Ethereum may soon face a funding problem that could affect the teams responsible for maintaining and improving the network, according to former Ethereum Foundation contributor Trenton Van Epps.
In a post that appeared on his blog last Thursday, Van Epps raised a red flag regarding the impending “slow-burning funding crisis” that Ethereum is facing. According to him, the problem will most probably become clearer within the coming three to nine months, unless there will be new sources of funding.
The problem here is related to those who are responsible for making sure that Ethereum runs smoothly. These are the developers whose responsibility it is to develop and sustain the software powering the Ethereum network, yet many of whom depend on grants and ecosystem funding.
Ethereum Core developers face funding gap
As per Van Epps, the shift has resulted in a major gap. Spending by the Ethereum Foundation has been lowered, whereas the Client Incentive Program, which was assisting with funding of development teams, has ended in April.
All of the above mentioned shifts have resulted in the creation of the annual funding need estimated at $30 million for the Ethereum development ecosystem.
Based on the talks with developers and contributors, Van Epps stated that it was not an emergency, but something which might be increasingly hard to ignore.
This statement comes amid a larger shift within the Ethereum Foundation. Earlier on Thursday, co-executive director Hsiao-Wei Wang said that she was leaving her position immediately after taking sabbatical leave.
This leaves us with the fact that her departure comes following that of her fellow co-executive director, Tomasz Stańczak, as well as other members, with the total number of departures and layoffs at the foundation this year reaching 19.
Buterin says Ethereum Foundation resources stay limited
Co-founder of Ethereum, Vitalik Buterin, had admitted in the past that the funds available to the foundation are meager. According to his tweet posted on X in May, the Ethereum Foundation controls merely 0.16 percent of all ETH issued within the blockchain network, having significantly fewer resources than other competing blockchain projects do.
Buterin claims that this was by design. The foundation, according to him, was created with a specific scope of activities that included supporting the development of the technology of the network and helping the blockchain network complete its roadmap milestones, which were mostly fulfilled by 2022.
“And so today, the EF is choosing to use its remaining resources to pursue longevity over breadth,” Buterin wrote. “Yes, this means we sell less ETH.”
This approach is reflected in the treasury management policy of the foundation.
In late April, the Ethereum Foundation unstaked 17,000 ETH, after which another 21,270 ETH were unstaked in early May. These amounts are worth nearly $50 million at the time. Besides, the Ethereum Foundation sold 10,000 ETH to Bitmine, the biggest corporate holder of Ether.
According to the blockchain analytics company Arkham, it is possible that the unstaking was done to release funds needed for further development and operations.
This move reflects a change in the treasury management policy of the foundation itself. Earlier, in the policy statement from the EF, it stated that the idea of the change was to make more money through staking in order to develop the protocol itself without constantly selling their ETHs, something which was criticized by some members of the community.
Van Epps’ concerns raise a larger question as Ethereum continues to mature – who is going to pay for maintaining the infrastructure of the one of the largest blockchain platforms in the world?
For a long time, the Ethereum Foundation had been responsible for the funding of such tasks, but as it concentrates on more specific projects and tries to manage its resources in the long run, the system will need other sources of funding.
