On June 4th, the Ethereum Foundation (EF) officially released its latest Treasury Management Policy, systematically outlining its financial spending policy, asset allocation strategy, and long-term "Defipunk" vision. This policy aims to enhance the Foundation's financial resilience, support DeFi innovation, and strengthen its values in privacy protection and self-custody.

Ethereum Foundation Treasury Management Policy Page

The role of the EF Treasury is to support the Foundation's long-term autonomy, sustainability, and legitimacy. The Ethereum Foundation (EF) is expected to continue as a long-term steward of the ecosystem, but its scope of responsibility will gradually narrow.

Increasing Fiat Reserves to Heavyweight Product Delivery

Under the new policy, EF will determine the fiat-to-ETH allocation ratio using the "Operating Expense Ratio x Buffer Lifespan" model and will maintain annual expenditure at a high 15%. The Foundation emphasizes that the years 2025–2026 will be a critical phase for the ecosystem, requiring concentrated resources to advance protocol-level technological implementations, including L1 scaling, blob technology, and UX optimization.

EF states that 2025–2026 will be a critical window for protocol deployment, intending to maintain the 15% annual expenditure and set a 2.5-year fiat buffer period. This means that the Foundation will need to convert approximately 37.5% of its treasury into fiat to support midterm investments.

According to EF's newly released Treasury Management Policy, A represents the annual operating expense (as a percentage of the current total treasury), and B represents the operating buffer lifespan (the number of years the reserve can support operations)

Specifically, this model logic can be broken down into three levels, corresponding to strategy formulation, amount calculation, and execution implementation.

Level One: Structured Model, Setting Asset Allocation Ratios

The Foundation first uses a structural model to determine its asset allocation framework. This model multiplies the annual operating expense as a percentage of the treasury (A) by the desired operating buffer lifespan (B) to derive a target fiat ratio:

TotalTreasury - A × B: The target value of ETH reserves (divided by the ETH price, yielding the core holding of ETH).

Target ETH amount = (1 - A × B) × Total Treasury ÷ Current ETH Price

This step operationalizes the strategy model into actual holding requirements. Translated into actual amounts, with the Foundation's treasury at $9.7 billion, A × B = 37.5%, and assuming an ETH price of $2,500, the Foundation should hold approximately 242,000 ETH as a core long-term asset.

Compared to traditional budgeting systems, this model provides a more flexible asset allocation approach: enabling timely fiat realization in bull markets to enhance countercyclicality, and maintaining a long-term hodler belief during market downturns. The EF indicates that the board will regularly review the two parameters A and B to dynamically adjust the asset structure, ensuring resource allocation synchronizes with the strategic cadence.

The upcoming 2.5 years are seen as a critical period for the Ethereum ecosystem by the Ethereum Foundation, requiring a focus on significant technical deliveries. In 2025, the EF plans to spend approximately 15% of the treasury funds (with a fiat reserve ratio of 37.5%) and intends to maintain a statutory buffer for 2.5 years of spending. The plan is to linearly reduce annual operating expenditures over the next five years, ultimately reaching a baseline level of 5% to be sustained long term.

Related Reading: "Ethereum Foundation 2030 Plan: Reduce ETH Spending to 5%, Actively Support Defipunk"

Optimizing Asset Management, Emphasizing RWA Allocation

In terms of asset allocation, the Ethereum Foundation (EF) has further clarified its asset allocation framework in a new policy, aiming to balance security, liquidity, and long-term sustainability.

Regarding crypto assets, the EF stated that, without compromising Ethereum's decentralization and openness principles, it seeks a robust financial return. The Foundation prioritizes deploying funds to audited, permissionless, and transparent DeFi protocols, emphasizing risk mitigation for smart contracts, governance, stablecoins, oracles, and avoiding chasing high-risk returns excessively.

