Main Points:
- Ethereum Foundation’s largest expenditure in 2023 was on “New Institutions” (36.5% of total spending).
- Layer 1 (L1) R&D accounted for 24.9% of the spending, including grants and internal development efforts.
- Community development made up 12.7% of the budget, with the remaining 25.9% allocated to zero-knowledge research, internal operations, Layer 2 research, and developer platforms.
- Criticism emerged from DeFi developers accusing the foundation of neglecting decentralized finance (DeFi).
- Ethereum Foundation partnered with ETH Kipu to promote blockchain education in Argentina, teaching Solidity to high school students.
Expenditure Breakdown and Priorities
In response to community inquiries about the Ethereum Foundation’s financial allocations, co-founder Vitalik Buterin and communications lead Josh Stark revealed the spending breakdown for 2023. Their detailed disclosure, posted on social media on August 27, provides insight into the foundation’s financial strategies and priorities for the year.
The most significant portion of the budget, 36.5%, was dedicated to what Buterin described as “New Institutions.” These are initiatives aimed at establishing and supporting new structures or organizations that can drive the long-term growth and sustainability of the Ethereum ecosystem. Although specific details on these institutions were not fully disclosed, this large allocation underscores the foundation’s focus on building the necessary infrastructure for Ethereum’s future.
Another substantial portion of the budget, 24.9%, was allocated to Layer 1 (L1) research and development. This category includes both internal R&D efforts and grants awarded to external teams working on fundamental Ethereum projects. Key initiatives funded under this umbrella include the development and maintenance of Go-Ethereum (Geth), research in Solidity (the primary programming language for Ethereum smart contracts), and contributions to Devcon, Ethereum’s annual conference. Additionally, funding supported the Robust Incentives Group, a body within the foundation focused on ensuring the economic sustainability of the Ethereum network.
Community Development and Broader Investments
Community development emerged as the third-largest spending category, accounting for 12.7% of the total budget. This reflects the foundation’s ongoing commitment to fostering a global community of developers, researchers, and users who contribute to Ethereum’s decentralized ecosystem.
The remaining 25.9% of the budget was spread across various initiatives, including zero-knowledge (ZK) research, internal operations, Layer 2 (L2) scaling solutions, and developer platforms. ZK research, which received 10.4% of the budget, is particularly noteworthy, as it focuses on enhancing Ethereum’s privacy and scalability through advanced cryptographic techniques.
Criticism from DeFi Advocates
Despite these investments, the Ethereum Foundation has faced criticism from certain segments of the decentralized finance (DeFi) community. Notably, Kane Warwick, a long-standing DeFi developer, accused Buterin and the foundation of being “anti-DeFi.” Warwick’s critique centers on the foundation’s allocation of a relatively small portion of its budget to DeFi projects while directing significant resources toward initiatives he considers “meaningless.”
In response, Buterin reaffirmed the foundation’s commitment to DeFi but emphasized a focus on sustainable projects with long-term potential rather than short-term ventures like liquidity farming or speculative token launches. He reiterated that the foundation’s investment strategy is guided by the principles of decentralization, security, and scalability, rather than market-driven hype.
Global Educational Initiatives
Beyond internal development and research, the Ethereum Foundation has also invested in educational initiatives to expand the global adoption of blockchain technology. In partnership with ETH Kipu, the foundation has launched a series of workshops in Buenos Aires, Argentina, aimed at teaching high school students about blockchain and Ethereum’s smart contract technology.
These workshops form part of a broader educational strategy that includes the introduction of internships within the blockchain sector and the development of online courses for Solidity, Ethereum’s smart contract programming language. Through these efforts, the Ethereum Foundation seeks to cultivate the next generation of blockchain developers and enthusiasts, particularly in emerging markets.
The Ethereum Foundation’s 2023 financial report highlights a strategic focus on long-term ecosystem growth, with substantial investments in new institutions, L1 research, and community development. However, this strategy has not been without controversy, particularly from the DeFi community, which feels overlooked by the foundation’s spending priorities. Despite these criticisms, the foundation remains committed to fostering global blockchain education and supporting sustainable, impactful projects that align with Ethereum’s core values.
