By Ignas, Cryptocurrency Thought Leader
Compiled by Felix
On August 24, the Ethereum Foundation deposited 35,000 ETH (approximately $94.07 million) into Kraken. This follows a previous transfer of 15,000 ETH ($30.1 million) to Kraken in May 2023, which preceded a 13% drop in ETH’s price over six days.
The move has raised concerns within the crypto community. Aya Miyaguchi, Executive Director of the Ethereum Foundation, clarified:
"This is part of routine treasury management. The Foundation’s annual budget averages $100 million, primarily allocated to grants and salaries—some recipients only accept fiat. Regulatory complexities have limited our ability to share detailed plans, but this transfer doesn’t equate to an immediate sell-off."
Cryptocurrency analyst Ignas highlights key issues regarding the Foundation’s financial transparency and sustainability:
Key Findings:
ETH Holdings:
- The Foundation holds 0.25% of ETH’s total supply (valued at $845 million).
- At current spending rates ($100M/year), reserves will deplete in 8 years.
Recent Expenditures:
- Q4 2023: $30M in grants
- Q3 2023: $8.9M in grants
Sample allocations:
- Global educational conferences (onboarding new users/devs)
- Zero-knowledge (ZK) systems coursework
- Innovative products like "email wallets" and Daimo (ERC-4337 smart contract wallet)
Lack of Comprehensive Reports:
Last full disclosure: 2021 ($48M total spend):
- Layer 1 R&D: $21M (44%)
- Community/education: $9.7M (20%)
- Operations: $5.1M (10%)
- No independent audits publicly available.
Comparative Transparency:
- Projects like Polkadot provide detailed financial reports—despite controversies over spending.
Sustainability Options:
- Staking yields: Generate passive income from ETH holdings.
- ETH price appreciation: Required to extend the 8-year runway.
FAQ Section
Q: Why did the Ethereum Foundation transfer ETH to Kraken?
A: Routine treasury management—not necessarily an immediate sell-off.
Q: How does the Foundation’s spending compare to other crypto projects?
A: Less transparent than Polkadot’s detailed reports but focuses on niche R&D/education.
Q: What’s the biggest risk to the Foundation’s longevity?
A: Depleting reserves if ETH prices stagnate and staking isn’t adopted.
👉 Explore Ethereum’s latest upgrades
👉 Understanding crypto treasuries
Final Note: Advocates urge the Ethereum Foundation to adopt Polkadot-level transparency in financial reporting.
Disclaimer: This content is informational only and does not constitute financial advice.
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