Ethereum Foundation (EF) Contributor Josh Stark posted on social media on August 27 a breakdown of the organization’s spending over the past two years.
Stark shared this information after speculation grew that the Foundation was planning to sell off a large amount of Ethereum. The rumor spread after a wallet linked to the Foundation made a large transfer.
Stark also hinted that the Foundation plans to release an expenditure report ahead of this year’s Devcon, scheduled for November 12th.
Funding Details
Stark shared two pie charts showing the Foundation’s funding allocations for 2022 and 2023. The charts show seven key areas: New Agencies, L2 R&D, Applied ZK, Community Development, Developer Platform, Internal Operations, and L1 R&D.
In both years, the largest amount of funding was allocated to Tier 1 improvements and new agency research and development (R&D), Stark explained.
“That graph captures both internal and external spending. For example, ‘L1 R&D’ includes grants to external customer teams as well as internal EF researchers. In both years, internal spending was about 38% and external spending was about 62%.”
Internal spending relates to teams working under EF in various areas, including client Geth, Solidity, Devcon, and the Ethereum organization team.
Meanwhile, external spending is related to grants provided by the foundation’s Ecosystem Support Program (ESP), which has awarded $91.1 million to 895 different projects between 2022 and 2023, according to data collected on its website.
Stark stressed that ESP issues quarterly reports on grants awarded to new projects, with the latest version accounting for grants awarded in the first quarter of 2024.
Referring to the “New Organizations” category, Stark emphasized that this is one of the Foundation’s efforts to “help build new organizations that can strengthen and support the Ethereum ecosystem in the long term.”
Stark cited organizations such as the open-source software provider Nomic Foundation, the Decentralization Research Centre, data aggregator L2Beat, and “other Ethereum-related and adjacent organizations.”
Ethereum co-founder Vitalik Buterin shared Stark’s post and reiterated the importance of investing in the new institution, adding that the foundation’s funding allocation did not include “World Economic Forum insect protein research.”
$94 million deal sparks controversy
Stark shared his analysis of the funds after a massive transfer of 35,000 ETH from EF’s wallet to the cryptocurrency exchange Kraken on August 23rd, causing a man-made disaster. The massive amount, equivalent to $94 million at current prices, has sparked debate in the cryptocurrency community about where the funds should be allocated.
Given the size of the trade, investors were concerned about a potential dump that could put further pressure on the price, as ETH has fallen 22% over the past 30 days.
Angel investor known as DCInvestor suggested Buterin said the next big trade should be broken down into 12 smaller moves, which would help ease fears of a market crash.
Buterin Responded The proposal faces logistical difficulties in coordinating multiple transfers in a multi-signature wallet that requires four confirmations. Multiple transactions would mean that the transfer would have to be signed 48 separate times, he added.
“There are solutions, of course (e.g. multi-layer wallets), but for obvious reasons we don’t want to rush into something security-sensitive.”