The Ethereum Foundation (EF) eliminated 54 positions — roughly 20% of its 270-person workforce — on June 23, 2026, and cut its annual operating budget by 40%. The restructuring shuttered the Privacy and Scaling Explorations (PSE) zero-knowledge research lab, triggered the departure of nine senior...
"The EF is choosing to use its remaining resources to pursue longevity over breadth. Yes, this means we sell less ETH." — Vitalik Buterin, Ethereum co-founder, May 25, 2026
The Ethereum Foundation (EF) eliminated 54 positions — roughly 20% of its 270-person workforce — on June 23, 2026, and cut its annual operating budget by 40%. The restructuring shuttered the Privacy and Scaling Explorations (PSE) zero-knowledge research lab, triggered the departure of nine senior leaders since January, and reorganized remaining staff into five domain-focused clusters under a formal CROPS mandate (censorship resistance, resilience, openness, privacy, security).
Within three weeks, three independent organizations emerged to absorb functions the Foundation shed: Ethlabs, a nonprofit protocol R&D lab backed by more than $11 billion in ETH treasury holdings; Ethereum Institutional, a nonprofit Wall Street liaison; and EthSystems, a for-profit privacy-infrastructure startup. All three share the same anchor funders — BitMine Immersion Technologies (NYSE: BMNR), SharpLink Gaming (NASDAQ: SBET), and Ethereum co-founder Joe Lubin — raising questions about governance independence in a network that prizes decentralization.
The net effect: Ethereum's 12-year-old central development organization is transitioning from ecosystem builder to endowment-style steward, targeting a 5% annual spending rate by 2030 — down from approximately 15% in prior years. Whether the new multi-entity structure delivers more resilient governance or fragments accountability remains an open question.
The Ethereum Foundation entered 2026 with approximately 270 employees and an annual spending rate of roughly 15% of treasury assets. The June 23 announcement changed three variables simultaneously:
The EF's ETH treasury stood at approximately $209 million according to Arkham Intelligence data, a nearly six-year low. The Foundation staked roughly 70,000 ETH between February and April 2026, generating an estimated $3.9 million to $5.4 million per year in yield. At least 15,000 ETH was sold to BitMine in confirmed OTC deals, totaling approximately $33 million across two transactions.
The Foundation's treasury policy, published June 4, 2025, set the framework: annual operating expenditure would start at 15% of treasury with an operating buffer of approximately 2.5 years, then follow a roughly linear reduction toward a 5% endowment-level baseline by 2030.
The most consequential elimination was the Privacy and Scaling Explorations unit, the EF's applied cryptography team. PSE — most recently rebranded as Privacy Stewards of Ethereum — built production-grade zero-knowledge tooling including MACI (private voting), Semaphore (anonymous credentials), and PlasmaFold (privacy-enabled Layer 2 transfers).
The closure follows a pattern. Since January 2026, the EF has experienced what CoinDesk described as "one of the largest periods of turnover in its 12-year history." The departures include:
The combined departure of these individuals represents a significant portion of the Foundation's protocol-level research capacity and institutional engagement expertise.
The remaining organization is structured around five domain-focused clusters, plus operations and management support:
The CROPS mandate, published in March 2026, defines the Foundation's narrowed scope. The framework centers on a "walkaway test": the principle that Ethereum should function perfectly even if the Foundation and its current developers vanished. Specific research priorities include FOCIL (Fork Choice with Inclusion Lists), designed to ensure transaction inclusion even if block producers face regulatory pressure, and post-quantum cryptography research.
Buterin described the mandate as repositioning the EF from the network's central operational authority to a leaner grants-and-research steward — what he termed a "smaller ship" focused on properties unlikely to be funded by the market alone.
Between June 22 and July 14, 2026, three new entities launched to absorb functions the EF relinquished:
Co-founded by five former EF senior researchers (Dietrichs, Monnot, Schwarz-Schilling, Josh Rudolf, Julian Ma), Ethlabs focuses on protocol-level research. Its stated priority is the "15-minute finality problem" — the time currently required for an Ethereum transaction to become irreversible under the Gasper consensus mechanism.
