Slicing the Treasury: Behind the Ethereum Foundation’s Radical Restructuring and New Five-Layer Architecture

For years, the Ethereum Foundation (EF) has operated in a state of deliberate, sometimes controversial ambiguity. Acting as a decentralized, non-profit steward, its periodic selling of ETH to fund operations routinely drew community ire. However, the era of unchecked spending and administrative bloat has officially come to an end.

On June 23, 2026, the Ethereum Foundation announced the conclusion of a sweeping, months-long internal reorganization. In its most aggressive restructuring to date, the EF has cut approximately 20% of its workforce—resulting in the departure of 54 employees—and initiated a dramatic 40% reduction in its annual operating budget.

The Five-Layer Restructuring

To replace its historically flat and opaque team structure, the EF is consolidating its operations into five distinct functional clusters:

1. Protocol Layer: Focused purely on core protocol research, consensus mechanism upgrades, and client coordination.
2. Access Layer: Safeguarding peer-to-peer networking infrastructure, data availability, and RPC node optimization.
3. User Layer: Advancing account abstraction, smart contract wallets, and dev-tool ergonomics.
4. Community Layer: Directing grants, organizing global devcons, and managing public goods funding.
5. Institutional Layer: Managing enterprise partnerships, academic research, and public sector education.

By carving out these specialized silos, the EF hopes to eliminate redundant expenditures and sharpen its operational focus.

Pivot to an Endowment-Driven Future

The layoffs are only half the story. The overarching goal of this restructuring is to transition the EF into a self-sustaining, endowment-driven model.

Historically, the EF has spent roughly 15% of its remaining treasury assets annually, a rate that forced consistent sell-side pressure on ETH markets. According to co-founder Vitalik Buterin, the newly minted Treasury Management Policy is targeting an immediate budget reduction, with the ultimate goal of lowering the EF's annual spending rate to a modest 5% post-2030.

To fund operations without dumping tokens on centralized exchanges, the Foundation has spent the first half of 2026 quietly building out yield-generating positions. By prioritizing validator staking rewards over raw token sales, the EF aims to secure its long-term financial sustainability while mitigating negative market sentiment.

Industry Reaction: A Leaner EF

Despite the harshness of a 20% layoff, the move has garnered widespread praise from industry leaders. Solana co-founder Anatoly Yakovenko publicly commended the transition, noting that a leaner, more agile Ethereum Foundation is exactly what the broader network needs to stay competitive.

As more commercial, applied R&D gets offloaded to the private market, the EF is finally stepping back to do what it does best: fund public goods, protect decentralization, and let the open market handle the rest.