Blab Crypto
Ethereum Foundation Cuts 20% of Staff Amid Record Network Usage and 44% ETH Decline
When the price of Ether slid more than 44% year‑to‑date, the Ethereum Foundation turned inward, trimming its ranks by 20% and tightening its purse strings. On June 23 the foundation announced that 54 employees—roughly a fifth of its workforce—would be let go and that its operating budget would shrink by about 40%. The decision, the foundation said, was the result of a months‑long review of its structure, spending and long‑term responsibilities.
Vitalik Buterin, the network’s co‑founder, emphasized that the cuts were not a reaction to ETH’s market performance. "Our staff are brilliant people…some of whom have worked on the Ethereum protocol for nearly a decade," he said. "These reductions are intended to create an organization that can execute its mandate without being repeatedly disrupted by short‑term market movements."
The timing of the layoffs is stark against the backdrop of the network’s explosive growth. Token‑terminal data released the same week shows that Ethereum’s traffic and throughput hit record highs in Q1 2026. Monthly active users rose 53.5 % from the previous three months and 85.9 % from a year earlier, reaching 13.2 million. Transaction count increased 38 % quarter‑over‑quarter to 200.4 million, while throughput climbed to a record 25.78 transactions per second.
Yet the surge in activity did not translate into higher revenue for the base layer. Layer‑1 transaction fees fell nearly 48 % from the previous quarter to $39.9 million, an 81.9 % decline from a year earlier. Total value locked (TVL) across the ecosystem dropped 11 % to $316.2 billion, and Ethereum’s fully diluted market value contracted 30.3 % to $290 billion at quarter‑end.
Ethereum’s growing role within traditional finance is evident. Tokenized assets on the platform totaled $203.4 billion in Q1 2026, including $178.9 billion in stablecoins. Tokenized funds grew 4.9 % from the previous quarter and 73.1 % from a year earlier to $19.4 billion. Tokenized commodities rose 60 % quarter‑over‑quarter to $4.7 billion, while tokenized stocks increased 16.5 % to $365.1 million.
Financial institutions such as BlackRock, JPMorgan, Franklin Templeton and Fidelity have built tokenized funds or expanded other blockchain‑based offerings using Ethereum. Joseph Chalom, chief executive of Ethereum treasury company SharpLink, said the network’s position rests on "a decade of accumulated developers, infrastructure, standards, liquidity and applications" and that "Ethereum has become the default operating system for programmable finance and internet‑native capital formation."
Despite this institutional engagement, demand for ETH itself has not kept pace. US‑listed spot Ether ETFs have recorded seven consecutive weeks of outflows totaling nearly $1 billion, indicating weak investor appetite for direct exposure to the token.
In response to the changing landscape, the foundation completed an internal reorganization that moves it away from general ecosystem promotion toward a highly specialized cluster model. The remaining staff are divided into five functional divisions covering protocol, access, user, community and institutional layers. The new Protocol cluster will focus on scaling, user‑experience enhancements and hardening layer‑1 cryptographic guarantees.
Bastian Aue, the foundation’s interim co‑executive director, said the shift will "force its staff to operate entirely within the practical parameters and technical limitations of the ecosystem." He added that the foundation will move its internal compensation and financial agreements directly into ETH and native stablecoins, and that it will reject requests to adjust protocol parameters for short‑term speculative interests.
One of the foundation’s main technical priorities is reducing the risks created by maximal extractable value (MEV). Aue noted that MEV can give a small number of operators disproportionate influence over the network. Proposed responses include stronger transaction‑inclusion guarantees, lower barriers to block building and validation, and greater transparency around routing assumptions. The foundation is also studying encrypted mempools to make front‑running more difficult.
Privacy will become a parallel priority. The foundation wants users to have access to strong privacy protections before information is selectively disclosed for identity, auditing or compliance purposes. This approach may conflict with institutional and regulatory preferences for greater visibility.
The layoffs also signal a tighter approach to the foundation’s finances. Buterin said the organization is reducing its budget by roughly 40 % this year as it begins a multiyear shift toward a smaller, endowment‑style organization. The treasury policy adopted last year seeks to move the foundation away from spending about 15 % of its remaining assets annually toward a rate of roughly 5 % a year after 2030.
The foundation’s long‑term strategy is to execute the third major iteration of Ethereum, known as the Strawmap, which aims to reshape consensus, transaction proofs, privacy, user accounts and state management. To do so on a constrained budget, the foundation is scaling back several legacy initiatives, including the multi‑client model and the independent Privacy and Scaling Explorations unit. The flagship developer conference, Devcon, will be scaled down, and institutional outreach will narrow its focus to highly specific, replicable deployment test cases.
