Ethereum Foundation Cuts 54 Jobs and Restructures Into 5 Clusters
The Ethereum Foundation eliminated 54 positions and cut its budget 40% on June 23. Here's what the new five-cluster model means for protocol development.
The Ethereum Foundation eliminated 54 positions — roughly 20% of its workforce — and cut its annual budget by approximately 40% on June 23, 2026. The Foundation simultaneously reorganized into five domain-focused clusters: Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer. The restructuring concludes a months-long internal overhaul and formally closes the EF's era as a large, sprawling research organization. What replaces it is a leaner entity targeting 5% annual spending of treasury assets by 2030, down from roughly 15% before this year.
What the Five-Cluster Model Actually Changes
The new structure creates explicit functional mandates where the old EF operated as a unified organization with overlapping workstreams. Each cluster owns a defined domain:
- Protocol Layer — core protocol development, upgrade delivery, MEV reduction, post-quantum security, ZK-EVM research
- Access Layer — self-sovereignty tooling: chain reading, transaction signing, proofs, and exit paths for users
- User Layer — user research, educational content, use-case evaluation, impact metrics
- Community Layer — communications, open-source advocacy, privacy and civil liberties alignment
- Institutional Layer — banks, governments, and large organizations adopting Ethereum; standards and reference architectures
The ZK research lab — previously a standalone effort within the EF — was shut down as part of the restructuring. ZK work now falls under the Protocol Layer cluster.
For Ethereum users and DeFi participants, the Protocol Layer cluster is the one to watch. It owns the Glamsterdam upgrade, which ships in Q3 2026 with enshrined proposer-builder separation and gas repricing that permanently reduces L1 swap costs. The new model creates clearer accountability for whether that timeline holds.
The Endowment Math Behind the 40% Cut
The budget reduction is a planned step in a multi-year trajectory, not a crisis response. The Ethereum Foundation's treasury plan, announced in June 2025, targets a path from spending roughly 15% of assets annually to a 5% endowment baseline by 2030.
| Period | Annual Spend Rate | Context |
|---|---|---|
| Before 2026 | ~15% | Expansion mode, bull market |
| 2026 | ~40% cut applied | Restructuring year |
| Target by 2030 | ~5% | Endowment sustainable baseline |
At roughly $1.5 billion in treasury assets, a 5% annual rate is $75 million per year — enough to fund core protocol work, the five clusters, and meaningful external grants without burning principal in a sustained bear market. The EF is not running out of money. It is choosing to spend less structurally, not reactively.
ETH is down roughly 44% year-to-date despite record staking near 30% of supply and $39 billion in DeFi TVL. The Foundation's ETH-denominated treasury has declined in dollar terms alongside the market, making the spending rate cut look larger in USD than in asset terms. The endowment model is designed precisely for this scenario.
What the Restructuring Doesn't Resolve
The June 20 analysis of Ethereum's funding crisis identified a specific structural gap: the Client Incentive Program (CIP), which funded 10+ independent client teams through staking rewards, expired in April without a named replacement. The EF's internal restructuring does not directly solve that problem.
Client teams — Geth, Nethermind, Lighthouse, Prysm, Teku, and others — are external to the Foundation and depend on mechanisms other than EF payroll. The Protocol Layer cluster has explicit scope over client coordination and upgrade delivery, which likely means grants will flow toward the multi-client teams. But a discretionary grant model is not the same as the structured, staking-revenue-backed mechanism the CIP provided. Predictable multi-year funding commitments are what client team headcount planning requires.
Bastian Aue, now the EF's effective sole executive director after nine senior departures in six months, has not yet issued a public statement on the CIP successor. That gap is the most important remaining unknown for Ethereum's protocol development continuity.
Three Signals That Define Whether This Works
- CIP successor announcement: a named, structured replacement for independent client team funding — ideally with a staking-revenue component — is what turns organizational restructuring into structural fix. No announcement by August is a warning signal.
- Glamsterdam delivery: the Protocol Layer cluster owns this upgrade. A delay in the enshrined proposer-builder separation timeline or gas repricing components signals that the leaner structure is producing resource constraints, not just cleaner accountability.
- External client team staffing: contributor exits at Geth, Lighthouse, or Prysm are the leading indicators that budget pressure is flowing through to independent teams the EF's internal restructuring did not directly address.
ETH's usage metrics — staking at 30% of supply, $39 billion in TVL — reflect genuine network demand. The gap between those numbers and the price reflects governance uncertainty and the broader macro environment. If the five-cluster model resolves coordination clarity and produces a CIP successor, the usage base provides the organic demand for a re-rating. Track live staking data on the ETH Staking tracker. Ethereum is available on Zest Exchange.