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Ethereum Foundation Internal Update



Vitalik Buterin


Announcing World Trade Francs: The Official Ethereum Stablecoin 01st April, 2018

Ethereum scalability research and development subsidy programs 02nd January, 2018

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Ethereum Foundation Internal Update

Posted on .

Now that Ethereum has launched and is rapidly nearing its Homestead phase, over the last few months we at the Ethereum Foundation have finally had the chance to have some breathing room and plan our strategies with a more long-term view. From a development perspective, we have now started in earnest the development of Serenity, the next large overhaul of the Ethereum protocol that will include powerful software abstraction features, the Casper consensus algorithm and hopefully some basic scaffolding that will allow for the development of scalability features over time with minimal disruption. POC1 has been released, and POC2 will likely be released in about one month. In parallel to this, Martin Becze is actively exploring options for optimizing the EVM using WebAssembly, and several groups are working on implementing various forms of advanced cryptography on top of the EVM today.

As exciting as this work is, however, there are also substantial amount of equally important, even if somewhat less glamorous, work that needs to be done on the backend of the backend, in the Ethereum Foundation itself, in order to make sure that the organization can survive and ideally prosper long enough to implement the full extent of the Ethereum vision.

At the time of the last major update of this kind, the Foundation’s primary challenges were organizational and financial. Expenses were very high, peaking at over 400,000 EUR per month being spent on a combination of development, communications, administration and security audits. The ecosystem was rapidly blossoming, with a number of Ethereum-based companies either uncloaking themselves after months of quiet development or newly entering the scene – a saving grace for the Foundation, as it no longer needed to sponsor development of every layer of the ecosystem itself, but nevertheless a transition that needed to be managed, so as to make sure that all of the relevant stakeholders continue to be included in the development process. Administrative inefficiencies, including a total of six entities in four jurisdictions, compounded our problems, and at times it seemed as though there was too much to handle.

It was at this point that we, under the leadership of our new executive director Ming Chan, began a process of streamlining our operations on multiple fronts, so as to prepare the Foundation for its longer-term future.

End of one era, end of one set of challenges, start of an new era, start of another set…

On the non-administrative front, perhaps the main highlight has been our efforts at increased transparency of the research and development process, the major initiatives on that front being the increased emphasis on using our gitter channels for discussion rather than Skype, as well as the EIP process for protocol upgrades; both have been highly successful with a large portion of discussion happening on those channels and many EIPs being made and discussed. We are also actively looking at the status of our other forms of internal and external communication and media, including forums, documentation and tutorials, and are actively welcoming community feedback regarding the best way to improve them.

The largest challenge of them all, however, was clearly financial. Open source projects are often known for being underfunded, sometimes with very unfortunate results, and although the unique nature of public cryptoeconomic blockchains has and may continue to provide opportunities that are simply not available in most other circumstances, the problem remains, and we decided that before we are comfortable looking for ways to get more money we should first aim to be more efficient with the money that we already have. Hence, it is here that the largest gains in the past four months have been made, and with very positive results.

On the development side, we made the decision to take a more focused approach and primarily target the core Ethereum software and specifically the Go client. This still includes much of the original Ethereum development plan, including light clients (which are well underway), a mobile wallet and Mist, and we continue to support C++ and Python to a smaller extent with particular emphasis on the development tools (Solidity and Mix), but other aspects of the ecosystem we are leaving to the wider community; as awesome as the idea behind Whisper is, it is currently getting zero Foundation support – though we are actively looking for partnerships and other mechanisms that will help get some of these additions developed. Our communications has been greatly streamlined, and now consists of a smaller team of individuals who are part-time but more widely distributed around the world.

Some of the largest gains are in administrative costs. Over the past four months, we have started a process of consolidating the legal entities through which Ethereum development is financed by the Foundation; out of the six entities that we have had across Europe through 2015, three have now been essentially decommissioned and will soon begin the process of shutting down. We have also moved out of the house that we had rented when we expected to have a very large number of developers working full-time in Zug, and are now based in a smaller location in the center of town that will save us an employee’s salary worth of monthly rent and utilities; we have also closed our physical office in London and are actively exploring options for cutting rental costs in Berlin. With Ming present much of the time in Switzerland, we now have to rely much less on outside contractors for our needs there, allowing us to save even further.

Somebody else’s electricity bill now…

All in all, the Foundation’s monthly expenditures have now been reduced by over half from our 2015 peak of over 400,000 EUR per month, and currently stand at a monthly sum of about 175,000 EUR (~188,000 USD). This roughly consists of:

  • 22,000 EUR per month for C++ development (down by ~75%)
  • 65,000 EUR per month for Go development (down by ~10%)
  • 5,000 EUR per month for Python development (down by ~50%)
  • 13,000 EUR per month for IT, hosting, maintaining build servers, release coordination, etc (down by ~35% with more cuts likely coming soon)
  • 6,000 EUR per month for communications (down by ~85%)
  • 20,000 EUR per month for research (roughly unchanged)
  • 40,000 EUR per month for top-level administrative and executive staff, accounting, office management, legal and other expenses (down by ~50% with more cuts likely coming soon)

The Foundation’s current assets include roughly 2,250,000 ETH, 500 BTC and $100,000 in fiat currencies, giving us roughly one year of runway from this point assuming that both the ether price and our budgeting preferences remain unchanged. Some salaries are being paid in ether; alongside this, we now also have an ongoing agreement with Bitcoin Suisse to convert the Foundation’s ether into fiat at the rate of 5,000 CHF per day in order to secure ongoing liquidity (alongside ~$650,000 worth of private sales to individuals and businesses). These numbers reflect actual Foundation holdings; almost all ether from the genesis premine and the developer purchase program has by now been distributed to its rightful owners.

