2025-01-27
On January 20, 2025, the Ethereum Foundation (EF), a
non-profit organization supporting the Ethereum blockchain, has made its first
move into decentralized finance (DeFi) by launching a multisignature wallet to
explore alternative treasury management strategies.
The foundation transferred 50,000 ETH,
valued at approximately $165.3 million, into the newly established wallet.
The move, announced by Hsiao-Wei Wang,
a recently appointed leader within EF, signals the organization’s intent to
actively participate in DeFi while addressing longstanding concerns about its
treasury management practices.
The wallet operates using a 3-of-5
multisig configuration, managed via Safe, formerly known as Safe Gnosis.
Hsiao-Wei Wang highlighted that Safe
provides both strong security and an excellent user experience.
As part of the initiative, an initial
test transaction has been sent to Aave, a leading Ethereum-based lending
protocol.
The decision follows criticism of EF’s financial management, including frequent sell-offs of ETH to cover operational costs, which some people claim have negatively impacted the cryptocurrency's price.
By entering the DeFi ecosystem, EF aims
to generate returns on its holdings while exploring innovative treasury
solutions.
As of October 31, 2024, EF's treasury
stood at $970.2 million, a decline of 39% over three years.
A report revealed that 81.3% of this
treasury is held in cryptocurrency, with 99.45% of those holdings in ETH.
Despite its substantial holdings, EF
has not staked its ETH due to concerns over regulatory implications and
maintaining neutrality in the Ethereum ecosystem.
The participation into DeFi could
provide a new revenue stream to support operational expenses while addressing
criticisms over transparency and ETH sell-offs.
The foundation’s leadership structure
is also undergoing changes.
Ethereum co-founder Vitalik Buterin
confirmed plans to enhance technical expertise among senior leaders, improve
collaboration within the ecosystem, and provide stronger support for
application developers.
Buterin emphasized that these reforms
aim to address concerns about Ethereum’s market performance and increasing
competition from networks like Solana without compromising EF’s neutrality or
governance principles.
Additionally, Ethereum co-founder
Joseph Lubin proposed a dual-leadership model to steer the foundation’s future
direction.
Lubin suggested Ethereum developer
Danny Ryan and Jérôme de Tychey, President of Ethereum France, as candidates to
balance technical and strategic needs.
