The Ethereum Foundation has publicly announced its first layoffs, raising controversy over strategic adjustments. Is the foundation model no longer effective?

In the face of increasing external doubts about the ambiguity of the technological direction, low collaboration efficiency, and centralized governance, the Ethereum Foundation is undergoing a profound organizational restructuring.

Written by: Nancy, PANews

In the face of increasing external doubts about the ambiguity of technological direction, low collaboration efficiency, and centralized governance, the Ethereum Foundation (EF) is undergoing a deep organizational restructuring.

Research and Development Team Renamed and Restructured, Strategic Adjustment Sparks Controversy

On June 2, the Ethereum Foundation announced a reorganization of its research and development team, making significant structural adjustments to the internal "Protocol Research and Development Team (PR&D)" and officially renaming it to "Protocol." This reconstruction is considered not just a simple organizational adjustment, but a systematic transformation from strategic goals, talent allocation to governance philosophy.

The newly formed "Protocol" team will focus on three strategic objectives: expanding the mainnet (L1), enhancing data availability (blobs), and improving user experience (UX), in order to establish a closer collaboration mechanism and clear resource allocation.

The Ethereum Foundation has made it clear that the new Protocol team will develop three strategic goals and have a leader for each strategic direction: Tim Beiko and Ansgar Dietrichs for L1 scaling, Alex Stokes and Francesco D'Amato for blob scaling, and Barnabé Monnot and Josh Rudolf for improving the user experience. They will be supported by renowned researcher and cryptographer Dankrad Feist. Feist, the name of Ethereum's new sharding scheme "danksharding", resigned as an advisor after a controversy over his advisory relationship with Ethereum re-staking protocol EigenLayer over the acquisition of a large number of tokens.

Ethereum Foundation Reorganization of Organizational Structure Source: Internet

At the same time, the foundation also stated that some R&D members will no longer continue to serve. Although the official announcement did not disclose a specific layoff list, from the changes in the PR&D restructuring, it appears that about a dozen R&D personnel have left, and the division of departmental responsibilities has become more detailed and clear. EF encourages other ecological projects to recruit these experienced talents and announced the recruitment of new members, with key positions including user experience officer and performance engineering leader.

The Ethereum Foundation stated that this restructuring will accelerate the pace of turning research outcomes into products and will promote Ethereum's scalability and user-friendliness with higher standards.

"We hope that this brand new organizational structure will allow internal teams to focus more and drive key initiatives forward. At the same time, we have had to make some very difficult decisions. Bidding farewell to those talented and diligent colleagues is heartbreaking. This decision does not reflect a disregard for their value or contributions," said Hsiao-Wei Weng, Co-Executive Director of the Ethereum Foundation.

However, the restructuring of the Ethereum Foundation has also sparked intense reactions from core developers and the industry. "At this moment, the term 'decentralized' has quietly and permanently been removed from Ethereum's roadmap." Ethereum core developer Peter Szilagyi stated that great companies have long understood that their most valuable asset is people—team members. Google even explicitly points out in its onboarding manual: developers come before users, who are ubiquitous. Organizations that fail to understand this will ultimately become marginalized. Yes, this is the subtext.

Kyle Samani, co-founder of Multicoin Capital, also questioned the Ethereum Foundation's strategic adjustment, noting that the definition of "focus" usually means decreasing rather than increasing, especially emphasizing that there should be no conflict between goals. When considered from the perspective of the third goal (i.e., L1 and L2 network expansion, improving user experience), the first goal (i.e., layoffs) is at odds with the second goal (i.e., clarifying the division of responsibilities).

Miles Jennings, head of policy and general counsel at a16z crypto, recently pointed out that the crypto industry needs to move beyond the non-profit foundation model, as it is no longer fit for purpose. He believes that although foundations played a role in circumventing regulation and promoting decentralization in the early days, they have now evolved into gatekeepers of centralized control due to problems such as misalignment of incentives, legal and economic constraints, and operational inefficiencies. With the U.S. Congress proposing a control-based maturity regulatory framework, the crypto industry has an opportunity to move away from foundations. Ordinary development companies are better structured than foundations, able to deploy capital efficiently, attract top talent through equity incentives, and achieve rapid response and sustained growth with market feedback. Jennings emphasized that the company aligns with the incentives of token holders through market discipline and clear financial metrics (e.g., revenue, profit margins), while the foundation struggles to optimize resource allocation due to a lack of accountability and profit drive, and employee incentives are limited by token price fluctuations. Public interest corporations, network revenue sharing, milestone token lock-up periods, and contract protection existing tools address potential misalignments between companies and token holders. In addition, two emerging programs, DUNA and BORGs, provide a streamlined path to implementing these solutions while eliminating the cumbersomeness and opacity of foundation structures. The next era of crypto will be built on systems that scale – systems with real incentives, real accountability, and real decentralization.

