Ethereum "Under Pressure": How Vitalik and the Ethereum Foundation Are Responding to Skeptics
The Ethereum Foundation Releases Spending Data Recently, the Ethereum Foundation drew widespread attention from the crypto community over its ETH sales and concerns about transparency. In response, the Ethereum Foundation published official spending data in late August. According to the breakdown, "New Organizations" accounted for the largest share of Foundation spending at 36.5%. Vitalik Buterin explained that this category covers grants to various organizations such as the Nomic Foundation, L2BEAT, the Decentralized Research Center, and the 0x
The Ethereum Foundation Releases Spending Data
Recently, the Ethereum Foundation drew widespread attention from the crypto community over its ETH sales and concerns about transparency. In response, the Ethereum Foundation published official spending data in late August.
According to the breakdown, "New Organizations" accounted for the largest share of Foundation spending at 36.5%. Vitalik Buterin explained that this category covers grants to various organizations such as the Nomic Foundation, L2BEAT, the Decentralized Research Center, and the 0xPARC Foundation. The primary goal of funding these new organizations is to strengthen the Ethereum ecosystem over the long term.
The second-largest spending category was L1 research and development, representing 24.9% of total expenditures. This includes funding for external client teams (62%) and the Foundation's internal researchers (38%). Internal spending covers teams such as Geth, Cryptography Research, Devcon, Solidity, and Next Billion — all of which have public accountability and share updates on their websites, GitHub, and social media channels.
The Foundation also published an activity report covering external spending and grants over the past four years. Projects that received Foundation grants in Q1 2024 include Xerxis, Ethereum Bogota, Motherless Africa, and ETHKL. The remaining spending categories include community development (12.7%), zero-knowledge applications (10.4%), internal operations (7.7%), developer platform (6.5%), and L2 research and development (1.4%).
In addition to disclosing Foundation spending, Vitalik also revealed that his annual salary from the organization is approximately $139,500. That figure is relatively modest compared to his net worth — Forbes estimated Vitalik's net worth at around $1.5 billion in 2022.
On the Foundation's treasury management plan, Vitalik noted that the Foundation intends to spend 15% of its remaining funds each year. This implies the Foundation will operate indefinitely, though its influence in the ecosystem will gradually diminish over time. Foundation member Justin Drake estimated the Foundation has roughly 10 years of operating runway remaining, though this depends on ETH price movements.
Is Vitalik Selling ETH Again?
Vitalik faced renewed criticism after selling $441,000 worth of ETH on September 12. He clarified, however, that the order had been placed in August, and stated this was his final sale (proceeds going toward environmental projects) with no similar transactions anticipated going forward. The transaction was triggered by an automated Cowswap TWAP order set up on August 29 — a TWAP strategy executes large orders by splitting them into smaller portions over a set time period.
According to LookOnChain data, a wallet linked to Vitalik sold a total of 190 ETH on September 12. He has sold $2.28 million worth of ETH since August 30. Vitalik maintained that he has never profited personally from ETH sales, as all proceeds have been directed toward funding projects.
How Do Vitalik and the Ethereum Foundation View DeFi?
Kain Warwick, a veteran DeFi developer, recently accused Vitalik and the Ethereum Foundation of being "anti-DeFi." He claimed the Foundation allocates only a small fraction of its annual budget toward advancing decentralized finance, while wasting a significant portion on other areas of lesser importance.
Vitalik responded by emphasizing his long-term focus on decentralized exchanges and sustainable projects, reaffirming his commitment to decentralized finance. That said, he noted he has no interest in backing short-term projects with unsustainable outlooks — such as liquidity mining schemes or temporary projects that rely on issuing new tokens and then dumping them on the market.
Dankrad Feist, a member of the Ethereum Foundation team, noted that the Foundation does not hold a unified position on DeFi. Personally, he is a DeFi proponent, but DeFi alone cannot solve all of Ethereum's challenges. Financial markets don't generate value on their own, but they can create significant social value by providing services like liquidity and insurance. In his view, DeFi's most valuable contribution on Ethereum is decentralized stablecoins. He hopes these stablecoins will become "pure" crypto money for exchange, but they face significant scalability limitations, which is why custodial solutions remain more prevalent today. He does believe, however, that having decentralized, censorship-resistant alternatives is extremely valuable.
