Ethereum Foundation discloses expenditures following rumors of significant transfer

Ethereum Foundation (EF) contributor Josh Stark published a detailed account of the organization’s expenditures for the previous two years on social media on Aug. 27.

Stark released this information following increased speculation regarding the foundation’s potential plans to liquidate a significant amount of Ethereum. These rumors emerged after a wallet associated with the foundation executed a substantial transfer.

Stark also suggested that the foundation plans to release an expenditure report prior to this year’s Devcon, which is set for Nov. 12.

Funding breakdown

Stark presented two pie charts illustrating the foundation’s fund distribution for 2022 and 2023. The charts encompass seven primary categories: new institutions, L2 R&D, applied ZK, community development, developer platform, internal ops, and L1 R&D.

In both years, the highest funding was allocated to research and development (R&D) of Layer 1 enhancements and new institutions. Stark clarified:

“Those graphs capture both internal and external spend. For example, ‘L1 R&D’ includes grants to external client teams, and it also includes internal EF researchers. In both years, internal spend was about 38% and external spend was about 62%.”

Internal expenditures pertain to the teams operating under the EF umbrella across various sectors, such as client Geth’s, Solidity, Devcon, and the Ethereum Organization’s teams.

Conversely, external expenditures relate to grants awarded through the foundation’s Ecosystem Support Program (ESP). From 2022 to 2023, the ESP allocated $91.1 million in grants to 895 distinct projects, based on data collected from their website.

Stark emphasized that ESP releases quarterly reports detailing the grants awarded to new projects, with the most recent edition covering the grants issued in 2024 Q1.

Regarding the “new institutions” category, Stark noted that this is part of the foundation’s initiative to “help build up new organizations that can strengthen and support the Ethereum ecosystem in the long run.”

Stark cited entities such as open source software provider Nomic Foundation, the Decentralization Research Centre, data aggregator L2Beat, and “other Ethereum-related and adjacent organizations” as examples.

Ethereum’s co-founder Vitalik Buterin shared Stark’s post and reiterated the significance of investments made into new institutions. He remarked that “no World Economic Forum insect protein research” is included in the foundation’s fund allocation.

$94 million transaction sparks debate

Stark disclosed the funding breakdown after a significant transfer of 35,000 ETH from EF’s wallet to crypto exchange Kraken on Aug. 23 raised concerns. The substantial amount — valued at $94 million at current prices — ignited discussions within the crypto community regarding the potential allocation of the funds.

Due to the considerable size of the transaction, investors expressed concerns about a possible sell-off that could exert additional pressure on its price, especially since ETH has declined by 22% over the past 30 days.

The angel investor known as DCInvestor suggested to Buterin that future large transactions be divided into 12 smaller transfers, which could help mitigate fears of a market dump.

Buterin responded that the suggestion encounters the logistical challenge of coordinating multiple transfers from a multi-sig wallet that necessitates four confirmations. Multiple transactions would require the transfer to be signed 48 separate times. He added:

“There are solutions of course (eg. multiple tiers of wallets), but for obvious reasons we don’t want to rush on something so security-sensitive.”

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