In summary, the Ethereum Foundation is trimming its workforce and budget while refocusing on core protocol hardening, MEV mitigation and privacy. The network continues to attract record usage and institutional tokenized asset activity, but fee revenue, TVL and ETH price remain weak. The foundation’s new structure and financial strategy aim to preserve long‑term development capacity while reducing exposure to short‑term market cycles.
Vitalik Buterin, the network’s co‑founder, emphasized that the cuts were not a reaction to ETH’s market performance. "Our staff are brilliant people…some of whom have worked on the Ethereum protocol for nearly a decade," he said. "These reductions are intended to create an organization that can execute its mandate without being repeatedly disrupted by short‑term market movements."
The timing of the layoffs is stark against the backdrop of the network’s explosive growth. Token‑terminal data released the same week shows that Ethereum’s traffic and throughput hit record highs in Q1 2026. Monthly active users rose 53.5 % from the previous three months and 85.9 % from a year earlier, reaching 13.2 million. Transaction count increased 38 % quarter‑over‑quarter to 200.4 million, while throughput climbed to a record 25.78 transactions per second.
Yet the surge in activity did not translate into higher revenue for the base layer. Layer‑1 transaction fees fell nearly 48 % from the previous quarter to $39.9 million, an 81.9 % decline from a year earlier. Total value locked (TVL) across the ecosystem dropped 11 % to $316.2 billion, and Ethereum’s fully diluted market value contracted 30.3 % to $290 billion at quarter‑end.
Ethereum’s growing role within traditional finance is evident. Tokenized assets on the platform totaled $203.4 billion in Q1 2026, including $178.9 billion in stablecoins. Tokenized funds grew 4.9 % from the previous quarter and 73.1 % from a year earlier to $19.4 billion. Tokenized commodities rose 60 % quarter‑over‑quarter to $4.7 billion, while tokenized stocks increased 16.5 % to $365.1 million.
Financial institutions such as BlackRock, JPMorgan, Franklin Templeton and Fidelity have built tokenized funds or expanded other blockchain‑based offerings using Ethereum. Joseph Chalom, chief executive of Ethereum treasury company SharpLink, said the network’s position rests on "a decade of accumulated developers, infrastructure, standards, liquidity and applications" and that "Ethereum has become the default operating system for programmable finance and internet‑native capital formation."
Despite this institutional engagement, demand for ETH itself has not kept pace. US‑listed spot Ether ETFs have recorded seven consecutive weeks of outflows totaling nearly $1 billion, indicating weak investor appetite for direct exposure to the token.
In response to the changing landscape, the foundation completed an internal reorganization that moves it away from general ecosystem promotion toward a highly specialized cluster model. The remaining staff are divided into five functional divisions covering protocol, access, user, community and institutional layers. The new Protocol cluster will focus on scaling, user‑experience enhancements and hardening layer‑1 cryptographic guarantees.
Bastian Aue, the foundation’s interim co‑executive director, said the shift will "force its staff to operate entirely within the practical parameters and technical limitations of the ecosystem." He added that the foundation will move its internal compensation and financial agreements directly into ETH and native stablecoins, and that it will reject requests to adjust protocol parameters for short‑term speculative interests.
One of the foundation’s main technical priorities is reducing the risks created by maximal extractable value (MEV). Aue noted that MEV can give a small number of operators disproportionate influence over the network. Proposed responses include stronger transaction‑inclusion guarantees, lower barriers to block building and validation, and greater transparency around routing assumptions. The foundation is also studying encrypted mempools to make front‑running more difficult.
Privacy will become a parallel priority. The foundation wants users to have access to strong privacy protections before information is selectively disclosed for identity, auditing or compliance purposes. This approach may conflict with institutional and regulatory preferences for greater visibility.
The layoffs also signal a tighter approach to the foundation’s finances. Buterin said the organization is reducing its budget by roughly 40 % this year as it begins a multiyear shift toward a smaller, endowment‑style organization. The treasury policy adopted last year seeks to move the foundation away from spending about 15 % of its remaining assets annually toward a rate of roughly 5 % a year after 2030.
The foundation’s long‑term strategy is to execute the third major iteration of Ethereum, known as the Strawmap, which aims to reshape consensus, transaction proofs, privacy, user accounts and state management. To do so on a constrained budget, the foundation is scaling back several legacy initiatives, including the multi‑client model and the independent Privacy and Scaling Explorations unit. The flagship developer conference, Devcon, will be scaled down, and institutional outreach will narrow its focus to highly specific, replicable deployment test cases.
In summary, the Ethereum Foundation is trimming its workforce and budget while refocusing on core protocol hardening, MEV mitigation and privacy. The network continues to attract record usage and institutional tokenized asset activity, but fee revenue, TVL and ETH price remain weak. The foundation’s new structure and financial strategy aim to preserve long‑term development capacity while reducing exposure to short‑term market cycles.
