The financial report recently released by the Ethereum Foundation shows that as of October 31, its financial reserves have fallen to $970.2 million, a decrease of 39% from $1.6 billion on March 31, 2022. This change has raised concerns in the community about the foundation's transparency, especially in the context of its increasing influence on the Ethereum ecosystem.
Key Points
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The Ethereum Foundation's financial reserves have decreased from $1.6 billion to $970.2 million, a reduction of 39%.
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81.3% of the reserves are held in cryptocurrency, the vast majority being Ether (ETH).
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The foundation spent approximately $240 million in 2022 and 2023 combined.
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Since March 2022, the price of Ether has dropped by 22%.
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The foundation has implemented a new conflict of interest policy requiring researchers and developers to report external work and investment plans.
The report from the Ethereum Foundation indicates that the vast majority of its assets (approximately $788.7 million, or 81.3%) are held in cryptocurrency, with 99.45% being Ether (ETH). The remaining $181.5 million consists of non-crypto investments and assets.
The report states: "We have chosen to hold the majority of our financial reserves in ETH. The Ethereum Foundation believes in the potential of Ethereum, and our ETH holdings represent this long-term perspective. At the same time, the foundation's financial goal is to fund public goods for the Ethereum ecosystem to ensure sustainable development in the coming years."
Since March 2022, the price of Ether has fallen from about $3,300 to around $2,600, resulting in a reduction of the foundation's assets. According to the report, the foundation spent approximately $105.4 million in 2022 and about $134.9 million in 2023.
Additionally, the foundation revealed that it is implementing a new conflict of interest policy, emphasizing that researchers and developers must notify the organization when planning to engage in any external work or investments. If the external work has an annual salary exceeding $25,000 or involves planned investments, it must undergo review by a discussion group.
This policy was introduced following the recent announcement by two leading Ethereum researchers, Justin Drake and Dankrad Feist, that they would be leaving their advisory roles at EigenLayer. The two received substantial token rewards for their positions at EigenLayer, raising concerns about conflicts of interest.
The changes in the Ethereum Foundation's transparency and financial management policies reflect the challenges and opportunities it faces in the ever-evolving cryptocurrency market.