EF Epic Restructuring: 20% Layoffs, Budget Slashed in Half, Is Ethereum Streamlining for a Comeback?

Original by Odaily Planet Daily (@OdailyChina)

Author: Azuma (@azuma_eth)

The Ethereum Foundation (EF) is undergoing its most significant organizational restructuring in recent years.

On the evening of June 23, the EF officially announced a comprehensive overhaul of its internal structure, dividing into several functional clusters: Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer. Concurrently, the foundation laid off approximately 20% of its staff, with around 54 employees departing.

At the same time, Ethereum co-founder Vitalik Buterin also shared more detailed reform ideas on X: The EF will gradually reduce its expenditure scale over the coming years, slashing the budget by about 40%. It plans to lower the annual spending rate from roughly 15% historically to approximately 5% after 2030, transitioning towards an endowment-driven operational model.

Clearly, this is an unconventional major overhaul of the organizational structure. Considering the controversies and challenges Ethereum has faced over the past year, this reform seems like a long-overdue course correction.

From the prolonged low price of ETH, to the heated debates over the success or failure of the scaling roadmap; from the community's persistent质疑 of the foundation's execution capabilities, to the consecutive departures of core members... Over the past year, the wave of criticism surrounding the EF has barely ceased. This latest round of layoffs, restructuring, and budget adjustments is viewed by many as the EF's first systematic response to these issues.

Why is the EF Perpetually Mired in Controversy?

In recent years, as the most influential conscious entity within the entire Ethereum ecosystem, every move made by the EF has been accompanied by controversy.

Some criticize the foundation for its long-term selling of ETH, dampening community confidence; others question the EF for overemphasizing public goods and long-term research while neglecting market competition and ecosystem growth; still others believe that, in the face of increasingly fierce industry competition, the EF has consistently lacked clear strategic expression and execution capability... Whenever the market harbors dissatisfaction with Ethereum, the EF often becomes the most direct target of criticism.

These controversies may seem disparate, but they all point to the same reality: Over the past decade or more, the EF has played an extremely unique role. It has been both a key driver of protocol research and a funder of ecosystem development; it shoulders the responsibility of coordinating the interests of various parties and, to a large extent, represents the external perception of Ethereum.

In the early days of Ethereum's development, this role positioning played an important function. However, as Ethereum has matured into a global network with a vast developer community, hundreds of billions of dollars in asset value, and numerous institutional participants, the market's expectations for the EF have quietly shifted.

What role exactly should the EF play? Is it merely a non-profit focused on research, or should it be the de facto coordination center for the entire ecosystem? Does it have a responsibility to ETH holders? Should it respond to the market's expectations for growth, adoption, and value accrual?

For a long time, the EF has not provided clear answers to these questions. Consequently, controversies over ETH sales, execution capability, governance, and even personnel attrition have continuously piled up, eventually devolving into mudslinging matches surrounding the foundation itself. Compounded by the persistently low price of ETH, the community needed an emotional outlet, and the EF was the perfect target.

The EF's Answer: Redrawing the Boundaries

If all the community's质疑 of the EF over the past few years ultimately pointed to the ambiguity of the foundation's role, then the core of this reform is that the EF has finally begun to redefine itself, clarifying what it should and should not do.

Based on the newly announced organizational structure, the EF has clearly defined the focus of its future work into the following five directions:

• Protocol Layer: Responsible for advancing core protocol R&D and network security;
• Access Layer: Focuses on wallets, developer tools, and infrastructure experience;
• User Layer: Concentrates on applications and user experience;
• Community Layer: Undertakes developer and ecosystem coordination tasks;
• Institutional Layer: Responsible for promoting Ethereum adoption among governments, enterprises, and traditional institutions.

Along with defining clear functional clusters, the EF is also actively contracting by laying off 20% of its staff and reducing the budget by 40%. Notably, Vitalik did not package this reform as a simple "efficiency improvement." Instead, he acknowledged that it represents real losses – some projects will be terminated, some capabilities will disappear, and some long-term contributors will leave.

Vitalik cited examples, stating that the PSE (Privacy and Scaling Explorations) team, long focused on cutting-edge research in privacy and scaling, will gradually be phased out; Devcon will also transition towards a smaller-scale, lower-cost model; the foundation's investment in large-scale projects outside the core Ethereum protocol will decrease; and institutional partnership work will also be further focused and contracted.

However, Vitalik also emphasized that this does not mean overall investment in these directions across the entire Ethereum ecosystem will decrease simultaneously. On the contrary, much of the work is simply shifting from the "exploration" phase to the "implementation" phase, moving from within the EF to the broader ecosystem.

For an organization that has long simultaneously undertaken research, funding, coordination, and even partial ecosystem promotion, this marks a significant role retraction. The EF will no longer attempt to be an all-encompassing ecosystem hub but instead hopes to return to its core functions: protocol research, public goods support, and ecosystem coordination. As for more specific development tasks, they will be gradually handed over to independent teams and market forces within the ecosystem.

Ecosystem Forces Are Stepping Up

If the EF's reform signifies a voluntary retreat, then another question worth pondering is: who will fill the void it leaves behind? The answer is already emerging: the ecosystem itself.

Just before the foundation announced the restructuring, Ethlabs, founded by several former core EF researchers, was officially launched and quickly gained support from ecosystem forces like BitMine, SharpLink, and Joseph Lubin. (Recommended reading: Is the Ethereum Foundation Splitting Up?! One Article to Understand Ethlabs' "Bright Future")

In the past, such an outflow of talent might have been interpreted as a sign of the foundation's declining influence. However, the market reaction this time was quite the opposite. More people now view the emergence of Ethlabs as a positive development for Ethereum, as it signifies that talent, resources, and research capabilities previously highly concentrated within the foundation are diffusing to a greater number of independent organizations.

Beyond Ethlabs, the Ethereum ecosystem has also seen the emergence of several other independent organizations over the past year, such as Argot Collective and the Ethereum Applications Guild. Simultaneously, public treasury companies like BitMine and SharpLink have also begun participating in ecosystem development through funding and research grants.

Compared to a decade ago, Ethereum's power structure has fundamentally changed. Ethereum was once almost synonymous with the EF, but today, Ethereum's development can no longer rely on a single institution. Instead, it increasingly depends on collaboration and division of labor among different organizations within the ecosystem.

Validation from a Competitor

Of course, the EF's reform does not mean the problems facing Ethereum have been solved.

Issues like the controversy over ETH's value capture, the pace of institutional adoption, and questions about ecosystem competitiveness and execution efficiency will not automatically disappear due to a single organizational restructuring. But at the very least, the EF has begun to acknowledge one thing: as Ethereum has grown, the foundation's power has become increasingly limited. It can no longer continue to play the role of "the one who solves all problems."

Shortly after the EF announced its reforms, Solana co-founder toly posted on X, saying: "Bullish. Budget constraints force us to prioritize and focus. Ethereum isn't going anywhere. A smaller, leaner Ethereum Foundation will be more decisive, move faster, and be able to pivot more quickly."

Recognition from a long-time rival might just be the highest praise for this EF reform.