On-chain funds will be flexibly allocated based on market conditions, risk exposure, and return opportunities, currently including independent staking and providing wETH liquidity to mainstream lending protocols. Future plans involve introducing stablecoin lending and some high-security on-chain RWA products as supplements. Additionally, the EF will quarterly assess deviations between actual fiat reserves and operational buffer targets, deciding whether to sell ETH and making strategic choices between off-chain liquidation and on-chain swaps.

Compared to previous emphasis on on-chain yield strategies, this time the EF explicitly introduces Tokenized Real World Assets (Tokenized RWAs) as a key component of fiat assets. Its allocation structure is divided into three layers: immediate liquid assets covering daily expenses, low-risk assets matching medium to long-term obligations, and Tokenized Real World Assets (Tokenized RWAs) integrated into a unified governance framework.

This change sends a clear signal: the Foundation is beginning to consider more stable income tools from the fiat world to support the sustainability of higher short- to medium-term expenses, rather than relying on market conditions or on-chain yield randomness.

It is worth noting that only RWA protocols that meet on-chain transparency, auditability, decentralized governance, and other conditions may be included in the Foundation's system. Conversely, traditional RWA projects with closed structures relying on legal trust paths will face higher barriers.

Such adjustments not only enhance the robustness of the treasury structure but also reserve institutional space for further expansion of the on-chain asset management path in the future. Currently, the detailed deployment information has not been made public.

Establishing the "Entrepreneurship New Standard" for the Ecosystem

In addition, the EF has outlined a clear Cypherpunk goal in its new financial policy and has built an evaluation framework called "Defipunk" based on this goal, aiming to promote the development of more decentralized, privacy-friendly, and technologically self-sufficient financial infrastructure. This framework emphasizes six core values: security, open source, financial sovereignty, technological trustlessness, cryptographic tooling for freedom, and privacy protection, with a particular focus on transactional and on-chain data privacy.

Flow of 2023 fiscal year EF operating expenses, with a significant portion going towards L1 foundational development and the establishment of "new institutions," following EF's announcement of layoffs and a strategic pivot, these areas of spending may see significant reductions

Meanwhile, the EF has also developed a standardized evaluation system for future on-chain deployments. This includes considerations such as permissionless access, self-custody capabilities, FLOSS-level open-source licenses, privacy protection options, publicly transparent development and governance processes, trust-minimized core logic, manipulation-resistant oracle mechanisms, security audit guarantees, and decentralized user interface. The EF states that this evaluation framework will serve as a key reference standard for future treasury fund deployments, encouraging ecosystem projects to continue optimizing in terms of security, privacy, and decentralization, thereby collectively building a long-term, crypto-native value-aligned financial ecosystem.

The Defipunk Framework will impact the Ethereum Foundation's funding mechanism for developers, especially in terms of privacy. The EF has explicitly identified privacy as a future focus, emphasizing support for private transactions, data protection mechanisms, decentralized user interfaces, and encouraging on-chain anonymous operations. The Foundation stated that "privacy is a key unfinished task for DeFi" and will drive the development of the related ecosystem through strategic funding and research collaborations in the future. This shift in stance may bring new funding and long-term endorsement to privacy protocols and anonymous identity projects like Railgun.

Such a policy framework with public standards and evaluation mechanisms marks the exit of an era highly dependent on subjective judgments of core members. Historically, projects looking to gain "legitimacy" recognition within the Ethereum ecosystem often had to establish informal connections with the EF. Whether it was project founders seeking a platform or investment institutions striving to early access quality targets, EF researchers were seen as key nodes to resources and influence. This interpersonal network-driven ecosystem operation model made "being close to the EF" a seemingly inevitable path to success.

Related Reading: "EF Has No Dreams"

Against this backdrop, the "Defipunk" evaluation framework introduced by the EF holds profound significance. It is not only a technical explanation of fund usage rules but also signifies a shift in ecosystem governance ideology—from consensus politics driven by implicit power networks to a transparent mechanism based on public standards and values.

