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 by 13% in the following 6 days.
The transfer operation has aroused concerns in the crypto community. In response, 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. Some recipients can only accept legal currency. 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 a sale, and there may be a planned and gradual sale in the future."
In response to this incident, crypto KOL Ignas analyzed how the Ethereum Foundation used ETH, pointing out that the Ethereum Foundation lacked comprehensive and transparent reporting on its spending. The following are the details:
The Ethereum Foundation holds $845 million worth of ETH, or 0.25% of the total ETH supply.
According to the latest report from the Ethereum Foundation, the Ethereum Foundation allocated $30 million in the fourth quarter of 2023. In the third quarter of 2023, the Ethereum Foundation allocated $8.9 million.
Here are some examples of spending items:
Conferences around the world, which aim to “attract new Ethereum users through foundational lectures and train developers through technical conferences and workshops.”
An online course on the core concepts and components of zero-knowledge (ZK) systems.
“Email wallets” that allow users to send cryptocurrency via email without any action required by the recipient.
"Daimo" ERC-4337 smart contract wallet: stablecoins only, non-custodial, no seed phrase required.
The Ethereum Foundation seems to allocate grants to education and niche (but cool) products that might not receive a lot of venture capital backing.
This could explain their reluctance to fund DeFi protocols since they would receive external funding from venture capital firms anyway.
However, there is a lack of comprehensive and transparent reporting of total spending. Who is auditing the Ethereum Foundation?
The latest is the 2021 report, which shows a total of $48 million in internal spending and external grants and awards.
The biggest expenses are:
· $21 million for L1 research and development
$9.7 million for community development, including grants and education
$5.1 million for internal operations (salaries, legal fees, etc.)
Therefore, 10% of total expenditures in 2021 are used to pay developer salaries and support the maintenance of the Ethereum Foundation.
It has to be said that although Polkadot has faced controversy for its crazy spending (related reading: "Spending $87 million in half a year, has Polkadot's financial expenditure chaos been unable to make ends meet?" ), 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 you want to provide financial support for operations for a longer period of time, either the price of ETH will rise or you will start staking to earn income.
Finally, expect more transparency in the Ethereum Foundation’s operations and reporting.
Welcome to BlockBeats the BlockBeats official community:
Telegram subscription group: https://t.me/theblockbeats
Telegram group: https://t.me/BlockBeats_App
Official Twitter account: https://twitter.com/BlockBeatsAsia
