Vitalik Buterin envisions a smaller, more opinionated Ethereum Foundation that sells less ETH. But with nine senior departures in 2026 and a treasury gap, holders face a hard choice.
The Signal
Ethereum co-founder Vitalik Buterin published a personal vision for the Ethereum Foundation (EF): a leaner organization focused on core values and selling less ETH. This comes after at least nine senior members left in 2026 and years of community frustration over EF-linked ETH sales.
Buterin describes the EF as "one node, with a defined purpose, alongside other nodes," prioritizing longevity over breadth. This choice ties directly to selling less ETH, but also means accepting a less dominant role in ecosystem growth. The EF holds approximately 0.16% of all ETH, well below the 10-50% foundation allocations common at other blockchain projects, according to Buterin.
“The EF must prioritize values like censorship resistance and privacy over aggressive growth, a pivot that clashes with many holders' expectations.”
On-Chain Data
- EF staking participation: In April 2026, the EF reached roughly 69,500 ETH staked, near its 70,000 ETH target, generating an estimated annual income of $3.9 million to $5.4 million.
- Historical operating costs: The EF spends nearly $100 million per year, far above staking income, forcing continued ETH sales or spending cuts.
- Supply percentage: The EF holds only 0.16% of total ETH, a minimal fraction compared to other blockchain foundations.
- Personnel departures: At least nine senior members have left the EF in 2026, reflecting the transition toward a smaller organization.
Market Impact
Buterin's proposal puts ETH holders' demand for execution to the test. If the EF becomes smaller and sells less ETH, direct selling pressure decreases, but institutional support for ecosystem growth also diminishes. This could benefit external organizations that take over business development and asset narrative roles, but risks Ethereum losing competitiveness against Solana and other L1s.
The EF's decision to prioritize values like censorship resistance (CROPS) over growth could be seen as a long-term strength, but in the short term, investors may interpret it as a signal that Ethereum is not maximizing adoption potential. The market must assess whether a smaller, focused EF is better than a large, selling one.
Your Alpha
- 1Monitor EF ETH sales: If the EF reduces sales, direct bearish pressure on ETH could ease, but the funding gap will require spending cuts or external funding.
- 2Watch for external organizations: Groups like Ethereum Foundation Grants or business development entities may step up. Identify which have credibility and resources to drive ETH adoption.
- 3Gauge holder sentiment: The demand for an execution-focused EF is key. If the market punishes ETH for lack of coordination, buying opportunities may arise if Buterin's thesis proves correct long-term.
Next Catalyst
The next milestone will be the full implementation of EF staking and a possible spending reduction plan. Additionally, the community expects the formation of new organizations to take over functions the EF is shedding. Any announcements about external funding or strategic partnerships could move the market.
Also watch for statements from Buterin and other leaders on the transition's progress. If the EF can demonstrate that a smaller, focused structure can maintain Ethereum's competitiveness, confidence could strengthen.
The Bottom Line
Buterin's proposal for a smaller EF that sells less ETH is a bold experiment that clashes with many investors' expectations. Fiscal viability depends on drastic spending cuts or external organizations absorbing growth functions. For holders, patience will be key: if the strategy works, Ethereum gains independence and strong values; if it fails, lack of execution could cost market share. Position for volatility as the market digests this new direction.
Additional Context
Buterin's proposal does not arise in a vacuum. The EF has been criticized for years for its focus on research and development, neglecting business adoption and marketing. With nine senior members leaving in 2026, the organization is already in transition. Buterin aims for a more agile EF that acts as one node among many, not the center of gravity. This implies that other entities, such as the Ethereum Foundation Grants (EFG) or new DAOs, will take leadership roles in areas like institutional relations and application development.
The risk is that this decentralization of functions leads to a lack of coordination, allowing competitors like Solana or Avalanche to capture market share. However, if the EF can maintain influence through strong values and a committed community, Ethereum could emerge stronger and more censorship-resistant.
Scenario Analysis
- Optimistic scenario: The EF cuts spending to $50M annually through reductions, and staking covers most of the deficit. External organizations like EFG drive business adoption. ETH benefits from lower selling pressure and gains market share.
- Pessimistic scenario: The EF fails to cut spending sufficiently and must sell ETH to cover costs, albeit at a lower rate. Lack of coordination leads to a loss of momentum in DeFi and L2s. ETH loses ground to competitors.
- Base scenario: The EF gradually reduces sales while new organizations emerge. The market remains uncertain, with ETH trading in a range until the new structure becomes clear.
Implications for Investors
For institutional investors, clarity on the EF's role is crucial. A smaller, focused EF could be seen as positive if it reduces uncertainty about mass sales. However, the lack of a centralized entity driving adoption could be a drag. Investors should monitor on-chain metrics of developer activity and TVL on L2s to assess whether the ecosystem continues to grow without direct EF impetus.
Key Questions
- Can the EF reduce its spending to a sustainable level with staking income?
- Which external organizations are best positioned to take leadership in adoption?
- How will the market react if the EF announces a scheduled ETH sale to cover the deficit?
These questions will define Ethereum's narrative in the coming months. Holder patience will be tested, but those who understand Buterin's long-term vision may find opportunities in volatility.
