June 23, 2026—The Ethereum Foundation (EF) officially announced the completion of a months-long organizational restructuring, laying off 54 employees, which accounts for about 20% of its total workforce. On the same day, co-founder Vitalik Buterin confirmed the Foundation would cut its annual budget by approximately 40%.
Behind this announcement lies the most profound governance overhaul in the Ethereum ecosystem’s more than ten-year history. The Foundation is shifting from a "core builder" to a "lightweight protocol governor and maintainer." What does this "slimming down" really mean? And how will it shape the future of the Ethereum ecosystem?
Laying Off 54 Employees Is the Result—What’s the Logic Behind the Restructuring?
This restructuring isn’t an isolated HR adjustment; it’s the culmination of a series of strategic contractions the Ethereum Foundation has undertaken since 2025. As early as June 2025, the Foundation introduced a new fund management policy, outlining a gradual reduction in ecosystem project funding. In March 2026, the Foundation released its "Mission Statement" and "Fund Management Policy," providing the institutional framework for this reorganization.
Two main factors triggered the layoffs: financial pressure and strategic focus.
On the financial side, the Foundation’s annual expenditures previously accounted for about 15% of its treasury. The long-term goal is to reduce that ratio to around 5% after 2030. Cutting the budget by 40% means the Foundation must significantly reduce operating costs. Strategically, the Foundation is concentrating resources on "critical tasks that only EF can and must handle"—specifically, ensuring censorship resistance, open source, privacy, and security (CROPS) at the protocol layer.
Ongoing Leadership Turnover Puts Governance Stability to the Test
The restructuring didn’t happen in a vacuum. Since January 2026, about nine senior figures have left or changed roles. This includes Executive Co-Director Tomasz Stańczak (who departed in February 2026) and Hsiao-Wei Wang (who left this month). The departure of several core researchers has raised concerns about the Foundation’s governance continuity and execution capabilities.
Vitalik Buterin himself expressed mixed emotions: "I deeply respect my colleagues at the Foundation, so I can’t pretend nothing precious has been lost." His remarks acknowledge the reality of talent loss while also hinting at the necessity and difficulty of the restructuring.
It’s worth noting that while the wave of executive departures overlapped with the layoffs, they are not the same event. The layoffs are a proactive organizational adjustment, while leadership departures reflect the tension between individual choices and shifts in organizational direction. Together, these factors have subjected the Ethereum Foundation to an unusually high degree of personnel turbulence in the short term.
Five Core Clusters: How the New Organizational Structure Works
Post-restructuring, the Ethereum Foundation has adopted a brand-new five-cluster structure, supplemented by an operations cluster and a management support team.
The five core clusters are:
Protocol Layer — Upholds EF’s traditional core mission: ensuring Ethereum’s ongoing censorship resistance, open source, privacy, and security (CROPS) at the protocol level. This includes research into harmful MEV mitigation, post-quantum cryptography, zkEVM, and L1 privacy.
Access Layer — Ensures users have alternatives to unverifiable intermediaries for on-chain data access, transactions, staking, and withdrawals. The core principle is "zero option": every intermediary path must have a corresponding trusted, non-intermediated alternative.
User Layer — Focuses on user segmentation research and impact assessment, ensuring that development decisions at the protocol and access layers accurately address real user needs.
Community Layer — Maintains EF’s independent identity and builds partnerships with open-source communities in privacy, encryption, civil liberties, and decentralized networks.
Institutional Layer — Manages EF’s relationships with financial institutions, enterprises, governments, universities, and nonprofits, while tracking policy and regulatory developments.
Each cluster has its own internal structure and accountability mechanisms. The core logic is professional specialization: clarifying previously blurred functional boundaries so each area is accountable for its outcomes.
40% Budget Cut: A Fundamental Overhaul of the Financial Model
The 40% budget cut is the most significant quantitative change in this restructuring. But more importantly, it signals a shift in the Foundation’s financial model.
Previously, the Foundation operated as a "spending organization"—drawing from its treasury each year to fund R&D, grants, and operational expenses. The new direction is to transition to an endowment fund model: sustaining long-term operations through investment returns on principal, rather than continually depleting the principal itself.
The specific goal is to reduce annual spending from about 15% of the treasury to around 5% after 2030. To achieve this, the Foundation plans to reduce direct ETH sales and instead rely on staking and DeFi yields to support operations.