Backing comes from BitMine, SharpLink, Joe Lubin, Anchorage Digital, Octant, and SNZ. Funders receive quarterly transparency reports and are subject to annual independent audits but hold no governance authority over research priorities, according to the organization's charter.
By June 30, Ethlabs' own backers publicly acknowledged the lab would compete with the Foundation on engineering priorities, not merely complement it, according to TechTimes reporting.
Founded by three former EF enterprise team members — David Walsh, Marius Smith, and Matthew Dawson — Ethereum Institutional operates as a neutral liaison between financial institutions and the Ethereum ecosystem. The organization covers five areas: institutional education, market intelligence, ETH marketing, standards development, and institutional events.
The team claims over 500 institutional relationships with Tier-1 banks, asset managers, and sovereign institutions. Its Institutional Ethereum Forum convened more than 150 senior executives from organizations representing approximately $250 trillion in combined assets under management, according to the group's launch announcement.
The most recent spinoff, EthSystems was founded by Mo Jalil (CEO), Oskar Thorén, and Aaryamann Challani — members of the EF's former Institutional Privacy Task Force. The company builds "selective disclosure" privacy technology: infrastructure allowing each participant in a transaction to see only information relevant to their role, with regulators receiving full visibility while counterparties see limited data.
EthSystems targets the confidentiality gap that prevents banks from transacting directly on public blockchains — the same problem the PSE unit was attempting to solve before its closure.
A structural feature of the new multi-entity landscape warrants scrutiny. BitMine Immersion Technologies, SharpLink Gaming, and Joe Lubin serve as anchor funders for all three spinoff organizations, and BitMine completed at least $33 million in OTC ETH purchases from the EF's own treasury in 2026.
The capital flow: EF treasury → BitMine (via OTC sales) → Ethlabs, Ethereum Institutional, and EthSystems (via anchor funding). BitMine and SharpLink are described as the two largest publicly traded corporate holders of ETH.
Each organization maintains formal governance separation. Ethlabs' charter prohibits funders from influencing research priorities. Ethereum Institutional operates under an independent board. EthSystems, as a for-profit, answers to its investors through standard corporate governance.
Whether these firewalls prove durable when the same capital sources back all three entities — and purchased their initial ETH from the Foundation itself — remains an unanswered governance question for the Ethereum ecosystem.
The financial logic behind the restructuring is arithmetic. At a 15% annual spending rate and a treasury near $209 million, the EF's runway was approximately 6.7 years. At the target 5% rate, the same treasury funds operations indefinitely — but at one-third the spending level.
The staking of 70,000 ETH provides supplementary yield of $3.9 million to $5.4 million annually, partially offsetting the budget reduction. However, the yield is denominated in ETH and subject to the same price volatility that eroded the treasury from its peak.
The 40% budget cut is not a one-year measure. Buterin framed it as the first step in a five-year linear reduction toward the 5% endowment baseline. The implication: further cuts are likely in 2027-2029, with the Foundation reaching its steady-state spending level around 2030.
This model mirrors traditional academic and philanthropic endowments — institutions like Harvard's endowment target 5% annual spending to preserve capital in perpetuity. The difference: academic endowments hold diversified portfolios. The EF's treasury is concentrated in a single volatile asset.
The Ethereum Foundation's restructuring is not a crisis response — it is a planned contraction toward a model its leadership believes is indefinitely sustainable. The 40% budget cut, 54 layoffs, and PSE shutdown represent the first phase of a five-year transition from ecosystem builder to endowment-style steward.
The three spinoff organizations that emerged within weeks provide functional continuity: Ethlabs for protocol research, Ethereum Institutional for Wall Street engagement, EthSystems for privacy infrastructure. The speed of their formation — and their shared funding sources — suggests coordination rather than coincidence.
The economic question is whether a $209 million treasury concentrated in ETH can sustain meaningful protocol stewardship at a 5% spending rate — approximately $10.5 million annually at current valuations. The governance question is whether three nominally independent organizations backed by the same anchor funders constitute genuine decentralization or a reorganization of influence under new labels.
Ethereum's protocol continues to function independently of any single organization — Buterin's "walkaway test." The restructuring is a bet that the Foundation's diminished role will prove that thesis correct.