Original Title: Ethereum Foundation Report
Original Author: Ethereum Foundation
Original Translation: Odaily Planet Daily
What is the Ethereum Foundation?
The Ethereum Foundation (EF) is a nonprofit organization that supports the Ethereum ecosystem and is part of a community comprised of organizations, individuals, and companies that provide funding for protocol development, grow the community, and promote Ethereum.
EF is at the forefront of a new type of organization: supporting blockchain ecosystems without controlling them. This makes everyone think every day about what kind of organization EF needs to be to support the long-term development of Ethereum.
EF itself is divided into many separate teams and believes that small, autonomous teams are the most effective structure for getting work done. New teams often gain organic growth by forking existing teams to respond to new needs in the ecosystem.
The EF team contributes to many different parts of the Ethereum ecosystem. Some teams build software or explore the cutting edge of the Ethereum roadmap; some teams help nurture developers and users around the world; others help promote the utility and potential of Ethereum to the world.
Core Values
Over the past 10 years, EF has experienced the ups and downs of Ethereum's brief history.
This experience has provided us with many lessons. Over time, three key ideas have emerged that help guide EF and inform our decision-making.
These are our three core values: long-term thinking, subtraction, and value management.
Long-Term Thinking
Ethereum has not been around for long, and the ecosystem sometimes focuses on very short-term goals and cycles. EF should balance this trend: transcending the peaks and valleys of market cycles and focusing on long-term prospects. This means that EF is willing to take actions now that may not yield returns for years or even decades, or that may not yield any results at all.
Subtraction
Subtraction means we do not seek to accumulate power and prestige. Our success is measured by the achievements of the Ethereum ecosystem, not by the achievements of EF. We are happy to give credit to others, support independent organizations, and work quietly behind the scenes.
Subtraction arises from an observation: organizations—nonprofits—naturally desire to accumulate power. But this cannot happen in organizations like EF that support decentralized blockchains; to counter this default path, EF needs to take active measures.
Value Management
Ethereum is more than just a technology. It is a community bound by a set of shared values, with a vision of how these values can improve the world. The Ethereum ecosystem stands on the shoulders of the long-standing history of open source and cypherpunk communities, paving the way for us.
EF Activities and Expenditures
Ethereum Foundation Team
EF includes many teams contributing to the Ethereum ecosystem across a wide range of areas. Most teams contribute to important Ethereum infrastructure, while a few others research and manage the Ethereum roadmap or help coordinate the ecosystem. Team case studies are as follows:
Robust Incentive Group (RIG): Dedicated to research in Ethereum mechanism design and cryptoeconomics. RIG's work depicts all the ways incentives directly or indirectly affect Ethereum users and protocol stakeholders. Where possible, RIG proposes mechanisms to restore incentive compatibility and system optimality.
Protocol Support Team: The Protocol Support Team ensures that Ethereum has the right people, processes, and perspectives to support its long-term maintenance. In practice, the team helps facilitate network upgrades (AllCoreDevs, EL specs), attracts and retains protocol contributors (Ethereum Protocol Fellowship), and takes on various other projects related to Ethereum's sustainability.
Developer Conference (Devcon): Hosts and supports events like Devcon to promote collaboration, education, and advocate for Ethereum's values and mission. As the community evolves, the team expands Ethereum's global impact through community-driven meetups, Devconnect, support for global non-EF events, and the Road to Devcon funding program.
Ethereum Foundation Funded Projects
EF supports important work across the ecosystem through funding. Grants come in various sizes and forms, and many EF teams play roles in approving and evaluating grants. The Ecosystem Support Program (ESP) reports on grant activities regularly. Grant case studies:
WTF Academy: WTF Academy produces free, open-source, concise, and community-reviewed Web3 development tool tutorials, including Solidity, Ethers, etc., with a focus on Chinese content. ESP's funding helped them expand their courses and translate more content into English. Awarded $30,000 in November 2022.
Security Alliance: The Security Alliance is committed to building a safer ecosystem. They achieve this through projects such as Seal Team 911, White Hat Security Harbor Protocol, their security framework, and Seal Team wargaming. Their efforts help projects and users through proactive security measures and passive incident management, and assist in preventing loss of funds. Awarded $130,000 during 2022 - 2023.