At the project level, this means the gradual shutdown of the "Privacy & Scaling Explorations (PSE)" department, downsizing the Devcon conference, and tightening external partnership strategies. Resources will be increasingly concentrated on core protocol development and security.
As the Foundation Steps Back, Ethlabs Steps Forward
Almost simultaneously with the Foundation’s contraction, a new organization has emerged.
On June 22, 2026—the day before the Foundation’s restructuring announcement—five former Ethereum Foundation researchers founded Ethlabs, an independent nonprofit R&D organization. Ethlabs is backed by BitMine Immersion Technologies and SharpLink Gaming, two large publicly traded ETH treasury companies, as well as Ethereum co-founder Joseph Lubin.
Ethlabs stands in sharp contrast to the Foundation. While the Foundation steps back to focus on protocol governance, Ethlabs moves forward, focusing on institutional adoption and market integration. Its early work centers on the critical needs of large-scale institutional onboarding: faster settlement, native asset issuance, robust infrastructure for cross-chain transactions, mainnet scalability, and foundational research supporting ETH’s monetary properties.
This division of labor clarifies the Ethereum ecosystem’s organizational specialization: the Foundation no longer tries to oversee everything from research to outreach, instead delegating execution to more focused, specialized ecosystem organizations.
It’s notable that Vitalik Buterin is not listed among Ethlabs’ supporters. This is widely interpreted as a deliberate move—to avoid giving any single organization excessive personal endorsement, and to help Ethereum transition from a "founder-driven narrative" to a "multi-organization, collaborative tech network."
Reshaping Ecosystem Governance: Accelerating Decentralization of Power
In the broader context, this restructuring marks a pivotal moment in Ethereum’s governance evolution.
The Ethereum Foundation has long played multiple roles: protocol researcher, core developer, ecosystem funder, community organizer, and external spokesperson. This "all-in-one" model was necessary in Ethereum’s early days, when the ecosystem was immature and needed a central body to coordinate resources and direction.
But as the ecosystem has grown, the drawbacks of this model have become apparent: slower decision-making, muddled strategy, and insufficient ecosystem mobilization. Criticism of Ethereum has shifted from price performance to organizational governance.
The restructuring and Ethlabs’ launch both point to a clear direction: Ethereum is moving from single-center governance to multi-center ecosystem governance. The Foundation is no longer the sole hub, but one highly important node among a network of specialized organizations.
This shift comes with risks. Decentralized power can increase coordination costs, amplify strategic disagreements between organizations, and talent loss could disrupt protocol development continuity. Striking a balance between "decentralization" and "effective coordination" will be the core challenge for Ethereum’s next phase.
Conclusion
The Ethereum Foundation’s restructuring—laying off 54 people (20%), slashing the budget by 40%, and implementing five core clusters—is more than just organizational streamlining. It’s a systemic overhaul of Ethereum’s governance model. The Foundation is moving from "builder" to "governor," from "all-in-one" to "specialization."
At the same time, Ethlabs’ emergence fills the execution gap left by the Foundation’s retreat, signaling Ethereum’s shift from single-organization leadership to multi-organization collaboration. The effectiveness of this transition remains to be seen, but the direction is clear: Ethereum is experimenting with a more decentralized, specialized approach to tackle the increasingly complex governance challenges of a growing ecosystem.
Frequently Asked Questions (FAQ)
Q: How many people did the Ethereum Foundation lay off? What percentage is that?
The Foundation cut 54 positions, which is about 20% of its total staff.
Q: How much is the budget being reduced?
The Foundation will cut its annual budget by about 40% this year. The long-term goal is to reduce annual spending to roughly 5% of the treasury after 2030.
Q: What does the post-restructuring organizational structure look like?
After restructuring, the Foundation is organized into five core clusters: Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer, plus an operations cluster and management support team.
Q: What is Ethlabs? How does it relate to the Foundation?
Ethlabs is a nonprofit R&D organization founded by five former Ethereum Foundation researchers on June 22, 2026, focusing on institutional adoption and market integration. It complements the Foundation—the Foundation focuses on protocol governance, while Ethlabs focuses on execution and outreach.
Q: What impact will this restructuring have on the Ethereum ecosystem?
The restructuring marks Ethereum’s shift from single-organization leadership to multi-organization collaboration, accelerating decentralization of power. In the short term, this may increase coordination costs and talent loss, but in the long run, it’s expected to improve overall ecosystem efficiency and professional specialization.
