Key takeaways
- The Ethereum Foundation is exploring staking options amid criticism of its asset management.
- Vitalik Buterin cited regulatory challenges as historical reasons for not staking.
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The Ethereum Foundation has been criticized for simply selling ETH to pay the bills instead of exploring staking or DeFi. Now, according to Vitalik Buterin, the foundation is exploring these options, including the possibility of staking around $1 billion in ETH holdings.
Backlash against the Ethereum Foundation has intensified in recent days due to its lack of engagement in the Ethereum ecosystem and ETH sales.
Lookonchain reported that the Ethereum Foundation offloaded another 100 ETH on Monday for around $336,000. ETH sales, since January 2, 2024, amounted to $13 million, or 4,666 ETH.
DCinvestor, a staunch defender of the ecosystem, said Trump-backed World Liberty Financial is “more aligned with the success of Ethereum-based DeFi than is the Ethereum Foundation.”
“Trump created a DeFi protocol team, they use Aave, they use Cowswap to sell the proceeds of their sale in ETH. EF mostly claims that DeFi doesn’t exist because they’re so afraid of playing favorites that they’d rather focus solely on the ‘world computer’ narrative rather than recognizing how the chain is used. , said DCinvestor.
“In order to be completely neutral, we literally cannot use the channel that we are here to maintain and protect,” he criticized the foundation in another post.
In response to DCinvestor, Ethereum Foundation contributor Josh Stark said that the foundation actively uses the Ethereum blockchain in its daily operations.
The FE is actively engaged in the Ethereum ecosystem by exchanging ETH for stablecoins for operational purposes, making payments to beneficiaries and team members in ETH and stablecoins, using the mainnet and networks layer 2, as well as on-chain payments and digital identifiers for its events, Stark explained.
Stark’s comment sparked even more criticism, especially in light of recent ETH sales.
Ethereum and CryptoPunks OG Eric Conner claimed that the primary use of EF was to “dump ETH.” He also questioned why the foundation only sold ETH instead of exploring staking or DeFi to manage its finances.
Buterin, responding to Conner, explained that staking has historically faced intense regulatory challenges. He noted, however, that these concerns had diminished.
Even though regulatory uncertainties have eased, the challenge of maintaining neutrality during controversial hard forks remains a key objective for the foundation, according to Buterin. If the EF were staked, it would automatically be associated with one side of a hard fork, compromising its neutrality.
“Historically, the concerns have been (1) regulatory, (2) if EF puts us on the line, that de facto forces us to take a position on any future controversial hard fork,” Buterin explained. “(1) is less than before, (2) remains.”
“There (are) certainly ways to minimize (2), and we have recently explored them,” he said.
Addressing the suggestion of running both forks or removing staking before a fork, Buterin said these were not viable solutions due to the reduction mechanism and limited withdrawal rate on the Ethereum network.
Still, community members believe there are better approaches than simply selling ETH to fund operations.
“We think the key point is that you should consider over-the-counter transactions rather than on-chain dumps,” Spot on Chain said. “No one wants to see EF continually dumping ETH on them.”
“Seriously, there are workarounds and systematically selling ETH is not the best strategy,” said one X user.
Management restructuring
The Ethereum Foundation is undergoing a leadership restructuring to strengthen its technical expertise and improve communication with ecosystem participants.
As Buterin shared, this initiative aims to increase execution speed, support application developers and commit to privacy, open source development and censorship resistance at the level of application layers.
The restructuring aims to expand the use of decentralized and privacy technologies for payments and treasury management while maintaining Ethereum’s global neutrality and avoiding turning into a lobbying organization.
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