Devcon University Roadshow: Events held at five universities in Thailand aimed at exposing students to the Ethereum ecosystem, educating them about Ethereum, and providing them with employment opportunities. Awarded $10,000 in April 2024.
Evolving Ethereum Institutional Ecosystem
Ethereum is a vast global project. There is an incredible range of work and diversity at all levels of the Ethereum ecosystem around the world.
Today, many individuals and organizations contribute to this work, but there is still much to be done, especially in supporting and maintaining public goods. Relying on one or a few organizations to do most of the work poses a risk to the ecosystem.
This phenomenon has led EF to prioritize the development of many independent organizations that can strengthen and support the ecosystem, thus sharing the responsibility for Ethereum's health, maintenance, and growth.
In the past two years, EF has focused on nurturing and supporting many new organizations that are pushing the Ethereum ecosystem forward, such as Argot Collective, Geodework, L2BEAT, Nomic Foundation, and 0xPARC. We are very proud to work with them.
Argot Collective: Argot Collective is a newly formed nonprofit, democratic organization dedicated to maintaining Ethereum's freedom and independent software. Argot is comprised of about 25 former Ethereum Foundation team members, including compiler engineers, programming language theorists, and verification experts, focusing on core infrastructure development without commercial pressure. Their mission emphasizes long-term sustainability and transparency, opposing profit-driven motives. Argot is the new home for the current Ethereum Foundation internal teams Solidity, Fe, Formal Verification, and Sourcify. While Argot is expected to retire in the future and launch new projects, they will be fully committed to the long-term maintenance and development of Solidity as long as the community finds it useful (Argot.org).
Geodework: Geodework is a public interest organization dedicated to the development of the Ethereum ecosystem and building a better internet. Its core focus is on pursuing geographic decentralization of Ethereum, which means building community and educational infrastructure and supporting local innovators and leaders around the world. In practice, Geodework facilitates funding, creates ecological tools, products, and services, and executes a series of projects aimed at strengthening the Ethereum community layer. Geodework is currently being developed within EF and will share more information in early 2025.
L2BEAT: L2BEAT provides analysis, research, and tools related to Ethereum's Layer 2 scaling projects. Its creation aims to provide transparent and verifiable insights into emerging Layer 2 technologies designed to scale Ethereum and monitor different Layer 2 technologies, with a primary focus on the safety of user funds. L2BEAT tracks the progress of projects committed to becoming trust-minimized L2s. Their goal is to provide the community with the latest information on the status of these projects and to offer insights and guidance towards achieving complete trust minimization.
Nomic Foundation: The Nomic Foundation is an early nonprofit organization providing open-source engineering software, dedicated to advancing the development of the Ethereum ecosystem. Their ultimate goal is to ensure that Ethereum continues to provide a high-quality, reliable developer experience, and in doing so, help Ethereum and the broader decentralization movement fully realize their potential, creating a world that offers more autonomy and choice to millions (economic foundations).
0xPARC: 0xPARC accelerates the development and deployment of programmable cryptography. They operate, fund, and support teams working across the full stack. This includes research on zero-knowledge cryptography, multiparty computation, homomorphic encryption, and program obfuscation, as well as deploying these technologies into user applications for autonomous worlds, identities, and more.
2022 EF Expenditure
2023 EF Expenditure
Expenditure Category Description
L1 R&D: This category includes all research and development related to mainnet upgrades, Geth, internal security research, cryptography R&D, economic modeling, and mechanism design, as well as long-term research to realize the Ethereum community roadmap and funding for external execution and consensus layer clients. Additionally, it includes many other funding projects for external teams, such as network stress testing and external research in specialized cryptography.
L2 R&D: Includes support provided to internal teams that contribute to L2 research and development, as well as funding to external groups to improve the L2 ecosystem. These funding projects cover educational resources, block explorers, developer tools, security audits, and more.
Applied ZK R&D: Includes funding support for teams exploring privacy and scaling, whose projects include MACI, Anon Aadhaar, TLS Notary, etc. Additionally, multiple grants have been provided, from ZK development tools, ZK ceremony design user experiences, to ZK application proofs of concept.
