Ethereum Foundation’s New Treasury Policy: Key to Long-Term Stability?

The Ethereum Foundation has released a new treasury policy designed to improve financial discipline, support long-term ecosystem growth, and reinforce Ethereum’s core values. 

The announcement, made Wednesday, introduces spending limits, a multi-year expense buffer, and a framework called “Defipunk” that ties treasury strategy to decentralized finance principles like privacy, permissionlessness, and open-source development.

This move comes as Ethereum prepares for what the foundation calls a “pivotal” phase in its development. With upcoming upgrades focused on scalability, privacy, and broader Layer 2 adoption, the foundation is securing its ability to remain financially stable and mission-aligned—regardless of market cycles.

A New Fiscal Strategy

Under the updated policy, the Ethereum Foundation has committed to capping its annual operating budget at no more than 15% of total assets. This cap ensures that spending remains proportional to available resources, even during volatile market conditions.

In addition, the foundation will maintain a buffer equal to 2.5 years of operating expenses. This means treasury decisions—such as Ether sales or fiat conversions—will be made only when the expense buffer changes significantly. The goal is to minimize reactionary financial moves and instead follow a fixed, long-term capital management plan.

This structure ensures stability through bear markets while giving the foundation room to act conservatively in bullish periods.

More Than Just ETH

While ETH remains the foundation’s largest holding—comprising over 80% of its assets—it is now expanding its treasury portfolio. The foundation will continue to stake ETH and use it in DeFi protocols, but also plans to allocate capital to tokenized real-world assets, fixed-term deposits, and investment-grade bonds.

A significant portion of its crypto treasury will now be used to earn yield through decentralized finance. In February, the foundation allocated 45,000 ETH—worth around $120 million at the time—to DeFi protocols such as Aave, Compound, and Spark. These protocols were selected for their security, immutability, and alignment with Ethereum’s decentralized ethos.

This is a notable shift from the foundation’s historical position of maintaining neutrality and avoiding involvement in specific protocols. Critics had argued that this neutral stance held back innovation and left DeFi projects unsupported. The foundation now appears to be correcting the course.

Defipunk: A Framework for Funding with Values

One of the standout features of the new policy is “Defipunk,” a framework that acts as a filter for treasury activities and project support. It prioritizes projects that uphold Ethereum’s original values: privacy, decentralization, open-source development, and trustless design.

The foundation says it will assess new investments and protocol participation based on this framework. Metrics such as permissionless access, reduced reliance on centralized oracles, and distributed user interfaces will guide decision-making.

Defipunk reflects Ethereum’s cypherpunk roots. It serves as a reminder that despite its growth, the foundation still prioritizes ideals over short-term gains.

Transparency at the Forefront

To maintain credibility and public trust, the Ethereum Foundation will publish quarterly and annual reports that detail its asset allocations, performance metrics, and major developments. Internal stakeholders—including board members and senior managers—will receive additional updates every quarter, covering treasury performance, ecosystem engagement, and risk exposure.

As of October 2023, the Ethereum Foundation held approximately $970 million in treasury assets, split between $788 million in crypto and $181 million in fiat-based instruments. The foundation noted that fluctuations in ETH price will be factored into future allocation decisions.

By institutionalizing transparency, the foundation strengthens its leadership in responsible and values-driven financial governance.

Adapting to a Changing Landscape

These treasury reforms also follow internal organizational changes. In March, Tomasz Stańczak and Hsiao-Wei Wang were appointed as co-executive directors. And in early June, the foundation restructured its internal development team, laying off several members and rebranding the Protocol Research and Development division to simply “Protocol.”

Behind the scenes, the foundation is realigning itself around execution, scale, and user experience—anticipating that 2025 to 2026 will define Ethereum’s long-term trajectory.

To match these ambitions, the foundation plans to lower its expense ratio over time. From the current 15% cap, spending may gradually narrow to a 5% baseline over the next five years. This transition will depend on the success of treasury yield strategies and market conditions.