Ethereum Foundation to Potentially Stake Nearly $1 Billion in ETH
The Ethereum Foundation, the non-profit organization supporting the development of the Ethereum blockchain, is exploring the possibility of staking its substantial Ether (ETH) holdings, potentially worth nearly $1 billion. This move, suggested by Ethereum co-founder Vitalik Buterin, could generate significant passive income for the foundation while also contributing to the security of the network.
To Stake or Not to Stake: The Foundation Weighs its Options
The idea of staking the Ethereum Foundation's ETH holdings has gained traction following recent discussions within the Ethereum community. Some have criticized the foundation for its perceived lack of active participation in the ecosystem, particularly in comparison to its substantial resources. Angel investor Eric Conner, for example, suggested that the foundation could stake its ETH and use the rewards to fund operations and grants.
Buterin explained that the foundation had previously held back from staking due to two primary concerns: regulatory risks and the potential for the foundation to be forced to take a position on a contentious hard fork, which could compromise Ethereum's neutrality. However, he noted that the regulatory landscape has evolved, and the foundation is now exploring ways to mitigate the risks associated with hard forks.
A Billion-Dollar Treasury: Potential Staking Rewards
According to a November disclosure, the foundation held 788.7 million in crypto assets, with 99.45% in ETH, representing 0.26% of the total ETH supply at the end of October 2024. Current estimates put the foundation's ETH holdings at around 269,000 ETH, worth approximately $891 million. If the foundation were to stake its entire ETH holdings with a platform like Lido Finance, offering a 2.95% annual yield, it could potentially earn around $26.2 million per year, although this amount is still significantly less than the $134.7 million the foundation spent in 2023.
"I'm all for using the chain and staking when it makes sense (and am a big fan of the EF's Client Incentive Program for this reason," said Tim Beiko, who runs the core protocol meetings at the Ethereum Foundation. "But staking wouldn't cover all EF spending and it'd be reckless to lever up on the ETH treasury to cover payroll."
Calls for Change: A New Era for the Ethereum Foundation?
The discussion around staking also comes amid broader calls for changes at the Ethereum Foundation. Buterin himself has outlined goals for leadership changes, including improving technical expertise, communication, and the use of decentralized technologies. Ethereum co-founder Joseph Lubin has even proposed replacing the current executive director, Aya Miyaguchi, with a co-leadership team consisting of Danny Ryan and Jerome de Tychey. Both Ryan and de Tychey have expressed support for changes to the EF.