Vitalik Buterin suggests the Ethereum Foundation is considering staking its ETH holdings

Ethereum co-founder Vitalik Buterin suggested the Ethereum Foundation is exploring the idea of staking its nearly $1 billion of ETH holdings.

In recent days, the foundation has come under heavy criticism for its seeming lack of participation in the Ethereum ecosystem. When forced to provide examples of its activities, Josh Stark, a contributor to the Ethereum Foundation, said the foundation used the blockchain to sell tokens, pay out grants and for tickets at events. This was negatively received by those who wished the foundation was more actively involved, with angel investor Eric Conner suggesting the foundation could stake its holdings and use the staking rewards to pay employees and to give grants.

In response, Buterin explained on X that there were two reasons why the foundation had not done so in the past. He said these were regulatory risks and the concerns that it forces the foundation to take a position on which is the correct chain in the case of a hard fork on the network, where there are two chains competing to be seen as the correct one. He explained that the foundation would need to choose a chain to avoid the risk of slashing — where staked assets are penalized — and that it might not be easy to unstake in time to avoid this.

Buterin noted the regulatory risk has decreased and said the foundation had been exploring ways to minimize the second concern — implying that the foundation is looking into the idea of staking its ETH.

In November, the foundation said it held 788.7 million in crypto assets, 99.45% of which are held in ether, representing 0.26% of the total ether supply as of the end of October 2024. Block explorer Etherscan shows its holdings are currently 269,000 ETH, worth $891 million.

Therefore, it the foundation's entire holdings were put into Lido Finance, with a current 2.95% yield, it would earn around $26.2 million a year if prices stay flat. That said, this is far below the $134.7 million the foundation spent in total during 2023.

"I'm all for using the chain and staking when it makes sense (and am a big fan of the EF's Client Incentive Program for this reason, but staking wouldn't cover all EF spending and [in my opinion] it'd be reckless to lever up on the ETH treasury to cover payroll," said Tim Beiko, who runs the core protocol meetings at the Ethereum Foundation.

Calls for changes at the Ethereum Foundation

In a previous post, Buterin outlined a number of goals for leadership changes at the foundation, including improving the level of technical knowledge among its leadership, improving communication with developers and users, bringing in fresh talent to improve "execution ability and speed," and broadening the foundation's use of decentralized and privacy-centric technology.

Ethereum co-founder Joseph Lubin has suggested that it's time to replace the foundation's current executive director, Aya Miyaguchi, with two co-leaders: Danny Ryan, a former EF researcher who oversaw the Merge (Ethereum's transition to a proof-of-stake consensus protocol), and Jerome de Tychey, the president of Ethereum France. "I believe that having Jerome and Danny partner to lead the EF would be a massive injection of energy, talent, outside the box thinking, creativity in marketing and drive — exactly what the Ethereum community needs today to show up for the world as the premiere, most diversely capable and most trusted blockchain ecosystem," Lubin wrote. 

"Regardless of the future of Ethereum—whether with or without me in any capacity—I want to state publicly and very clearly that I have nothing but respect and praise for Aya Miyaguchi's leadership and friendship," said Ryan. "Even if you want to see changes with the EF, and even if your criticisms are valid, please look toward and help build a positive future. Please, put the pitchforks away."