Promote internal organizational restructuring, a delayed self-correction

The restructuring of the Ethereum Foundation did not occur suddenly, but rather is a concentrated outbreak of years of accumulated structural contradictions and external criticisms.

In the past, the outside world criticized the foundation for being overly obsessed with long-term research while neglecting the short-term needs of users and developers, and there was constant questioning of its centralized governance structure. For example, former Ethereum Foundation engineer Hari bluntly pointed out this year that Ethereum and its virtual machine (EVM) lack a clear and cohesive technical vision, and the research and development progress is slow. If decisive reforms are not made, it may fall into rigidity in the future. He suggested reducing reliance on pure research and shifting towards a product-oriented delivery pace.

Similar calls have come from early Ethereum member Anthony DOnofrio, who criticized the EF as a "centralized decentralized organization" with an executive director, finance department, and a circle of paid developers. While this structure is effective in coordination, it deviates from the ideal of decentralization. He calls for future Ethereum to require not only technological research but also "visionary leaders" who understand its social and political impacts.

Aave founder Stani Kulechov also previously tweeted suggesting that the Ethereum Foundation reform its budget and operational structure, dismiss unaccountable members, and allocate resources based on capability. He emphasized that the Ethereum Foundation should be a streamlined and efficient organization.

Co-founder Vitalik Buterin's role at the Ethereum Foundation, Ethereum's most emblematic soul figure has also been controversial for a long time. For example, in February of this year, community member Ameen Soleimani even launched a poll on whether Vitalik should play the role of "king" (governance decision-maker) or "prophet" (value leader) in the Ethereum ecosystem, with 80.1% of voters believing that he is closer to the latter. In response, Vitalik said, "The claim of having 3 of the 5 seats on the EF Board of Directors has ceased to be true since 2017, and since then I have only had 1 of the 3 seats."

In the face of criticism and structural challenges, the Ethereum Foundation also initiated several internal reform measures earlier this year. As early as January, Vitalik publicly announced a transformation of the foundation's leadership model aimed at enhancing technical expertise and strengthening communication with developers. According to Haseeb Qureshi, managing partner at Dragonfly, the EF leadership had gradually broken away from the closed-door mentality of "not invented here," showing greater inclusivity and openness to external ideas.

In February, Aya Miyaguchi, the former executive director of the Ethereum Foundation, was promoted to chair. Aya has been an advocate of a "subtractive philosophy", advocating that foundations should avoid becoming highly centralized authorities, promoting decentralization and community-led decentralization, and likening Ethereum to an "infinite garden" that encourages an open, permissionless innovation ecosystem that emphasizes long-term sustainability rather than short-term benefits. However, her idealistic style has also sparked some controversy, with some questioning it as too abstract and lacking in execution. After Aya became the chairman, she was mainly responsible for promoting strategic cooperation and maintaining relationships, and would reduce the direct participation in specific affairs, which was once interpreted by the community as "rising and falling".

In addition, the Ethereum Foundation has also initiated an exploration of the integration of AI and governance, appointing Devansh Mehta as the head of AI × Public Goods Governance, and continues to strengthen its technical backbone by appointing Hsiao-Wei Wang and Tomasz Stańczak as co-executive directors, both of whom are key contributors to the Ethereum Beacon Chain and the founders of the Nethermind execution client, respectively.

While there are frequent high-level adjustments, the core members of the Ethereum Foundation are also continuing to lose. For example, in January this year, Eric Conner, the core developer of Ethereum, announced his withdrawal from the Ethereum Foundation in a post on social platforms, pointing out that EF has problems such as opacity, disconnection from the community, and resistance to change, and believes that the foundation can still operate normally after cutting the budget by 80%. Ethereum Foundation researcher Danny Ryan, who also announced his retirement in 2024 after seven years of contributing to the foundation, was seen as the most supported potential leader in an informal community survey on the eve of Aya's appointment, reflecting the community's strong expectations for do-it-yourself tech talent. The aforementioned Peter Szilagyi, the maintainer of Geth, the core client of Ethereum, also announced his temporary departure in November last year, ending a nearly decade of Ethereum career. He once confessed that "Ethereum is losing its way."

It can be said that this organizational change of the foundation is not only a belated self-correction, but also an experiment in the future sustainable governance model. However, how to balance idealism and execution efficiency, technology R&D and ecological coordination, and decentralized vision and realistic governance will be a long-term proposition for EF and the entire Ethereum ecosystem in the next stage.