The new policy aims to reduce operating costs, establish trigger conditions for ETH sales, and implement the "Defipunk" privacy standards.

On June 4, the Ethereum Foundation released a new fiscal policy, outlining how the foundation will manage its reserves, deploy capital in DeFi protocols, and assess privacy standards, while maintaining Ethereum's commitment to autonomy and neutrality.

The Ethereum Foundation has announced a more structured and transparent reserve policy, linking operating costs and cash needs to ETH reserves and sales to strengthen its financial position. This policy marks a departure from the foundation's historically passive capital stance.

Reducing Expenditure and Standardizing ETH Sales

In recent months, the Ethereum Foundation's surprise sales of ETH have sparked strong opposition from the community, with some critics claiming that these actions have undermined trust in the foundation.

Perhaps in response to these concerns, the foundation has announced a comprehensive update to its asset management strategy. The foundation's annual operating costs (measured as a percentage of its funds) and operational lifespan will be regularly reassessed, taking into account market dynamics and community feedback to ensure that the foundation's short-term operations align with its long-term strategy.

The goal is to reduce annual expenditures from 15% of assets to 5% by 2030. Currently, the Ethereum Foundation has only 2.5 years left before it runs out of cash, making the "next 18 months crucial."

In addition, the foundation calculates its fiat reserve requirements by multiplying a fixed annual operating expense target (currently set at 15%) by a 2.5-year operational timeframe. ETH will only be sold automatically when cash reserves fall below a 2.5-year expenditure buffer (approximately 37.5% of the treasury).

Engaging More Closely with the DeFi Ecosystem

To continue the trend of closer cooperation with the DeFi ecosystem, the foundation will also implement a financing strategy, including staking and providing wETH to yield-generating lending protocols. It may also borrow stablecoins and seek higher on-chain returns through RWA exposure and DeFi allocations.

To fulfill its commitment to transparency, the foundation will also release quarterly and annual reports outlining its asset holdings, investment performance, and any significant developments during each period.

As of October 31, 2024, the foundation's total reserves were approximately $970.2 million, including $788.7 million in crypto assets and $181.5 million in non-crypto assets.

Adopting "Defipunk" Principles to Assess DeFi Protocols

The policy also makes a written commitment to privacy, which the foundation defines as "a fundamental civil liberty in an increasingly surveilled financial environment."

Through a new internal rule called "Defipunk," the foundation will assess potential DeFi partners based on a set of criteria: permissionless access, self-custody, open-source licensing, and technical privacy features such as transaction shielding.

DeFi protocols that do not meet the standards may still be eligible if they can demonstrate credible progress toward achieving these ideals.

The foundation also calls on employees "involved in financial management" to "upskill" by using open-source, privacy-preserving tools. Employees involved in financial management should use open-source privacy tools and/or contribute to them to complete their daily work, especially when upskilling in relevant areas is needed.

In the new policy, the foundation emphasizes its commitment to the core values of "cypherpunk." "Through research, advocacy, and strategic capital deployment, the foundation can help nurture an Ethereum-native financial ecosystem to maintain autonomy and sustain an 'open society in the digital age' at scale."

It is worth noting that this may also put the foundation at odds with regulatory trends in the United States and Europe, where policymakers are increasingly focused on transparency and compliance rather than crypto privacy.

The new policy aims to reduce operating costs, establish trigger conditions for ETH sales, and implement the "Defipunk" privacy standards.

On June 4, the Ethereum Foundation released a new fiscal policy, outlining how the foundation will manage its reserves, deploy capital in DeFi protocols, and assess privacy standards, while maintaining Ethereum's commitment to autonomy and neutrality.

The Ethereum Foundation has announced a more structured and transparent reserve policy, linking operating costs and cash needs to ETH reserves and sales to strengthen its financial position. This policy marks a departure from the foundation's historically passive capital stance.

Reducing Expenditure and Standardizing ETH Sales

In recent months, the Ethereum Foundation's surprise sales of ETH have sparked strong opposition from the community, with some critics claiming that these actions have undermined trust in the foundation.

Perhaps in response to these concerns, the foundation has announced a comprehensive update to its asset management strategy. The foundation's annual operating costs (measured as a percentage of its funds) and operational lifespan will be regularly reassessed, taking into account market dynamics and community feedback to ensure that the foundation's short-term operations align with its long-term strategy.

The goal is to reduce annual expenditures from 15% of assets to 5% by 2030. Currently, the Ethereum Foundation has only 2.5 years left before it runs out of cash, making the "next 18 months crucial."

In addition, the foundation calculates its fiat reserve requirements by multiplying a fixed annual operating expense target (currently set at 15%) by a 2.5-year operational timeframe. ETH will only be sold automatically when cash reserves fall below a 2.5-year expenditure buffer (approximately 37.5% of the treasury).

Engaging More Closely with the DeFi Ecosystem

To continue the trend of closer cooperation with the DeFi ecosystem, the foundation will also implement a financing strategy, including staking and providing wETH to yield-generating lending protocols. It may also borrow stablecoins and seek higher on-chain returns through RWA exposure and DeFi allocations.

To fulfill its commitment to transparency, the foundation will also release quarterly and annual reports outlining its asset holdings, investment performance, and any significant developments during each period.

As of October 31, 2024, the foundation's total reserves were approximately $970.2 million, including $788.7 million in crypto assets and $181.5 million in non-crypto assets.

Adopting "Defipunk" Principles to Assess DeFi Protocols

The policy also makes a written commitment to privacy, which the foundation defines as "a fundamental civil liberty in an increasingly surveilled financial environment."

Through a new internal rule called "Defipunk," the foundation will assess potential DeFi partners based on a set of criteria: permissionless access, self-custody, open-source licensing, and technical privacy features such as transaction shielding.

DeFi protocols that do not meet the standards may still be eligible if they can demonstrate credible progress toward achieving these ideals.

The foundation also calls on employees "involved in financial management" to "upskill" by using open-source, privacy-preserving tools. Employees involved in financial management should use open-source privacy tools and/or contribute to them to complete their daily work, especially when upskilling in relevant areas is needed.

In the new policy, the foundation emphasizes its commitment to the core values of "cypherpunk." "Through research, advocacy, and strategic capital deployment, the foundation can help nurture an Ethereum-native financial ecosystem to maintain autonomy and sustain an 'open society in the digital age' at scale."

It is worth noting that this may also put the foundation at odds with regulatory trends in the United States and Europe, where policymakers are increasingly focused on transparency and compliance rather than crypto privacy.