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It’s honestly very hard to be the Ethereum Foundation.
Your job is to fund R&D in public goods and deliver complex network upgrades. But that means you also have to constantly choose between selling ETH and being scolded for selling ETH.
The EF has approximately 200 employees and an annual operating budget of ~$145 million. That money comes from a treasury of largely ETH. That ETH needs to be sold to pay your staff, but ETH holders don’t like it when you sell the thing they own. This is crypto’s most unique recurring theme: “Make sure the number goes up while also paying for things with the number.”
So the Crypto Twitter peanut gallery wants the EF to know that they can simply “use DeFi.” Put the ETH in a lending vault, collect the proceeds and please stop destroying the ETH chart.
The EF has historically been reluctant to do that, for obvious reasons: it is not the job of a neutral ecosystem manager to make complex risk management decisions.
Yet yesterday, the Ethereum Foundation doubled its use of DeFi (continuing since February). The EF deposited 2,400 ETH ($9.1 million) and $6 million worth of stablecoins into Morpho’s vaults.
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This should be good news for bag holders, but not everyone is happy:
Where previously the Ethereum Foundation did not support its own ecosystem, now it does not support it right players, meaning the smaller guys and underdogs.
I don’t know, man. It seems like you can’t please everyone, so maybe these decisions just shouldn’t be public.
You can imagine a world where the EF tries to be ‘fair’. It allocates capital to smaller projects, but that exposes the base to a wider range of smart contract/security risks.
Best-case scenario: nothing is broken, but the foundation’s operating costs are increased to pay for security researchers and an investment team. Honesty is expensive. At worst, protocols are exploited and the EF’s treasury runway is shortened.
Solana doesn’t seem to have the same problems, namely because the foundation doesn’t pursue the same levels of radical transparency as Ethereum. Solana is also supposedly selling SOL, but no one is mad because it’s not on the Twitter timeline.
To start with, the foundation has actively supported the Solmate DAT and has an active partnership with the “Solana Company” DAT (formerly Helius Medical). The EF has sold ETH to DATs in OTC sales, but has not participated in formal investments or partnerships with DATs.