Ethereum Foundation Unveils Conservative Treasury Strategy Amid Major R&D Restructuring

The Ethereum Foundation (EF) has released its comprehensive treasury management policy, establishing a disciplined financial framework that maintains a 2.5-year operating expense buffer while capping annual spending at 15% of total treasury assets.

The announcement follows a significant restructuring of the organization's research and development operations, announced Monday, signaling a strategic shift toward focused execution as Ethereum approaches what leadership describes as "pivotal years."

The newly published treasury policy reflects the Ethereum Foundation's commitment to sustainable operations while supporting the broader ecosystem's growth. Under the framework, the EF will maintain annual operating expenses (Opex) at 15% of its current total treasury, with a strategic buffer equivalent to 2.5 years of operating runway held in reserve.

The approach focuses on two variables, the policy document states, outlining how the multiplication of annual Opex percentage and years of buffer determines target fiat-denominated reserves and directly informs the timing and scale of ETH sales.

The policy includes an ambitious long-term trajectory: the Foundation plans to reduce annual operating expenses roughly linearly over the next five years, ultimately reaching a 5% baseline common among endowment-based organizations. This glide path reflects the EF's vision of gradually narrowing its scope while maintaining its role as a long-term steward of the Ethereum ecosystem.

DeFi-First Investment Strategy

Notably, the treasury policy emphasizes on-chain deployments within the decentralized finance ecosystem, aligning capital allocation with Ethereum's core principles. The EF will prioritize "battle-tested, immutable, audited, permissionless protocols" while encouraging positive-sum actors in the Ethereum DeFi space.

Current strategies include solo staking and wrapped ETH (wETH) supplied to established lending protocols, with plans to expand into carefully vetted yield farming and tokenized real-world assets as the DeFi ecosystem matures.

The policy introduces a "Defipunk" evaluation framework emphasizing security, open-source development, financial self-sovereignty, and privacy – areas EF identifies as historically neglected in broader DeFi adoption.

R&D Division Overhaul

The treasury announcement follows closely on the heels of a major restructuring within the EF's research and development operations. The Protocol Research & Development division has been rebranded simply as "Protocol," with the organization implementing significant structural changes and workforce adjustments.

"Some members of PR&D won't be continuing with the Ethereum Foundation," the restructuring announcement states, confirming staff layoffs as part of the organizational realignment. The Foundation expressed hope that departing team members would continue contributing to the broader Ethereum ecosystem.

Three Strategic Pillars

The restructured Protocol division will focus on three strategic initiatives:

1. Scale L1 - Led by Tim Beiko and Ansgar Dietrichs
2. Scale L2 - Overseen by Alex Stokes and Francesco D'Amato
3. Improve UX - Directed by Barnabé Monnot and Josh Rudolf

Dankrad Feist will serve as strategic advisor across all tracks, providing unified direction as the organization pursues what it describes as "Ethereum's best shot at deploying not only our technology, but our values, at planetary scale."

Critical Juncture

The simultaneous release of the treasury policy and R&D restructuring appears strategically timed as Ethereum approaches what the Foundation characterizes as a pivotal moment. The organization points to rapid advances in zero-knowledge Ethereum Virtual Machines (zkEVMs) and the hardening of Layer 2 solutions as evidence that "the world is ready for the world computer."

"zkEVMs have rapidly accelerated, enabling us to rearchitect L1 to simultaneously support scale, verifiability, security and censorship-resistance," the Protocol division stated in its restructuring announcement.

The treasury policy specifically identifies 2025-26 as "likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables" – a timeline that aligns with the aggressive restructuring of research operations.

To ensure oversight of the new treasury management approach, the Ethereum Foundation has established a structured internal reporting cadence. The Finance team will provide quarterly reports to the Board and management covering performance metrics, position summaries, and notable operational events.

Annual EF reports will include expanded treasury-related information, offering the community visibility into major treasury allocations and the percentage breakdown across fiat holdings, idle ETH, and deployed ETH positions.

With the treasury policy providing a sustainable funding model and the Protocol division streamlined for execution, the Ethereum Foundation appears positioned to navigate the challenges of scaling a global financial infrastructure while maintaining its foundational principles of decentralization and permissionless access. The success of this strategic shift will likely be measured not just in technical achievements, but in the Foundation's ability to catalyze broader ecosystem adoption of the "Defipunk" principles it now champions – combining privacy, security, and financial sovereignty at planetary scale.