The Defipunk evaluation system, focusing on security, decentralization, privacy protection, etc., provides a clearer institutional path for how future projects can obtain funding support and ecosystem recognition. In other words, after this point, whether a project can receive support will no longer depend solely on "who they know" but on whether it aligns with Ethereum's long-term vision and public value goals.

This is an institutional-level loosening and a critical starting point for the ecosystem culture's shift from individual preferences back to technical rationality.

Community Response: Has ETH Bottomed Out?

As the Ethereum Foundation rolls out its new financial policy, setting a goal of "reducing costs and increasing efficiency," the market is also witnessing a series of noteworthy developments. Internal personnel changes within the Foundation, strategic bets on ETH in the capital markets, and a periodic rebound in the ETH/BTC exchange rate are weaving a more complex ecosystem structure. The community has engaged in widespread discussions on this, with viewpoints echoing between consensus and divergence.

On June 3, the EF announced the dismissal of some development staff and the restructuring of the original research team into a new department named "Protocol," focusing resources on three major technical directions: L1 scaling, blob scaling, and UX improvement. The official positioning of this move is to optimize resource allocation. On one hand, some development staff, especially those who have long been in the theoretical stage, were dismissed. On the other hand, a stricter accountability mechanism is being introduced, demanding that research results be quickly transformed into tangible outputs. Co-executive director Hsiao-Wei Weng stated on social media X that they hope the new structure will drive the core project forward more efficiently.

Prior to this, criticism of the Ethereum Foundation (EF) had been ongoing, and the Ethereum's weak performance in recent months has further fueled community dissatisfaction. Many prominent investors and developers have expressed their opinions and dissatisfaction with the EF. Some core members have left the EF, redirecting their research and resources outside the foundation, indicating that the internal divisions within the EF have reached an irreconcilable point, pushing the EF directly into the spotlight.

Related Reading: "Core Members Leave to Establish 'Fork EF,' How Long Can the Ethereum Foundation Last?"

As a result, some voices in the community view the restructuring of the Ethereum Foundation as a "self-correction" in response to external criticism. Some developers also pointed out that this is a necessary focus adjustment, expected to channel more power into the core evolution of the protocol layer.

Almost simultaneously, the publicly traded company SharpLink Gaming announced its Ethereum treasury reserve strategy, planning to raise $425 million for long-term ETH holdings, with the key investor being Consensys, a major technical driver in the Ethereum ecosystem. This operation, referred to as the "ETH version of MicroStrategy," is interpreted in the community as a repricing of Ethereum by the traditional capital markets and as Consensys' public endorsement of its technical roadmap.

SharpLink's significant bet quickly boosted market confidence. After the announcement on May 28, the price of ETH rose 4% within 24 hours, reaching $2639, with a cumulative increase of 50% over the past month.

Further reading: "Spending $425 Million on ETH Version of MicroStrategy, 'E-Guards' Abandon Political Correctness"

On June 4th, the ETH/BTC exchange rate experienced a sudden increase of over 2%, triggering market attention towards the direction of capital flow. Traders saw this as a signal of ETH's relative value recovery. Some analysts believe that ETH is currently approaching a key technical formation's peak region, and if a successful breakthrough occurs, the price is expected to rise to $2000 or $3000. The driving forces behind this could be fundamental improvements or merely driven by the entry of large funds.

Further reading: "10x Research: ETH Showing More Resilience Than Expected, Approaching Key Technical Formation Peak"

However, more notably, amidst the foundation's reduction of operational expenses and the high-profile market funds increasing their ETH positions, Ethereum's narrative focus is shifting from "institutional incentives" to "market consensus," and the tension between technological drive and capital intent is playing out concurrently.

Overall, the Ethereum Foundation's current cost reduction and efficiency enhancement strategy not only demonstrate financial prudence but also reflect a repositioning of its role boundaries. Against the backdrop of ongoing decentralized governance evolution, the collaborative relationship among the foundation, tech firms, capital institutions, and developer communities is heading towards a more complex yet potentially more efficient new phase.

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