Ethereum co-founder Vitalik Buterin announced on March 23 that the Ethereum Foundation (EF) will slash its 2026 budget by approximately 40%, moving toward a long-term endowment-based operating model. The reduction aligns with a financial management policy set in 2025, aiming to gradually lower annual spending from the current 15% to about 5% by 2030 and beyond. Under the endowment model, the EF will rely primarily on investment returns to fund activities, preserving principal to sustain operations indefinitely.
Budget Cuts and Organizational Restructuring
The 40% budget reduction accompanies a major reorganization revealed by the EF on the same day, which includes cutting 54 positions—roughly 20% of its workforce—and restructuring into five core clusters focused on protocol development. Buterin framed the cuts as a strategic choice to fund Ethereum's ambitious technical upgrades with limited resources, not merely cost-cutting. He acknowledged that the shortfall from the budget reduction will be partially offset by increased activity outside the EF, but not entirely, forcing the foundation to make "big sacrifices."
Shift to Ethereum's Third Generation
Buterin highlighted the "Ethereum Strawmap," a sweeping plan to overhaul nearly all protocol areas—including consensus, proving, privacy, account models, and state management—representing a third major iteration following The Merge. Unlike The Merge, this transition will be phased in component by component. The EF also aims to expand its role in the "access layer," with Buterin vowing not to compromise on building a high-performance protocol resilient to quantum computing and AI demands.
Specific Sacrifices and Strategic Pivots
To achieve the leaner budget, Buterin outlined several concrete changes:
- Multi-client strategy shift: Moving from redundancy to specialization, where each client takes a distinct role, leveraging AI-based formal verification to cut development and maintenance costs.
- PSE team downsizing: The Privacy & Scaling Explorations team will narrow its focus from broad research to targeted building in critical areas like zero-knowledge proofs, reducing resource needs.
- Devcon scaling back: The developer conference will operate on a smaller, more efficient scale to significantly reduce losses.
- Reduced large projects: The EF will decrease involvement in major non-Ethereum projects, with Buterin personally funding some.
- Institutional activity focus: Concentrating on reproducible use cases aligned with censorship resistance, open source, privacy, and security (CROPS).
Long-Term Vision and Bitcoin Inspiration
Once the Strawmap is complete, Buterin proposed shifting Ethereum's development strategy to prioritize security fixes and high-value limited changes, raising the bar for adding new protocol features. This approach would allow Ethereum to maintain its capture resistance without requiring massive budgets. He suggested Ethereum should learn from Bitcoin, which operates as a relatively small project with millions of lines of code, rather than a sprawling one. Despite recent difficult years, Buterin concluded that the ecosystem is adapting both inside and outside the EF, and "Ethereum is in a very strong position to succeed and thrive."