Ethereum Foundation Considers Staking ETH Holdings

Ethereum co-founder Vitalik Buterin suggested that the Ethereum Foundation is exploring the idea of staking its nearly $1 billion in ETH holdings.

Recently, the foundation faced criticism for its perceived lack of participation in the Ethereum ecosystem. When asked for examples of its activities, Josh Stark, a contributor, mentioned that the foundation utilized the blockchain for selling tokens, distributing grants, and for event tickets. This response was met with dissatisfaction from members of the community who wished for more active involvement. Angel investor Eric Conner proposed that the foundation stake its ETH holdings and use the rewards for employee salaries and grants.

Buterin responded on X, highlighting two key reasons for not staking in the past: regulatory risks and the challenge of positioning itself correctly in the event of a network hard fork, where competing chains emerge. He noted that staking could lead to slashing penalties on staked assets and that unstaking might not be timely enough to avoid such risks.

He mentioned that regulatory risks have diminished, and the foundation is now investigating ways to address the hard fork concern, suggesting a potential move towards staking its ETH.

As of November, the foundation reported holding approximately $788.7 million in crypto assets, primarily in ether, representing 0.26% of the total ether supply as of late October 2024. Current holdings amount to 269,000 ETH, valued at around $891 million.

If the foundation invested its entire holdings in Lido Finance yielding 2.95%, it could earn approximately $26.2 million annually, significantly lower than its total expenditures of $134.7 million in 2023. Tim Beiko, who leads core protocol meetings at the foundation, remarked that while staking makes sense, relying solely on staking to cover expenses would be imprudent.

Calls for Changes at the Ethereum Foundation

Buterin previously outlined several goals for leadership changes at the foundation, including enhancing technical expertise among leaders, improving developer communication, attracting new talent for better execution, and expanding the use of decentralized technologies.

Joseph Lubin, another Ethereum co-founder, proposed replacing the current executive director, Aya Miyaguchi, with two co-leaders: Danny Ryan, who managed the merge transition, and Jerome de Tychey, president of Ethereum France. Lubin expressed that their leadership could inject much-needed energy and innovation into the foundation.

Ryan publicly praised Miyaguchi’s leadership while urging critics to focus on building a positive future for the foundation, emphasizing respect for her contributions despite calls for change.