- Ethereum Foundation will maintain a 2.5-year fiat buffer and cap annual spending at 15% of the total treasury to ensure stability.
- Treasury deployments now include staking, DeFi lending, and stablecoin strategies, guided by strict liquidity, security, and decentralization principles.
- The new Defipunk framework supports privacy-preserving DeFi protocols with open-source, trustless, and permissionless features aligned with Ethereum’s core values.
The Ethereum Foundation has published a comprehensive treasury policy outlining a financial strategy built on sustainability, transparency, and a long-term commitment to the Ethereum ecosystem. The policy introduces a structured approach to treasury management, emphasizing capital efficiency, risk controls, and support for Ethereum-native decentralized finance.
Operating Expense Buffer and Spending Cap
The Foundation will maintain a 2.5-year operating expense buffer, ensuring stability across market cycles. Annual spending is capped at 15% of the total treasury value, with a gradual reduction planned to reach a 5% target within five years. This glide path aims to align the Foundation’s financial practices with long-term stewardship principles observed in endowment-based models.
Two primary variables drive the treasury’s fiat reserve strategy: the annual operating expenditure (A) and the years of buffer (B). The product of these values determines fiat reserves, while the remainder of the treasury—primarily ETH—stays in core holdings. Adjustments to these variables are made based on market dynamics, ecosystem demands, and internal reviews.
Strategic ETH Management and Sales Framework
ETH sales will occur periodically based on deviations from the defined fiat-denominated reserve target. These sales, conducted either through off-ramps or onchain swaps, fund operations and maintain the operating buffer. Sales are guided by internal calculations and reviewed quarterly to ensure alignment with macro policy goals.
ETH deployments currently include solo staking and supplying wETH to trusted lending protocols. These long-term allocations prioritize security, liquidity, and conservative returns. The Foundation may also borrow stablecoins and invest in higher-yield protocols at a limited scale, with all deployments subject to rigorous security, liquidity, and depeg risk assessments.
Fiat Holdings and Tokenized Asset Strategy
The treasury’s fiat portion is structured into three categories. Immediate-liquidity assets cover short-term operations. Liability-matched reserves, such as investment-grade bonds, support longer-term obligations. Tokenized real-world assets (RWAs) are integrated under the same strategic and risk guidelines as crypto holdings.
These allocations are designed to maintain flexibility while minimizing risk. The policy favors diversification and responsible exposure, treating all fiat and tokenized positions with the same fiduciary care as native crypto assets.
Support for Ethereum-Aligned DeFi Through Defipunk Framework
The policy introduces “Defipunk,” a practical evaluation framework inspired by cypherpunk principles. It sets concrete criteria for project evaluation and support. Core benchmarks include permissionless access, self-custody, free-libre open-source code, robust privacy protections, and decentralized governance.
EF will back protocols progressing toward these benchmarks by offering legitimacy, liquidity, research partnerships, and funding. Projects are assessed not for perfection but for credible roadmaps toward these standards. Emphasis is placed on minimizing oracle dependence, removing administrative controls, and securing user privacy through cryptography.
This approach addresses challenges currently limiting privacy-focused DeFi, such as gas costs, audit complexity, and UX hurdles. By guiding development in this direction, the Foundation seeks to prevent transparency defaults from becoming entrenched system constraints.
Internal Governance and Treasury Transparency
A structured internal reporting process ensures that treasury management remains accountable and aligned with the Foundation’s mission. Quarterly reports are prepared by the finance team and reviewed by the board and executive leadership. These include updates on performance, positions, and key operational events.
An annual report will provide a more detailed breakdown of treasury composition and allocations. This transparency policy supports EF’s role as a legitimate steward of Ethereum’s development, enhancing community trust and internal oversight.
The Foundation is also committed to applying Defipunk principles within its own operations. Staff involved in treasury management are encouraged to use and contribute to open-source, privacy-preserving tools. This practice reinforces EF’s commitment to supporting a decentralized and privacy-first ecosystem from within.
The Ethereum Foundation’s transition from passive asset holding to active, policy-driven treasury management reflects its evolving role in the Ethereum ecosystem. With a firm structure now in place, the Foundation positions itself to guide and support the next wave of decentralized innovation.
