Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
The Ethereum Foundation (EF) has undergone its most significant organizational restructuring in recent years.
On the evening of June 23rd, EF officially announced a comprehensive internal restructuring, dividing into several functional clusters including the Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer. Simultaneously, the foundation laid off approximately 20% of its staff, with about 54 employees departing.
At the same time, Ethereum co-founder Vitalik Buterin also disclosed more detailed reform ideas on X: EF will gradually reduce its expenditure scale in the coming years, cutting its budget by about 40% compared to before, and plans to decrease its annual spending rate from the previous roughly 15% to about 5% post-2030, transitioning towards an endowment-driven operational model.
Clearly, this is an unconventional major organizational overhaul. Considering the controversies and challenges Ethereum has faced over the past year, this reform seems more like a long-overdue correction of its positioning.
From ETH's prolonged price slump to debates over the success or failure of scaling solutions; from the community's persistent questioning of the foundation's execution capabilities to the successive departures of core members... over the past year, criticism surrounding EF has hardly ceased. This round of layoffs, restructuring, and budget adjustments by EF is seen by many as its first systematic response to these issues.
Why is EF Always Mired in Controversy?
Over the past few years, as the most influential central entity within the entire Ethereum ecosystem, EF's every move has been accompanied by controversy.
Some criticize the foundation for selling ETH long-term, undermining community confidence; others question EF's overemphasis on public goods and long-term research, neglecting market competition and ecosystem growth; still others believe that faced with increasingly fierce industry competition, EF has consistently lacked sufficiently clear strategic articulation and execution capabilities... Whenever market dissatisfaction arises towards Ethereum, EF often becomes the most direct target of criticism.
While these controversies appear varied, they point to the same underlying reality — for over a decade, EF has played an extremely unique role. It is both a key driver of protocol research and a funder of ecosystem development; it undertakes the responsibility of coordinating diverse interests and, to a large extent, also represents the external perception of Ethereum.
In Ethereum's early development stages, such a role was crucial. However, as Ethereum has evolved into a global network with a vast developer community, hundreds of billions in asset value, and numerous institutional participants, market expectations of EF have quietly shifted.
What role should EF actually play? Is it merely a non-profit organization focused on research, or the de facto coordinating center for the entire ecosystem? Is it accountable to ETH holders? Should it also respond to market expectations for growth, adoption, and value accumulation?
To these questions, EF has long failed to provide clear answers. Consequently, controversies over token sales, execution, governance, and even personnel attrition continue to accumulate, eventually evolving into a war of words centering on the foundation itself. Coupled with ETH's persistently low price, the community needed an outlet for its frustration, and EF happened to be the most suitable target.
EF's Answer: Redefining Boundaries
If all community skepticism towards EF in recent years ultimately points to the ambiguity of the foundation's role, then the core of this reform is that EF has finally begun to redefine itself, clarifying what it should and should not do.
Judging from the newly announced organizational structure, EF has clearly delineated its future priorities into the following five areas:
- Protocol Layer: Responsible for advancing core protocol R&D and network security.
- Access Layer: Focuses on wallets, developer tools, and infrastructure experience.
- User Layer: Concentrates on applications and user experience.
- Community Layer: Undertakes developer and ecosystem coordination work.
- Institutional Layer: Responsible for promoting adoption of Ethereum by governments, enterprises, and traditional institutions.
While clarifying functional clusters, EF is also proactively scaling back through measures like 20% layoffs and a 40% budget reduction. Notably, Vitalik did not package this reform as a simple 'efficiency improvement,' but candidly admitted it signifies real losses — some projects will end, certain capabilities will be lost, and some long-term contributors will leave.
Vitalik gave examples, stating that the PSE (Privacy and Scaling Explorations) team, long focused on cutting-edge privacy and scaling research, will gradually fade from the scene; Devcon will transition to a smaller-scale, lower-cost model in the future; the foundation's investment in large projects outside of Ethereum will decrease; and institutional cooperation efforts will also become more focused and scaled back.
However, Vitalik also emphasized that this does not mean overall ecosystem investment in these directions will decrease. On the contrary, much of the work is merely shifting from an 'exploration' phase to an 'implementation' phase, moving from within EF to the broader ecosystem.
For an organization that has long simultaneously shouldered research, funding, coordination, and even some ecosystem-driving responsibilities, this signifies a clear retreat from its role. EF no longer aims to be an all-encompassing ecosystem hub but hopes to return to its core functions: protocol research, public goods support, and ecosystem coordination. As for more specific construction work, it will gradually be undertaken by independent teams within the ecosystem and market forces.
Ecosystem Forces Are Stepping In
If EF's reform signifies a proactive step back, then another question worth noting is: who will fill the void it leaves? The answer is now apparent — the ecosystem itself.
Just before the foundation announced its restructuring, Ethlabs, founded by several former core EF researchers, was officially established and quickly gained support from ecosystem players like BitMine, SharpLink, and Joseph Lubin. (Recommended reading: "Has the Ethereum Foundation Split?! Understanding Ethlabs' 'Bright Future' in One Article")
In the past, such talent outflow might have been interpreted as a sign of the foundation's declining influence, but this time, market reaction has been the opposite. More people now view the emergence of Ethlabs as a positive development for Ethereum, as it signifies that talent, resources, and research capabilities once highly concentrated within the foundation are diffusing to more independent organizations.
Besides Ethlabs, over the past year, several other independent organizations have emerged within the Ethereum ecosystem, such as Argot Collective and Ethereum Applications Guild. Simultaneously, publicly-traded treasury companies like BitMine and SharpLink have also begun participating in ecosystem construction through funding and research grants.
Compared to a decade ago, Ethereum's power structure has fundamentally changed. Ethereum was once almost synonymous with EF. But today, Ethereum's development can no longer rely on a single institution; it increasingly requires collaboration and division of labor among different organizations within the ecosystem.
Recognition from a Competitor
Of course, EF's reform does not mean Ethereum's problems are solved.
Whether it's controversies over ETH's value capture, the pace of institutional adoption, or issues of ecosystem competitiveness and execution efficiency, none will disappear automatically due to an organizational reshuffle. But at least EF has begun acknowledging one thing — as Ethereum has grown, the foundation's capacity has become increasingly limited; it can no longer continue to play the role of "the one who solves all problems."
Shortly after EF announced its reform, Solana co-founder toly posted on X, stating: "Bullish. Budget constraints force us to prioritize and focus. Ethereum isn't going away. A smaller, leaner Ethereum Foundation will be more decisive, move faster, and be able to adjust direction more quickly."
Perhaps the recognition from an old rival is the highest praise for EF's current reform.