Developer Platform: Covers all work related to enhancing Ethereum as a developer platform, including projects involving development libraries such as Solidity, Remix, Ethers.js, and Web3.js, as well as support for the Python ecosystem.
Community Development: Includes various work supporting different parts of the Ethereum community, covering interactions with the core protocol community (such as supporting the staking community), Next Billion team, Devcon and Devconnect events, Ethereum.org, and other educational resources. Additionally, multiple grants have been provided to local and regional Ethereum communities and events worldwide.
Internal Operations: Covers general expenses supporting all EF teams, including all costs related to internal and external legal, accounting, and financial services, as well as subscriptions and service providers across the organization, such as data services, operational tools, and technical infrastructure. This also includes investment costs related to financial management strategies and salaries for all operational and administrative personnel.
New Institutions: Includes funding for new institutions to support the Ethereum ecosystem. During 2022 and 2023, this included funding for organizations such as Nomic Foundation, 0x PARC, L2BEAT, and others.
Ethereum Foundation Financial Reserves
As of October 31, 2024, the total financial reserves held by the Ethereum Foundation (EF) amount to approximately $970.2 million, which includes $788.7 million in crypto assets (including the remaining 26,701 ETH committed to the customer incentive program) and $181.5 million in non-crypto investments and assets.
The vast majority (99.45%) of crypto assets are held in ETH. These ETH account for 0.26% of the total supply of ETH as of October 31, 2024.
We choose to hold the majority of our financial reserves in ETH to reflect the foundation's confidence in Ethereum's potential; the ETH we hold also represents this long-term perspective.
At the same time, the goal of the foundation's financial reserves is to provide funding support for important public goods in the Ethereum ecosystem for years to come.
To achieve this, we follow a conservative financial reserve management policy to ensure that adequate resources are available even during prolonged market downturns. This requires us to regularly sell ETH to ensure reserves are sufficient for the coming years, while programmatically increasing fiat reserves during bull markets to support expenditures during bear markets.
The rise of the ecosystem, embracing challenges
Ethereum Ecosystem
Over the past few years, the Ethereum ecosystem has continually evolved. Now, many organizations and institutions contribute to Ethereum and push its boundaries forward, including companies, nonprofits, DAOs, L2 organizations, and more. Our ecosystem has never been stronger.
As the ecosystem develops, these organizations are contributing more funding to the Ethereum community.
Total Amount of Funds in the Ethereum Ecosystem Treasury
By 2024, the Ethereum ecosystem will be supported by billions of dollars in funding from the foundation, organizations, and DAOs.
This chart shows the total value held in project treasuries. This includes liquid amounts available for projects and amounts still vesting. All non-EF data is sourced from Deep DAO as of October 17, 2024 (deepdao.io/organizations).
Most project treasuries are primarily composed of the project's native tokens. This means the total value of the project treasury far exceeds the total value that can be immediately deployed in fiat. If a project attempts to sell a significant portion of its funds, it could have a substantial impact on the price of the underlying tokens.
Conversely, this chart shows us the depth of long-term available resources in the Ethereum ecosystem. Even a small portion of capital gradually deployed over the next 10 years will provide significant resources for the growth and maintenance of the Ethereum ecosystem.
Total Funds Deployed by the Ethereum Ecosystem in 2022-2023
In 2022 and 2023, organizations within the Ethereum ecosystem deployed over $497 million to support projects across the community.
In collecting this data, we used a broad definition of ecosystem funding. This includes funding for Ethereum public goods (like protocol associations) as well as funding for projects within the larger Ethereum ecosystem (for example, products funded to build on specific L2s). This data does not include equity investments or similar funding, nor does it include airdrops from token generation events.
The dollar value is calculated using the asset prices applicable at year-end or known information on the specific grant date.
This information was collected through research of publicly available information and contacting 94 organizations in the Ethereum ecosystem. However, existing data is quite fragmented, and some projects did not respond to our inquiries. This data also does not include the internal expenditures of many organizations, which often contribute to Ethereum public goods. This data should be viewed as incomplete.
We have included data on grant distribution platforms such as Gitcoin. The funding associated with these platforms typically comes from donations from other organizations (such as EF). We have attempted to deduplicate the data to avoid double counting.