The Ethereum Foundation's Recent Research Focus
Despite the controversy around its spending, the Ethereum Foundation is actively researching technological advances across multiple areas.
On zero-knowledge proofs, George Kadianakis stated that research into STARKs and SNARKs is being actively applied — including recursive signature aggregation and post-quantum security implementations. Justin Drake noted that the introduction of SNARKs has significantly reduced proving costs and highlighted formal verification work for zkEVM.
On verifiable delay functions (VDFs), Antonio Sanso stated that while they have not yet been deployed on Ethereum, the team is exploring potential applications. Further improvement and evaluation are still needed.
On maximal extractable value (MEV), Barnabé Monnot and s0isp0ke discussed research progress on solutions such as ePBS, Execution Tickets, and Inclusion Lists — all aimed at mitigating MEV's impact and improving the network's censorship resistance.
Vitalik Buterin and Justin Drake believe binary hash trees could replace Verkle trees in the future to better adapt to technological upgrades. Additionally, formal verification and verifiable computation are considered critical technologies for ensuring code correctness and enabling interoperability across different programs.
How Does the Foundation View ETH Value Accrual?
As widely understood, the roadmap envisions rollups forming a diverse ecosystem on Ethereum L1, with countless DApps on L2 and ultra-low user fees. This, however, raises the question of whether ETH itself accrues sufficient value. On this point, Ethereum Foundation members believe ETH value accrual is essential to Ethereum's success. ETH, as a monetary asset, underpins decentralized stablecoins and provides economic security for the network.
Foundation member Justin Drake believes Ethereum must become the internet's programmable money, and ETH value accrual will be achieved through aggregate fees and monetary premium. What matters is total fees, not the fee per transaction. Even if each transaction fee is less than a cent, 10 million transactions per second could still generate billions of dollars in revenue.
Another important factor he highlighted is the rate at which ETH is used as collateral — for example, backing DeFi. Various financial activities on Ethereum will all contribute to ETH's value capture.
He also believes that under the Rollup roadmap, Ethereum mainnet will serve as the settlement layer for high-value activity, making L1 scaling a necessity.
If Ethereum is designed to support sustainable economic activity, ETH value accrual will naturally follow. Growth in ETH's value will reinforce the security and economic activity of the Ethereum ecosystem, ultimately positioning Ethereum as a global financial platform.
How Should Layer 2 Centralization Be Addressed?
Today, over 80% of Ethereum transactions take place on Layer 2 solutions, including Arbitrum, Optimism, Base, and zkSync. These L2 networks have recently faced criticism over centralization. Last month, Justin Bons of Cyber Capital raised concerns that these networks carry systemic risk due to their centralization. In response, Vitalik explained that highly decentralized L2 solutions cannot realistically steal user funds without achieving overwhelming consensus.
On September 12, Vitalik stated that he would only publicly endorse L2s that have reached Stage 1 or higher in their decentralization efforts, regardless of his personal investment. He reiterated the importance of L2s and stressed the significance of security, advising against removing initial safety guardrails until proof systems have been thoroughly validated. Starting next year, he intends to publicly reference (e.g., in blog posts, talks, etc.) only L2s at Stage 1 or above, while offering a "short grace period" for genuinely promising new projects.
Vitalik outlined the standards for Stage 1+ rollups: the network must require 75% council consensus to override the proof system, and at least 26% of council members must be independent from the rollup team. He believes "this requirement is reasonable and necessary for network security, and the era of rollups disguised as 'multisigs' is coming to an end — the era of cryptographic trust has arrived." Notably, several ZK rollup teams are targeting this milestone by year-end.
Summary
In closing, while Ethereum is navigating a period of FUD, the Ethereum team is actively addressing and working through these challenges. As the largest public application chain, Ethereum's fundamentals remain intact — there is no need for excessive pessimism.
The biggest challenge Ethereum faces today is really the bottleneck in ecosystem applications, but L2's low transaction fees are quietly brewing the conditions for new applications to emerge. Once capital market liquidity improves, crypto adoption will accelerate, and Ethereum's future remains very much worth looking forward to.