As a seasoned analyst with years of experience navigating the complexities of the crypto world, I find myself leaning towards agreement with Marc Zeller’s perspective on the Ethereum Foundation. The sheer size of their budget, especially when compared to the remuneration of key contributors like the Geth team, raises eyebrows.
Marc Zeller, creator of the Aave Chan Initiative (ACI), proposed disbanding the Ethereum Foundation, as he interpreted a recent transaction as indicating that the Foundation might be considering selling ETH once more.
Ethereum Foundation Should Be Dissolved After Purge And Verge Upgrades
As a researcher, I’ve come across a post on X (previously Twitter) where Zeller expressed his opinion that the Ethereum Foundation should be deprived of its funding and disbanded after the implementation of the Purge and Verge upgrades. This crypto pioneer argued that the Foundation’s budget was extravagant, expressing doubt over the necessity for an annual budget of $100 million. He further stated that the Geth team, who play a crucial role in the Ethereum ecosystem, are undercompensated relative to the importance and quality of their work.
Zeller’s remarks were a direct reaction to a post by Aya Miyagotchi, Executive Director of the Ethereum Foundation, where she disclosed that their deposit of 35,000 ETH ($94.07 million) into Kraken was part of their financial management strategies. She explained that the Ethereum Foundation manages an annual budget of $100 million, with the majority being allocated for grants and staff wages.
She suggested that the Ethereum Foundation has always had to sell a significant amount of their Ethereum holdings because some of the recipients of the grants and salaries can only accept fiat. Meanwhile, she also revealed why they were just carrying out such treasury activity, noting that they had been unable to do so before due to regulatory complications.
The regulatory complication she was referring to is the US Securities and Exchange Commission’s (SEC) investigation into whether ETH was a security, although this investigation was eventually closed.
Just as anticipated, the Ethereum Foundation’s deposit of approximately $94 million in ETH onto Kraken raised concerns about a potential large-scale sell-off, which could potentially influence the value of ETH. However, Miyagotchi reassured the community that they do not intend to liquidate all those tokens immediately. Instead, she mentioned that there will be systematic and gradual sales moving forward.
The Foundation’s Budget Is Not Sustainable
Researcher Ignas points out that if the Ethereum Foundation maintains an annual budget of $100 million and does not alter its current holdings, it would exhaust its 273,776 ETH (currently valued at approximately $748.88 million) in eight years, as per Arkham Intelligence’s data analysis. He suggests that if the Foundation aims to sustain its operations for a longer period, either Ethereum’s price must increase or it should begin staking its ETH tokens to generate returns.
The crypto researcher disclosed that a large portion of the Ethereum Foundation’s spending is allocated towards providing grants. Their latest financial report, dated 2021, indicated that approximately 90% of the Foundation’s expenses were dedicated to these grants, with just 10% going towards salaries and operational costs. In light of this data, Zeller proposed that the Ethereum Foundation should eliminate all grant expenditures from their budget.
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2024-08-26 15:41