Over the next few months we expect optimizations and cost savings to continue, and as our overhead reduces we will begin once again ramping up our efforts on several fronts. We are soon adding Lisa Cheng to our team part-time for communications, and will also begin carefully increasing our expenditures on research efforts in order to speed up the development of Serenity. At the same time, we are actively exploring various kinds of strategies in order to increase the Foundation’s runway. Given the very large level of interest in Ethereum that we have seen in North America, Europe and particularly Asia, we are confident that we will be able to figure out an approach that ensures that development will continue not just past Serenity, but also to a massively scalable Ethereum 2.0 and beyond.


Vitalik Buterin


Author Joshua Davis

Posted at 6:24 am January 7, 2016.

So long as Dynamis continues to exist and is a viable on blockchain insurance DAO the foundation will always have funding as ownership shares. Ok so the thought that even 10% of its revenue would be enough to even run the foundation for a month is laughable but that’s not the point. The point is Dynamis will always owe the foundation something. Words are nothing. Smart contract code that grants dividends to the foundation and can’t be changed except by consensus is something. If 50% of developers on Ethereum feel this way and are willing to tax themselves expecting nothing in return except for the infrastructure they already were fortunate to receive even if those projects only give tiny sums wouldn’t it add up? We are still a tight knit community and influencers in such a space can create trends. So I pledge 1% of all my ownership in my own DAO. Again I’m not saying its worth anything that’s not my point but rather that I cast a small vote with what little I have that there should be a foundation around so long as blockchains continue to exist and what I’m offering really means nothing if 50% of developers don’t feel roughly the same way but if they do having a 1% stake in 50% of all DAOs might be something… who knows.


Author Donald McIntyre

Posted at 6:26 am January 7, 2016.

Amazing job and transparency Vitalik, thank you!


    Author Brad A

    Posted at 6:50 am January 7, 2016.

    Agree, this is good transparency Vitalik. Also cost reduction at this point is smart. More important than having lots of people is getting the best people into the right jobs.


Author Matias Insaurralde

Posted at 10:10 am January 7, 2016.

Looks nice! Good luck 🙂


Author Tymat

Posted at 11:40 am January 7, 2016.

What about the following:

1) Swarm/IPFS integration
2) DEVP2P/sub-protocols


    Author RJ C

    Posted at 6:03 pm January 7, 2016.

    If my understanding is correct, 1) is still very much happening, not sure about 2)


Author Tom Koller

Posted at 2:58 pm January 7, 2016.

Congratulations from Montreux. You guys rock !


Author Mike Sweeney

Posted at 3:32 pm January 7, 2016.

Can you point me to where the Foundation is a separate entity? Here in the USA, “Foundation” is typically a tax-exempt “not for profit” entity and separate from a “for-profit” entity. For example, the Ford Foundation is on 42nd Street in NYC, and the Ford Motor Company is in Detroit, Michigan.

Please don’t take this as a critique if it is not set up in the same way as Ford, I am just trying to understand the nuances of Block Chain relationships with “land based” entities. Thanks from NYC.


Author Ana

Posted at 8:14 pm January 7, 2016.

Hi, This is suggestion for Ethereum and foundation,

stop mining so much new coins in proof of work ( miners didn’t invest nothing ) very ridiculous.
hope the proof of stake is coming soon ( and the miner will be pad by transaction fee) and no more with new coins,
-Create inflation every year 0.5% or 1% will be ok for Ethereum foundation to developing ruining in future.
Monetize Mist browser..

Good LuCK


    Author Tomis Erb

    Posted at 3:08 am January 31, 2016.

    This may be part of the solution. People pay taxes because they receive benefits. If someone has 100,000 Ether but the system is handicapped by lack of development then that Ether is worth potentially a lot less than if a very moderate Ether fee (tax, inflation) had been applied to fund rapid and broad development. You guys are doing an outstanding job don’t let money get in the way.


Author Jiri Jetmar

Posted at 10:45 pm January 7, 2016.

Hi Vitalik

thank you for the transparency. One question here – Zug is indeed a very nice place, I lived there for more then 10 years but also one of the most expensive place in whole Europa. So why not to move entirely to locations where the living expenses are of factor 10 lower – e.g. in Berlin ?

Thanks again.



Author Bob Bonomo

Posted at 11:02 pm January 7, 2016.

Thanks Vitalik !


Author Fabian Vogelsteller

Posted at 12:34 pm January 13, 2016.

I really like your transparency, too, vitalik!


Author Michael Kilday

Posted at 8:04 pm January 25, 2016.

Good job trimming costs and keeping key areas adequately funded, best wishes on the foundation being funded indefinitely. Investors seem very happy with this (knock on wood) so far. :o)


Author Tomis Erb

Posted at 2:57 am January 31, 2016.

I wonder if some of the top educational institutions would be interested in some foundation support/partnerships. Many of these institutions have endowments in the Billions and are interested in being on the cutting edge in technology. Maybe colocation with employes of both Ethereum and the educational institution, professors and students helping out and or doing internships. Possible consulting/development/origination fees to the Ethereum Foundation.


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