Ethereum Foundation to Allocate 50,000 ETH to Support DeFi Applications
Date: 2025-01-21 Author: Oliver Abernathy Categories: BUSINESS
The Ethereum Foundation has announced plans to allocate 50,000 Ether, equivalent to approximately $165 million, to support the Ethereum-based decentralized finance (DeFi) ecosystem.
Ethereum co-founder Vitalik Buterin posted on X on January 20 that the foundation would be making organizational changes. These changes are aimed at more active engagement with application developers and increased transparency for the community.
The funds will be stored in a 3-of-5 multi-signature wallet on the Safe platform. As foundation spokesperson Xiao-Wei Wang clarified in her post on X, a test transaction has already been made through the Aave lending protocol. However, it will take a few days to finalize the wallet setup.
The strengthening of the Ethereum DeFi ecosystem could have a positive impact on the fund’s treasury, which, according to Arkham Intelligence, has shrunk by 56%, from 617,000 ETH in January 2020 to 269,000 ETH, or about $894 million. The allocated 50,000 Ether represents 18.5% of the fund’s current reserves.
Despite the importance of this initiative, the Ethereum Foundation has come under fire. For example, Infinix founder Kane Warwick accused the fund of lacking interest in DeFi, as well as putting pressure on the Ethereum price due to regular ETH sales to pay salaries and organize events.
Before the announcement, Ethereum core developer Eric Conner said that the fund’s staking revenue could cover most of its internal expenses. This could reduce the ETH sales that have been causing community discontent.
Some members of the Ethereum community attribute the fund's lack of involvement in the development of the ecosystem to the fact that the price of ETH has lagged behind Bitcoin and Solana in recent months. They also note that representatives of these networks are more active in interacting with regulators.
Vitalik Buterin, in turn, emphasized that the fund does not plan to change its ideological principles or start lobbying in government bodies in order to maintain neutrality.
CryptoQuant CEO Ki Young Ju supported Buterin, noting that the fund's priority is value creation, not the pursuit of profit.
