TL;DR
- Ethereum Foundation allocates 50,000 ETH (approx. $165 million) to support DeFi applications, addressing community criticism.
- Organizational changes announced to better support DeFi, with funds secured in a multisig wallet on Safe.
- Mixed community reactions, but the foundation remains focused on supporting the Ethereum ecosystem and ensuring its growth.
The Ethereum Foundation has announced a significant initiative to support the DeFi ecosystem, addressing months of criticism from the community. The foundation will allocate 50,000 Ether (ETH), worth approximately $165 million, to bolster DeFi applications on the Ethereum network.
Responding to Criticism
The move comes after the Ethereum Foundation faced backlash for its perceived lack of interest in DeFi. Critics, including prominent figures like Infinix founder Kain Warwick, accused the foundation of neglecting the DeFi space and creating sell pressure on Ether by liquidating holdings to cover operational costs.
In response, the foundation has committed to more actively supporting app developers and increasing transparency within the community.
Organizational Changes
Ethereum co-founder Vitalik Buterin announced on January 20, 2025, that the foundation would undergo organizational changes to better support the DeFi ecosystem.
The allocated funds will be secured in a three-of-five multisig wallet on Safe, a decentralized custody protocol. This wallet has already executed a test transaction on the Aave lending protocol, demonstrating the foundation’s commitment to integrating with DeFi platforms.
Expanding the Foundation’s Treasury
The Ethereum Foundation’s treasury has seen a significant decline, dropping 56% from 617,000 ETH in January 2020 to 269,000 ETH, currently valued at around $894 million.
The promised 50,000 ETH represents 18.5% of the foundation’s total holdings. By leveraging the rewards from the DeFi ecosystem, the foundation aims to expand its treasury and reduce the need to sell ETH for operational expenses.
Community Reactions
The announcement has been met with mixed reactions from the Ethereum community. While some applaud the foundation’s efforts to support DeFi, others remain skeptical about its long-term commitment.
Ethereum core developer Eric Conner suggested that the foundation’s staking rewards could cover most of its internal budget, alleviating some of the selling pressure that has concerned the community.
Future Outlook
Despite the criticism, the Ethereum Foundation remains focused on creating value rather than generating profit. Buterin emphasized that the foundation is not looking to make an ideological shift or start lobbying regulators. Instead, the goal is to support the Ethereum ecosystem and ensure its continued growth and innovation.
