Donovan Choy

The lack of transparency around the Ethereum Foundation’s (EF) spending is in the limelight this week after an onchain <a href="https://x.com/lookonchain/status/1827036101858750549">transfer</a> of 35,000 ETH ($94 million) from the Foundation’s treasury to Kraken was detected on Saturday.



This prompted EF Executive Director Aya Miyaguchi to <a href="https://x.com/AyaMiyagotchi/status/1827219654999470258">clarify</a> that the transfer was part of the Foundation’s “treasury management” activities and is not necessarily “equal to a sale.”



Miyaguchi said that, due to “regulatory complications,” the Foundation was prevented from sharing the plan in advance, but there will be “planned and gradual sales” going forward.



In a separate post yesterday, Josh Stark of the EF provided a first glimpse at a breakdown of the Foundation’s spending for the last two years. He clarified, however, that the full details are expected to be published before Devcon 2024.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="519" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png" alt="" class="wp-image-91186" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-60.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Source: <a href="https://x.com/0xstark/status/1828416179993522386">Josh Stark</a></figcaption></figure>



For the last two years, EF has spent 25-30% of its annual budget on “L1 R&amp;D.”



This includes internal spending on EF-affiliated teams like Geth, the dominant Ethereum software client on the execution layer, Privacy + Scaling Explorations, Solidity, Devcon, Ethereum.org, and more.



The second largest chunk of spending is in the “New Institutions” category. That includes external grants to organizations such as L2Beat, 0xPARC Foundation, Nomic Foundation, Decentralization Research Centre, and other Ethereum-related organizations.



The stated goal of external funding to these organizations is to “strengthen and support the Ethereum ecosystem” in the long term, Stark said.



Internal spending made up about 38% while external spending was about <a href="https://x.com/0xstark/status/1828416182036111412">62%</a>. That roughly translates to $62 million being allocated as external spending for grants, given the Foundation’s <a href="https://x.com/AyaMiyagotchi/status/1827219654999470258">annual budget</a> of roughly $100 million a year.



Assuming the annual budget is spent in its entirety, the EF has a run rate of 6-7 years at today’s ETH prices, given EF’s <a href="https://etherscan.io/address/0xde0b295669a9fd93d5f28d9ec85e40f4cb697bae">treasury</a> of 273,274 ETH ($687.5 million).



Based on the EF’s Q1 2024 <a href="https://blog.ethereum.org/2024/05/14/esp-allocation-q124">report</a>, the <a href="https://x.com/EF_ESP">Ecosystem Support Program</a> allocated $11.4 million in funding to 109 different developers, research, events, and community projects.



Additionally, when asked on X, Vitalik Buterin clarified that he’s <a href="https://x.com/VitalikButerin/status/1828418559875101058">paid</a> roughly $139,600 a year as a member of the EF.



To put the EF’s spending into context, Arbitrum DAO has spent about $70 million on its <a href="https://x.com/blockworksres/status/1820523746396184614">Short-Term Incentive Program (STIP)</a>, a grant that ran for three months since November 2023, and another $23.7 million for the <a href="https://www.tally.xyz/gov/arbitrum/proposal/110767177349707239820875764565747830009768307680609166467172874966002003291288">Long-Term Incentives Pilot Program (LTIPP)</a>.



Arbitrum also passed in May 2024 a <a href="https://www.tally.xyz/gov/arbitrum/proposal/53472400873981607449547539050199074000442490831067826984987297151333310022877">$215 million</a> grant to support its gaming ecosystem.



Cosmos’ Interchain Foundation spent $30.8 million in 2023 with the largest spending ($8.2 million) going towards the “IBC Protocol”, based on its <a href="https://medium.com/the-interchain-foundation/annual-report-2023-and-beyond-616d22dce090">2023 annual report</a>.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="674" height="406" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png" alt="" class="wp-image-91184" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=674 674w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=433 433w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=364 364w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-58.png?w=80 80w" sizes="(max-width: 674px) 100vw, 674px" /><figcaption class="wp-element-caption">Source: <a href="https://medium.com/the-interchain-foundation/annual-report-2023-and-beyond-616d22dce090">Interchain Foundation</a></figcaption></figure>



Polkadot, on the other hand, spent $87 million in the first half of 2024 alone, with $37 million going to “advertising and media, online and offline community building and events…big conferences and business development,” based on a <a href="https://forum.polkadot.network/t/2024-h1-polkadot-treasury-report/8862">treasury report</a> released in June.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="600" height="371" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png" alt="" class="wp-image-91185" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=600 600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=416 416w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=422 422w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=354 354w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-59.png?w=80 80w" sizes="(max-width: 600px) 100vw, 600px" /><figcaption class="wp-element-caption">Source: <a href="https://forum.polkadot.network/t/2024-h1-polkadot-treasury-report/8862">Polkadot</a></figcaption></figure>



Other major L1 Foundations, including the Solana Foundation and the Aptos Foundation, have not released formal annual spending reports.



A Sui Foundation spokesperson told Blockworks that it may release treasury reports in the future in addition to its current updates.&nbsp;



The Solana Foundation and Aptos Foundation did not immediately return a request for comment.



Disclaimer: Blockworks Research is a delegate to Arbitrum DAO.



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Ethereum Foundation under fire for lack of transparency in treasury management

Jack Kubinec

The Ethereum Foundation, a non-profit supporting the Ethereum ecosystem, removed the warrant canary indicating it’s never been served a government subpoena from its website on Feb. 26.&nbsp;



“[W]e have received a voluntary enquiry from a state authority that included a requirement for confidentiality,” Ethereum web developer Pablo Pettinari <a href="https://github.com/ethereum/ethereum-foundation-website/commit/769b30603504b4b5e8f601f8014691a8d1821390">wrote</a> alongside a code commit removing the canary.&nbsp;



The Ethereum Foundation performs functions such as handling grants and providing research for the Ethereum ecosystem. It emphasizes that it does not control or lead Ethereum. Ethereum co-founder Vitalik Buterin <a href="https://ethereum.foundation/ef">serves</a> on its executive board.&nbsp;



The Ethereum Foundation erroneously <a href="https://x.com/TiKawamoto/status/1130081578028273664?s=20">removed</a> its warrant canary in 2019 — though this time seems to be for real.&nbsp;



The price of ether (<a href="https://blockworks.co/price/eth">ETH</a>) <a href="https://x.com/MikeSeligEsq/status/1770475199609114831?s=20">fell</a> more than 2% immediately after the news broke, furthering a bearish week for the token.&nbsp;



Industry watchers were quick to point out that the Ethereum Foundation’s “voluntary enquiry” could be no big deal.&nbsp;



“It’s extremely common for crypto protocol foundations to receive voluntary requests for information from federal and state regulators. And subpoenas are about as sure as the sunrise for a crypto entity,” Mike Selig, partner at Willkie Farr &amp; Gallagher, <a href="https://x.com/MikeSeligEsq/status/1770475199609114831?s=20">said</a> on X.&nbsp;



The Ethereum Foundation did not immediately return a request for comment.



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