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- The Ethereum Foundation may soon start staking its ETH holdings.
- Vitalik Buterin shared key constraints preventing this move in the past.
Vitalik Buterin, co-founder of the Ethereum blockchain, said the Ethereum Foundation is considering staking its ETH holdings, valued at about $1 billion. Buterin’s comments come in response to the intense scrutiny over the Foundation’s seeming lack of Ethereum ecosystem participation.
Buterin Defends for the Ethereum Foundation
In a recent X post, an Ethereum Foundation contributor, Josh Stark, outlined examples of how it utilizes the protocol. He said the Foundation utilizes Ethereum to sell tokens, distribute grants, purchase event tickets, and pay team members.
the EF uses Ethereum all the time, for instance to (1) swap ETH for stables (usually @CoWSwap) and (2) to pay people (grantees, team members) in stables and ETH, on mainnet and L2s. Events we run (like Devcon and Devconnect) take onchain payments and use onchain ID for tickets.
— Josh Stark (@0xstark) January 20, 2025
Several community members who wished that the Foundation become more engaged in the Ethereum ecosystem reacted negatively to Stark’s post. They likened the Foundation swapping ETH for stables to token dumping.
Angel investor Eric Conner suggested that the Foundation could stake its ETH holdings instead and use the rewards to pay employees and give grants. He added that the Foundation could eventually use Decentralized Finance (DeFi) to cover the majority or all of its internal budget.
Responding to Conner’s comments, Buterin highlighted two reasons why the Foundation has not previously staked its holdings. He pointed out regulatory concerns as the first factor limiting the Foundation from staking its ETH holdings. He, however, acknowledged that regulation has become less of an issue recently than in the past.
The second concern highlighted by Buterin relates to agents that force the Foundation to take a position on any future contentious hard fork. This usually occurs when two chains compete for dominance. He explained that the Ethereum Foundation must choose a chain to reduce the risk of slashing, where staked assets are penalized.
Buterin emphasized that the Foundation is already exploring ways to minimize the second concern. This means the Foundation is considering staking its ETH assets.
In November, the Foundation reported holding $788.7 million worth of digital assets. Of these assets, 99.45% were held in Ethereum, accounting for 0.26% of the token’s total supply as of the end of October 2024.
A recent report reveals the Ethereum Foundation currently holds 269,000 ETH, valued at $891 million.
Ethereum’s Pectra Upgrade and Foundation’s ETH Sales
The recent debate about the Foundation’s ecosystem contribution comes amid excitement around Ethereum’s next Pectra update. This upgrade is expected to bring notable improvements to the Ethereum network, as CNF discussed earlier.
Scheduled for release in the first quarter of 2025, the Pectra upgrade could lead to the wider adoption of real-world assets on the network. Market analysts also anticipate an influx of investment into Exchange-Traded Funds (ETFs).
In a related development, the Ethereum Foundation recently sold 100 ETH, valued at approximately $336,000. As we covered in our latest report, the sales are consistent with a selling pattern that began in January 2024. These sell-offs have usually coincided with huge market dips in the past.
However, ETH is currently trading on a bullish rally. Within the last 24 hours, the price has increased by 2.1% to $3,359.
