Ethereum Foundation Deploys $120 Million in ETH to DeFi Lending Protocols

Ethereum Foundation has made a significant move by allocating nearly $120 million worth of Ether (ETH) into leading DeFi lending protocols, including Aave, Spark, and Compound. The decision reflects a strategic effort to earn yield on its treasury holdings while supporting the growing decentralized finance ecosystem.

Strategic ETH Deployment Across DeFi Platforms

From its multi-signature wallet, the foundation transferred 30,800 ETH (approximately $81.6 million) to Aave, the largest DeFi lending platform. The funds were distributed across two key markets:

• 20,800 ETH (around $55 million) to Aave's core market
• 10,000 ETH (approximately $26 million) to Aave Prime

Additionally, 10,000 ETH ($26 million) was allocated to Spark, a protocol within the MakerDAO ecosystem that provides services similar to Aave. Another 4,200 ETH ($11.2 million) was directed to Compound, a well-known DeFi platform.

Earning Yield Without Selling Assets

By supplying its ETH to these protocols, the foundation can generate passive income while maintaining ownership of its holdings. Current market conditions suggest the foundation could earn around $1.5 million annually based on a 1.5% supply rate.

This strategy aligns with the foundation's broader goal of sustainably managing its treasury. Last month, the foundation transferred 50,000 ETH to a multi-sig wallet, signaling its intent to support DeFi protocols following community concerns about treasury management practices.

Community Reactions and Historical Context

The Ethereum Foundation's treasury management practices have occasionally sparked debate. Critics have raised concerns over ETH sales for operational expenses and have even called for leadership changes, including the replacement of Executive Director Aya Miyaguchi.

However, the foundation's latest decision demonstrates a long-term commitment to Ethereum’s DeFi ecosystem, using yield-generating strategies instead of direct asset liquidation.