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The Ethereum Foundation has unveiled a new treasury policy designed to optimize resource allocation and bolster its DeFi ecosystem amid a critical phase for the blockchain network.
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This policy introduces a structured approach linking operational expenses and cash flow to Ether reserves, ensuring financial sustainability over the next pivotal 18 months.
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According to Ethereum Foundation director Hsiao-Wei Wang, “This policy reflects our conviction that 2025-26 are likely to be pivotal for Ethereum, warranting enhanced focus on critical deliverables.”
Ethereum Foundation adopts a transparent treasury policy to enhance DeFi support and financial stability, preparing for a crucial 18-month period ahead.
Ethereum Foundation’s Strategic Treasury Policy Enhances Financial Stability
The Ethereum Foundation (EF) has implemented a comprehensive treasury policy aimed at aligning its operational costs with its Ether holdings and anticipated market conditions. This new framework mandates regular reassessment of the EF’s annual operating expenses as a percentage of its treasury, alongside evaluating the runway in years to maintain liquidity and operational efficiency. By doing so, the EF aims to mitigate risks associated with volatile crypto markets and ensure that its financial strategy remains adaptive to evolving ecosystem demands.
As of October 31, the EF’s treasury stood at approximately $970.2 million, with over 81% held in ETH. Despite recent minor declines in Ether’s price, the Foundation’s approach emphasizes prudent asset management and transparent reporting. Quarterly and annual disclosures will provide stakeholders with detailed insights into asset holdings, investment performance, and strategic decisions, reinforcing the EF’s commitment to accountability.
Increased Engagement with DeFi Protocols to Support Ecosystem Growth
In a notable shift from its historical neutrality, the Ethereum Foundation is actively engaging with permissionless DeFi protocols that adhere to strict security audits and immutable governance. This strategic move aims to generate acceptable returns on treasury assets while fostering innovation aligned with “Defipunk principles.”
Earlier this year, the EF allocated 45,000 ETH (valued at $120 million at the time) to various DeFi projects, including lending protocols like Aave, from which it borrowed $2 million worth of the GHO stablecoin. Additional support has been extended to protocols such as Spark and Compound, signaling a more proactive role in ecosystem development.