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Issues around financial accountability by the Ethereum Foundation have elicited strong comments from community members.
Ethereum Foundation says plans are underway to publish its financial report as soon as possible. The disclosure follows the attention that the foundation’s spending pattern has drawn from members of the community.
Ethereum Foundation Heed Calls for Transparency
An Ethereum Foundation researcher, Justin Drake, revealed this on an ask-me-anything (AMA) on the r/ethereum subreddit, writing under the nickname “bobthesponge1.”
According to Drake, the foundation will soon release a comprehensive financial report, just like it did in April 2022. In that report, the Ethereum Foundation declared its assets under management as of March 2022 were worth $1.6 billion. Of that amount, $1.3 billion were in Ethereum.
With the current agitations surrounding the financial spending of the Foundation, Drake attempted to clarify issues using his “limited personal understanding,” as he termed it. As per his explanation, the Ethereum Foundation spends approximately $100 million annually. Meanwhile, about $650 million worth of funds is in its main Ethereum wallet, with a runway of approximately 10 years. This projection is dependent on the market price of ETH.
As per Drake, the budget plan involves spending 15% of the Ethereum Foundation’s leftover money on an annual basis. This assertion by Drake has been verified by Vitalik Buterin, Ethereum co-founder, in a separate comment on the subreddit. Buterin stated that such a budget strategy implies that the Ethereum Foundation would get smaller and smaller over time.
Issues around financial accountability by the Ethereum Foundation have elicited strong comments from community members. The trigger followed several mysterious transfers of ETH from the Foundation without proper accountability and explanation to community members. For instance, Lookonchain, a blockchain analytics provider, reported a $94.07 million worth (or 35,000 ETH) transfer from the Foundation to the Kraken Exchange recently.
Community Backlash Over Mysterious ETH Transfers
Some members of the Ethereum community on X have expressed displeasure at the opacity surrounding financial transactions. They maintain that this has created fear, uncertainty, and doubt as to the intentions of the Ethereum Foundation.
Responding to some complaints, Aya Miyaguchi, Ethereum Foundation Executive Director, explained that the budget remains part of the foundation’s “treasury management,” which mainly services grants and salaries. Additionally, some recipients can only accept such in fiat currency. Meanwhile, Miyaguchi says regulatory complications caused the long delay in treasury activities for some time.
However, a user hyper1on (@0xhyper1on) countered this position with a photo of transactions carried out besides the Kraken transfer.
The transaction shows six movement of 1,000 ETH between January and August 2024. Another X user queried the reason why the Ethereum Foundation had to wait for community members to express concerns before deciding to do the needful. They also were unhappy to learn of the Kraken transfer through a third-party notification.
As at the time of writing, Ether traded for $2,367.23, marking a 1.02% drop in price in the past 24 hours.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
