Marc Zellerfounder of the Aave Chan Initiative (ACI), has called for the dissolution of the Ethereum FoundationThis followed a recent transaction that showed the Foundation once again looking to sell the ETH top.
Ethereum Foundation Should Be Disbanded After Purge and Verge Upgrades
In an X (formerly Twitter) afterZeller noted that the Ethereum Foundation should be dismantled and dissolved once the Purge and Verge Upgrades are delivered. The crypto founder suggested that the Foundation’s budget was too excessive, as he questioned why the foundation needed an annual budget of $100 million. He added that the Geth team receives a “meager” payment despite the “vital work” they do in the Ethereum Ecosystem.
Zeller’s comments were a direct response to a X-message by the Executive Director of the Ethereum Foundation, Aya Miyagotchiwhere she revealed that the Foundation’s recent deposit of 35,000 ETH ($94.07 million) into Kraken was part of their treasury management activities. She explained that the Ethereum Foundation has an annual budget of $100 million, with the majority of this money going toward grants and salaries.
She suggested that the Ethereum Foundation has always had to sell a significant portion of their Ethereum holdings because some recipients of the grants and salaries can only accept fiat currency. Meanwhile, she also revealed why they only carried out such treasury activities, noting that they were unable to do so earlier due to regulatory complications.
The regulatory complication she was referring to is the US Securities and Exchange Commission (SEC) investigation into whether ETH was an effect, but this investigation was ultimately closed.
As expected, the Ethereum Foundation’s $94 million worth of ETH deposit into Kraken raised fears of a massive sell-off that could have a significant impact The price of ETH. However, Miyagotchi assured the community that they did not plan to sell all of those tokens at once, saying, “From now on, there will be planned and gradual sales.”
The foundation’s budget is unsustainable
Crypto researcher Ignas noticed that the Ethereum Foundation will release all of its ETH holdings within eight years if it continues to operate on an annual budget of $100 million. Facts of the on-chain analytics platform Arkham Intelligence shows that the Foundation owns 273,776 ETH ($748.88 million). Ignas added that if the Foundation wants to fund its operations for much longer, the price of ETH needs to increase or start staking its ETH tokens to earn revenue.
The crypto researcher also revealed that most Ethereum Foundation Expenses are on grants. According to their 2021 financial report, which appears to be their most recent report, only 10% of the Foundation’s expenditures went to salaries and maintaining the Foundation. In line with this, Zeller called that the Ethereum Foundation is cutting “all” subsidies from their budget.
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