The Ethereum Foundation is undergoing a major restructuring, cutting about 20% of its staff (roughly 54 roles) as it reorganizes into five domain-focused clusters—protocol, access, user, community, and institutional layers—alongside operations and management.

In tandem, Vitalik Buterin disclosed a roughly 40% budget reduction and a shift toward a long-term, endowment-based operating model, with annual spending projected to fall from about 15% of remaining funds to around 5% after 2030.

The Foundation is also trimming overall resources by about 40% while reorganizing into seven clusters, emphasizing protocol security, censorship resistance, and privacy.

The EF clarified a separation between core protocol development and market-facing or institutional engagement, prioritizing protocol work over short-term market goals.

An institutional layer will target adoption by financial institutions, enterprises, governments, universities, and nonprofits, while the access layer enforces a zero-intermediary path for intermediated products on the network.

External treasury initiatives are expanding, with backing from BitMine Immersion Technologies, SharpLink Gaming, and Ethereum co-founder Joseph Lubin for ETHLabs, a nonprofit aimed at accelerating Ethereum development and institutional adoption.

The restructuring signals a divergence: the Foundation concentrates on core priorities and institutional engagement, while treasury-backed entities push broader development and adoption.

Buterin envisions completing the Strawman/Strawmap core protocol overhaul first, followed by a higher bar for new features, with more protocol work moving toward AI-assisted formal verification to cut upgrade costs.

The ultimate outcome will hinge on forthcoming treasury reports and protocol milestones to determine whether the leaner Foundation accelerates upgrades or risks talent loss and slower progress.

The Privacy and Scaling Explorations unit is being wound down, with its priorities absorbed or discontinued by other teams.

Solana co-founder Anatoly Yakovenko argues the cuts are bullish, predicting faster decision-making and execution as the Foundation sharpens focus and speeds up progress.

Leadership changes include the departure of prominent EF contributors and executives, raising concerns about core development funding and a potential funding squeeze.