Key Points
- Ethereum Foundation cuts 20% staff and 40% budget, shifting to endowment-based model.
- New five-cluster structure narrows focus as funding risks emerge for core development.
On June 23, 2026, the Ethereum Foundation announced it had cut 54 roles, around 20% of its workforce. It also reduced its 2026 operating budget by 40% and reorganized into five focused clusters.
The changes follow a months-long internal review and reflect a shift away from acting as the network’s primary development hub. The foundation is repositioning itself as a protocol steward with a revised financial structure.
Five-Cluster Structure and Strategic Refocus
The new structure consists of Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer groups. Each cluster has a defined mandate covering technical research, user tools, community engagement, and institutional relations.
The Protocol Layer focuses on post-quantum security, zkEVM development, and Layer 1 privacy improvements. Its published mandate emphasizes independence from short-term market considerations and intermediary-controlled financial infrastructure.
The Access and User Layer clusters address usability and empirical research into network activity. The Community and Institutional clusters manage public positioning and engagement with financial institutions, enterprises, governments, and academic bodies.
One day before the announcement, former foundation researchers introduced Ethlabs, an independent protocol research entity. The sequence highlights a broader trend toward distributing development efforts across separate organizations rather than concentrating them within the foundation.
Endowment Model and Funding Outlook
The staffing and budget reductions align with a treasury policy shift that began in 2025 and was formalized in March 2026. The foundation plans to transition toward an endowment-style model designed for long-term sustainability.
Annual spending, currently about 15% of treasury assets, is targeted to fall to roughly 5% by 2030. According to analysis published by CoinMarketCap Academy, this level is intended to support operations indefinitely.
Employees affected by the layoffs will receive severance based on tenure, retirement contributions, and access to career support funds, as reported by The Block. Several senior figures have departed since January 2026, with interim leadership overseeing the transition.
Former core contributor Trent Van Epps warned that core development funding could face pressure within three to nine months as incentive programs conclude alongside the budget contraction. This near-term window may test whether independent research groups and ecosystem participants can absorb responsibilities previously funded directly by the foundation.
Industry participants, including Consensys, have outlined parallel research timelines that may overlap with areas the foundation is reducing. The effectiveness of distributed funding mechanisms in maintaining research continuity remains a central issue over the coming quarters.
