The Ethereum Foundation has terminated 54 employees, about 20% of its workforce, and announced a new organizational structure. Vitalik Buterin confirmed the foundation plans to reduce its budget by roughly 40%, according to Cointelegraph.
The restructuring signals a shift in how the foundation allocates resources across its core work streams. The foundation funds research, client development, and ecosystem grants that underpin Ethereum's protocol layer and supporting infrastructure. A 40% budget reduction means fewer dollars flowing to those areas, likely forcing the foundation to make hard choices about which initiatives stay and which don't.
No immediate public details emerged about which teams or projects were hit hardest. The foundation has supported consensus-layer research, execution and consensus clients (the software that runs validator and full nodes), testing infrastructure, and grants to ecosystem developers. Layoffs at this scale typically affect most or all of these areas to some degree.
The move comes as the foundation has faced scrutiny over its concentration of influence in Ethereum governance and the size of its treasury. Some community members have argued for years that the foundation should become leaner and more focused. A smaller budget could force that conversation into the open: what core work is non-negotiable, and what can move to other funding sources or the broader ecosystem?
Ethereum's core protocol has shipped major upgrades over the past two years, from the Shanghai upgrade (which enabled staking withdrawals) through Dencun (which lowered Layer 2 costs). Much of that work was coordinated by foundation-funded researchers and client teams. The question now is whether a 40% budget cut affects the pace or scope of future protocol changes.
ETH was trading around $1,646.71 at publication, roughly flat on the day. The market has not reacted sharply to the news, suggesting investors see this as an internal restructuring rather than a signal of fundamental protocol problems.