Ethereum Foundation’s spending transparency questioned: Where does the $100 million go every year?

Original author: Ignas, Crypto KOL

Original translation: Felix, PANews

On August 24, the Ethereum Foundation deposited 35,000 ETH (about 94.07 million US dollars) into Kraken. The last time ETH was transferred to Kraken was on May 6 last year, when 15,000 ETH (about 30.1 million US dollars) was transferred to Kraken. ETH fell 13% in the following 6 days.

This transfer operation has caused concerns in the crypto community. In this regard, Aya Miyaguchi, executive director of the Ethereum Foundation, claimed: "This is part of the Ethereum Foundation's fund management activities. The Ethereum Foundation has an annual budget of about $100 million, which is mainly composed of grants and salaries, and some recipients can only accept legal tender. For a long time this year, the Ethereum Foundation was told not to conduct any fund activities because the supervision is complicated and plans cannot be shared in advance. However, this ETH transfer transaction does not mean sales, and subsequent sales may be planned and gradual."

In response to this incident, crypto KOL Ignas analyzed how the Ethereum Foundation uses ETH, pointing out that the Ethereum Foundation lacks comprehensive and transparent reporting on its spending. The following are the details:

The Ethereum Foundation holds $845 million worth of ETH, accounting for 0.25% of the total supply of ETH.

According to the latest report of the Ethereum Foundation, in the fourth quarter of 2023, the Ethereum Foundation allocated $30 million. In the third quarter of 2023, the Ethereum Foundation allocated $8.9 million.

Here are some examples of spending items:

· Conferences around the world aimed at "attracting new Ethereum users through foundational lectures and training developers through technical conferences and workshops."

· Online courses on the core concepts and components of zero-knowledge (ZK) systems.

· "Email wallet" that allows users to send cryptocurrency via email without the recipient's action.

· "Daimo" ERC-4337 smart contract wallet: stablecoins only, non-custodial, no mnemonic required.

The Ethereum Foundation appears to allocate grants to education and niche (but cool) products that might not receive a lot of VC backing.

This could explain their reluctance to fund DeFi protocols, as they would receive external funding from VCs anyway.

However, comprehensive and transparent reporting of total expenditures is lacking. Who is auditing the Ethereum Foundation?

The latest is the 2021 report, which shows $48 million in internal expenditures and external grants and prizes.

The biggest expenses are:

· $21 million for L1 R&D

· $9.7 million for community development, including grants and education

· $5.1 million for internal operations (salaries, legal fees, etc.)

Therefore, 10% of the total expenditure in 2021 is used to pay the salaries of developers and support the maintenance of the Ethereum Foundation.

It must be said that although Polkadot has faced controversy for its crazy spending (related reading: 《Spending $87 million in half a year, Polkadot's financial expenditure chaos has exceeded its income?》), at least its reports are transparent and can be found. In addition, if the current spending rate of $100 million per year is maintained, the Ethereum Foundation will run out of its ETH in 8 years. If it wants to provide funding support for operations for a longer period of time, either the price of ETH will increase or staking will begin to generate returns.

Finally, expect the Ethereum Foundation to be more transparent in its operations and reporting.

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