The Ethereum Foundation introduced a treasury policy emphasizing a 2.5-year operating expense buffer, capping annual spending at 15% of total treasury assets.
By Bhushan Akolkar
Editor Julia Sakovich
Updated
3 mins read
Ethereum Foundation has published its treasury policy, putting greater emphasis on transparency over its ETH holdings. During the last year, the Foundation came under major scrutiny over the consistent offloading of its ETH holdings.
Co-founder Vitalik Buterin defended the sale, calling them essential to keep up with the operational costs of running the Foundation. This new treasury policy will play a crucial role in maintaining transparency and clarity with the community.
As said, the Ethereum Foundation’s Treasury policy focuses on financial stability and operational efficiency. The policy mandates maintaining a 2.5-year buffer for operating expenses while capping annual spending at 15% of total treasury assets. Over the next five years, the Foundation plans to reduce this cap to a long-term target of 5%.
To enhance transparency and oversight, the Foundation has implemented a structured internal reporting system. The finance team will submit quarterly and annual financial reports, while the board and management will review them, ensuring accountability in managing the Foundation’s resources.
Hsiao-Wei Wang, a representative of the Ethereum Foundation, revealed that the organization currently has a cash runway of just 2.5 years. This sets the stage for a critical 18-month period as the Foundation looks to allocate its resources more strategically. Thus, the Foundation highlights the need for deliberate financial management to sustain Ethereum’s growth and innovation. Wang wrote:
“This policy reflects our conviction that 2025-26 are likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables.”
As of October 31, the Ethereum Foundation reported a treasury balance of approximately $970.2 million. This total comprises $788.7 million in cryptocurrency assets and $181.5 million in non-crypto holdings. ETH ETH $2 479 24h volatility: 4.9% Market cap: $299.27 B Vol. 24h: $29.68 B dominates the treasury, accounting for over 81% of the Foundation’s total asset position.
The Ethereum Foundation showed interest in earning “acceptable returns” on treasury assets by utilizing permissionless protocols that are both immutable and rigorously audited. Thus, apart from strengthening its treasury position, the Foundation will focus on “Defipunk principles” to build a resilient and user-focused ecosystem. Key tenets of this philosophy include:
In February, the Ethereum Foundation allocated 45,000 ETH, valued at $120 million at the time, for deployment across various decentralized finance (DeFi) protocols. As of May 29, the Foundation has supplied ETH and borrowed $2 million in GHO stablecoins through Aave’s lending protocol, according to Aave founder Stani Kulechov.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
