Marc Zeller, founder of the Aave Chan Initiative (ACI), has called for the dissolution of the Ethereum Foundation. This came following a recent transaction suggesting that the Foundation was again looking to sell the ETH top.
Ethereum Foundation Should Be Dissolved After Purge And Verge Upgrades
In an X (formerly Twitter) post, Zeller remarked that the Ethereum Foundation should be defunded and dissolved once the Purge and Verge upgrades are delivered. The crypto founder suggested that the Foundation’s budget was too outrageous, as he questioned what the foundation needed an annual budget of $100 million for. He added that the Geth team receives a “meagre” pay despite the “critical work” they perform in the Ethereum ecosystem.
Zeller’s comments were in direct response to an X post by the Ethereum Foundation’s Executive Director, Aya Miyagotchi, in which she revealed that the Foundation’s recent deposit of 35,000 ETH ($94.07 million) into Kraken was part of their treasury management activities. She stated that the Ethereum Foundation has an annual budget of $100 million and that most of this money is for grants and salaries.
She suggested that the Ethereum Foundation has always had to sell a significant amount of their Ethereum holdings because some of the recipients of the grants and salaries can only accept fiat. Meanwhile, she also revealed why they were just carrying out such treasury activity, noting that they had been unable to do so before due to regulatory complications.
The regulatory complication she was referring to is the US Securities and Exchange Commission’s (SEC) investigation into whether ETH was a security, although this investigation was eventually closed.
As expected, the Ethereum Foundation’s deposit of $94 million worth of ETH into Kraken sparked fears of a massive sell-off, which could significantly impact ETH’s price. However, Miyagotchi assured the community that they weren’t looking to sell all those tokens at once. She said, “There will be planned and gradual sales from here on.”
The Foundation’s Budget Is Not Sustainable
Crypto researcher Ignas noted that the Ethereum Foundation will spend all its ETH holdings in eight years if it continues to work with an annual budget of $100 million. Data from the on-chain analytics platform Arkham Intelligence shows that the Foundation holds 273,776 ETH ($748.88 million). Ignas added that if the Foundation wants to fund its operations for much longer, it will need ETH’s price to rise or start staking its ETH tokens to earn yields.
The crypto researcher also revealed that most of the Ethereum Foundation’s expenditures are on grants. According to their 2021 financial report, which seems to be their most updated report, only 10% of the Foundation’s expenditures went to salaries and maintaining the Foundation. In line with this, Zeller called for the Ethereum Foundation to cut “all” the grants from their budget.