The Ethereum Foundation has eliminated 54 roles, cut its 2026 budget by 40%, and reorganized its structure into five core clusters as part of a broader transition toward a leaner operating model and a long-term plan to reduce annual treasury spending to around 5% by 2030.
In a June 23, 2026 update, the Foundation confirmed it had reduced its workforce by roughly 20% out of about 270 employees. Alongside the job cuts, it implemented a major budget reduction and shifted into a new cluster-based structure, supported by dedicated operations and management functions, according to a blog post published by Vitalik Buterin via the Ethereum Foundation’s official channels.
The changes reflect more than cost-cutting. They signal a strategic repositioning of the Foundation away from acting as Ethereum’s primary development engine and toward a more narrowly defined role focused on protocol stewardship, supported by stricter financial discipline.
Five-cluster organizational structure
The redesigned framework replaces the prior functional model with five distinct clusters: Protocol Layer, centered on post-quantum security, zkEVM development, and Layer 1 privacy; Access Layer, focused on tools enabling users and AI agents to interact with Ethereum without intermediaries; User Layer, which studies real network usage to guide protocol decisions; Community Layer, responsible for ecosystem engagement across crypto, open-source, and research communities; and Institutional Layer, which works with governments, enterprises, financial institutions, and academic institutions.
The Protocol Layer’s mandate explicitly rejects optimizing Ethereum for short-term market appeal or converting it into a traditional financial infrastructure layer controlled by intermediaries. This highlights a clear separation between core protocol priorities and TradFi-facing applications, even as the Institutional Layer continues to engage with those external entities.
Treasury policy shift and financial restructuring
The overhaul is tied to a broader treasury strategy introduced in 2025 and formalized in a 2026 policy framework.
Currently, the Foundation spends around 15% of its treasury per year. Under the updated endowment-style approach, it aims to gradually reduce this to roughly 5% by 2030, a level it views as sustainable for long-term operations, according to analysis cited by CoinMarketCap Academy.
Employees affected by the layoffs will receive severance packages of at least one month’s salary per year of service, along with retirement benefits and access to transition support such as career coaching and ecosystem placement assistance. Since early 2026, multiple senior leaders have departed, including former co-executive directors Tomasz Stańczak and Hsiao-Wei Wang, with interim leadership currently overseeing operations.
The announcement also comes alongside the rise of Ethlabs, an independent protocol research initiative formed by former Ethereum Foundation contributors, reflecting a broader shift of development activity toward external ecosystem organizations.
Ecosystem funding risks and transition phase
Following the announcement, concerns emerged that Ethereum’s core development ecosystem could face a funding gap within three to nine months as existing incentive programs wind down while Foundation spending is reduced.
This near-term period is viewed as a critical transition phase, distinct from the longer-term question of whether the new financial model can sustain research output at scale.
In the immediate term, attention is expected to shift away from ETH price reaction—which slipped modestly to around $1,668 following the news—and toward whether independent groups such as Ethlabs and other ecosystem-funded teams can absorb research responsibilities previously handled by the Foundation.
At the same time, ecosystem players like Consensys continue advancing parallel efforts in areas such as zero-knowledge proofs, some of which overlap with work the Foundation is stepping back from. The central issue is no longer whether restructuring is necessary, but whether decentralized funding mechanisms can maintain continuity in Ethereum’s core development pipeline.
