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The Ethereum Foundation (EF) has released a Treasury Policy outlining ways to maintain the sustainability and integrity of the organisation. The document addresses the issue of asset management with a particular focus on balancing profits with stewardship responsibilities. The primary concern of Ethereum traders is that the EF may be using treasury funds to enrich themselves rather than improve the affordability and speed of the Ethereum blockchain. The Treasury Policy stipulates that operating expenses will amount to 15% of the treasury per year, while treasury reserves will last for 2.5 years. The policy also outlines guidelines for allocating crypto investments within the portfolio. 

The EF will prioritise factors such as liquidity and safety when allocating a crypto portfolio. The EF further highlights the need to manage a treasury with transparency and accountability. They plan to achieve this by releasing regular treasury performance and allocation reports. The EF also outlines steps to maintain core cypherpunk values such as respecting privacy, self-custody, and decentralized technology. They will accomplish this by adhering to cypherpunk values with both internal and external projects. The EF will further support open source projects that share their cypherpunk values. 

Hsiao-Wei Wang, Ethereum Foundation researcher, commented that EF only has 2.5 years until their funds run out, meaning that the next 18 months will be a crucial time for the foundation to budget their resources. Therefore, 2025 to 2026 will be an essential period for EF to allocate funds only to projects necessary for the Ethereum ecosystem. There has been widespread criticism of the EF for using treasury funds, which critics have claimed have been used for insider projects. The EF previously used ETH sales to pay staff and fund projects. The EF will now release quarterly and annual reports so Ethereum traders can see details about the foundation’s treasury holdings, investment performance, and portfolio allocations. In October 2024, the EF had a treasury of $970.2 million, with around 81% allocated to ETH tokens. 

The Treasury Policy features privacy as a key policy decision, pointing out that privacy is even more important in a world where surveillance is becoming commonplace. The EF has become increasingly concerned with privacy encroaching technologies such as Know Your Customer (KYC) gatekeeping and centralised apps that track your identity. For this reason, in their policy document, EF has directed that external partners must have open source licenses, secure transaction procedures, and self-custody of assets. Ethereum has tried to stand out as a blockchain that not only encourages incentives but also tries to uphold ethical standards. External partners who don’t meet all EF requirements can still collaborate with Ethereum if they plan on working towards the standards. Ethereum’s commitment to privacy could place the cryptocurrency on a collision course with European regulators pushing for transparency in the crypto market. 

The EF has further stated that they will allow for staking and lending practices so the foundation can build up its treasury again. EF will use various metrics to measure the risks and rewards of investing in DeFi platforms, such as the security of the investment and the current funding requirements. They stated that their portfolio allocation will change depending on market conditions and new yield opportunities. In February, the EF started the DeFi process by investing 45,000 ETH across the Compound, Spark Protocol, and Aave platforms. The EF will also hold fiat currency for regular operations and investing in traditional finance, such as bonds. An Ethereum Finance Team will be responsible for reporting the strategy as it develops over time.

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