate covers:
According to Lubin, Ethlabs would operate as "another stewardship organization alongside the Ethereum Foundation." According to ThirdWeb's analysis, the combined institutional backing represents exposure to approximately $11 billion in Ethereum-related treasury assets across the backing entities.
The emergence of Ethlabs reveals a structural shift: core protocol research and development for Ethereum is fragmenting from a single-Foundation model into a multi-organization ecosystem. Whether this produces productive competition or coordination failures depends on governance mechanisms that do not yet exist between these entities.
Ethereum's organizational crisis unfolds against a backdrop of record network usage that generates minimal revenue for the base layer.
| Metric | Current | Historical Peak | Change | |--------|---------|----------------|--------| | Daily active addresses | ~2M (Feb 2026) | ~1.5M (2021) | +33% | | Daily gas fee revenue | ~$500K | ~$30M+ (2021) | -98% | | L2-to-mainnet tx ratio | 5:1 to 10:1 | ~1:1 (pre-L2 era) | — | | Blob space utilization | 20–30% | — | — | | ETH/BTC ratio | 0.027 | 0.088 (Nov 2021) | -69% |
The value leakage is quantifiable. According to Yellow Research, Coinbase's Base L2 earned over $94 million in profit during the period analyzed but contributed just $4.9 million to Ethereum mainnet in blob fees — a 5.2% pass-through rate. L2 sequencers capture transaction fees and MEV; Ethereum mainnet receives only periodic batch-posting costs.
"Based rollups," where Ethereum validators sequence L2 transactions and route MEV back through the proposer pipeline, represent the proposed structural fix. No major production rollup has committed to a firm launch date for based sequencing. The gap between Ethereum's usage growth and its revenue capture remains unresolved.
Meanwhile, Solana generated $1.03 million in daily fees in a recent 24-hour period, compared to approximately $182,000 for a basket of Ethereum L2s, according to MEXC Research. Solana achieves higher absolute fee revenue despite per-transaction costs of $0.00025 versus $0.10–$0.50 on Ethereum L2s — a function of transaction volume exceeding 23 billion on-chain transactions processed.
On June 29, 2026, Loopring shut down its DEX and AMM services, taking its relayer offline immediately. The project, which raised $45 million in a 2017 token sale, was one of Ethereum's earliest ZK rollup implementations.
According to the Loopring team, three factors drove the shutdown:
Remaining user funds will be returned through a smart contract upgrade for balances exceeding $10, without requiring users to cover gas costs. Multiple LRC exchange delistings during 2026 accelerated the project's decline.
Loopring's shutdown is not an isolated event. It fits within the broader pattern documented in the webthreepedia report on DeFi's attrition, where 60 protocols have ceased operations and $45 billion in value has been erased. For Ethereum specifically, it represents the loss of a first-generation scaling solution that proved ZK rollups were viable but could not survive the competitive environment its own innovation enabled.
ETH's price performance in 2026 reflects the compounding effects of organizational instability, fee revenue collapse, and competitive pressure:
According to IG UK, five structural factors explain ETH's underperformance relative to BTC: higher Nasdaq correlation (0.78 vs. BTC's 0.55), a prolonged ETF outflow streak, absence of a corporate treasury price floor comparable to Strategy's bitcoin accumulation model, L2 fee cannibalization, and delayed network upgrades. Spot Bitcoin ETFs recorded 13 consecutive days of net outflows through early June, with close to $400 million pulled in a single day.
The absence of a corporate treasury demand floor for ETH is notable. While Strategy (formerly MicroStrategy) holds 847,363 BTC as of June 22, 2026, at a cost basis of $66,384 per coin, no equivalent institutional accumulation vehicle exists for ETH at comparable scale. This structural asymmetry leaves ETH price discovery more exposed to speculative sentiment and L2 value extraction dynamics.
The Ethereum Foundation's restructuring is not a strategic pivot executed from a position of strength. It is a forced downsizing driven by a declining treasury, a collapsing fee revenue model, and an exodus of senior talent that has already reconstituted itself in a competing organization. The Foundation now operates with fewer people, less money, no applied cryptography lab, and no permanent executive leadership — while the network it stewards processes record transaction volumes that generate minimal base-layer revenue.
The emergence of Ethlabs and the fragmentation of development responsibility across multiple organizations may ultimately prove beneficial through productive competition. But the transition carries execution risk: coordination between the Foundation, Ethlabs, and independent teams requires governance infrastructure that does not yet exist. In the near term, the question is not whether Ethereum's technology works — record usage demonstrates that it does — but whether its organizational and economic architecture can sustain the network's development when 95% of ecosystem fee value accrues to Layer 2 operators rather than the base layer.
The gap between Ethereum's technical adoption metrics and its economic fundamentals is the widest it has ever been. Resolving that gap requires either successful implementation of based rollups to recapture L2 revenue, a sustained increase in blob fee density, or acceptance that Ethereum's base layer will function as subsidized public infrastructure funded by a shrinking endowment. The Foundation's restructuring suggests the current trajectory points toward the third option.