Ethereum Foundation 2024 Financial Report: Core Values, Detailed Expenditures, and Ecosystem Overview

Ethereum Foundation 2024 Financial Report: Core Values, Detailed Expenditures, and Ecosystem OverviewThe Ethereum Foundation (EF) recently released a comprehensive financial report detailing its core values, expenditure breakdown from 2022 to 2023, treasury status as of October 31, 2024, and an overall assessment of the Ethereum ecosystem. This report aims to address community concerns regarding transparency, clearly illustrating the Foundation's operations and its contributions to the long-term development of the Ethereum ecosystem

Ethereum Foundation 2024 Financial Report: Core Values, Detailed Expenditures, and Ecosystem Overview

The Ethereum Foundation (EF) recently released a comprehensive financial report detailing its core values, expenditure breakdown from 2022 to 2023, treasury status as of October 31, 2024, and an overall assessment of the Ethereum ecosystem. This report aims to address community concerns regarding transparency, clearly illustrating the Foundation's operations and its contributions to the long-term development of the Ethereum ecosystem.

Ethereum Foundation's Core Values

The report begins by outlining the Ethereum Foundation's three core values: Long-Term Thinking, Subtraction, and Values Stewardship.

• Long-Term Thinking: The Foundation emphasizes the need to transcend short-term market fluctuations and focus on the long-term development goals of the Ethereum ecosystem. It recognizes the ecosystem's susceptibility to short-term priorities and positions itself as a counterbalance, championing a long-term vision. This is reflected in the Foundation's strategic planning and investment decisions, prioritizing projects and technologies with enduring value.

• Subtraction: The Foundation does not pursue power or prestige; its success is measured by the achievements of the Ethereum ecosystem, not the Foundation's own size or influence. This reflects the Foundation's community-centric approach, avoiding prioritizing its own interests over the ecosystem. This principle of subtraction is also evident in the Foundation's operational model and resource allocation, striving for efficiency and sustainability.

• Values Stewardship: The Foundation recognizes that Ethereum is not merely a technology but a community bound by shared values. It is committed to upholding and promoting these values, ensuring the health and sustainability of the Ethereum ecosystem. This includes supporting projects and initiatives aligned with Ethereum's values and resisting actions that might compromise them.

Ethereum Foundation Expenditures in 2022 and 2023

The report details the Ethereum Foundation's expenditures in 2022 and 2023, showcasing funding priorities and strategic focus.

2022 Expenditures ($105.4 million):

• L1 Research & Development (30.4%, $32.1 million): This was the largest portion of 2022 expenditures, supporting research and improvements to the Ethereum mainnet. This reflects the Foundation's commitment to continuous optimization of Ethereum's core technology.

• New Entities/Organizations (27.1%, $28.6 million): The Foundation's investment in emerging organizations demonstrates its support for ecosystem innovation and growth. This funding supported entities such as Argot Collective, Geodework, L2BEAT, Nomic Foundation, and 0xPARC.

• Community Development (18.5%): This funding supported the building and growth of the Ethereum community, enhancing participation and cohesion.

• Internal Ops (8.1%): This funding supported the Foundation's internal operations, ensuring efficient functioning.

• Developer Platform (7.9%): Supported the building and maintenance of developer platforms, providing developers with necessary tools and resources.

• AppliedZK (7.2%): This funding supported the research and application of technologies like zero-knowledge proofs (ZK-SNARKs).

• L2 Research & Development (0.8%): Supported the research and development of Ethereum Layer-2 scaling solutions.

2023 Expenditures ($134.9 million):

Total expenditures in 2023 increased by nearly 28% compared to 2022. Expenditure priorities shifted somewhat, but continued to reflect a focus on long-term development.

• New Entities/Organizations (35.2%, $47.4 million): This expenditure increased significantly, indicating a greater emphasis on supporting emerging organizations.

• L1 Research & Development (25.7%): While the percentage decreased slightly, the expenditure amount remained higher than in 2022.

• Community Development (12.5%):

• AppliedZK (11.0%): This expenditure increased significantly, demonstrating the Foundation's emphasis on zero-knowledge proof technologies.

• Internal Ops (7.7%):

• Developer Platform (6.5%):

• L2 Research & Development (1.4%): Increased compared to 2022.

Ethereum Foundation Treasury Status

As of October 31, 2024, the Ethereum Foundation's total treasury was approximately $970.2 million, with $788.7 million in cryptocurrency assets (99.45% ETH) and $181.5 million in non-cryptocurrency investments and assets. The Foundation holds 0.26% of the total ETH supply. The Foundation explained its rationale for maintaining a large ETH reserve to ensure continued funding for essential public goods within the Ethereum ecosystem for years to come and to mitigate market volatility. The Foundation employs a robust treasury management policy, including regularly selling ETH to maintain sufficient reserves and programmatically increasing fiat reserves during bull markets to offset expenditure needs during bear markets.

Ethereum Ecosystem Treasury Overview

The report also provides an overview of the treasury status of various projects within the Ethereum ecosystem. As of the report's release, the total value of project treasuries across the ecosystem reached $22 billion. This includes readily available funds and unreleased funds. Most project treasuries consist primarily of the project's native token. These treasury funds will support the continued development and maintenance of the Ethereum ecosystem. From 2022 to 2023, the Ethereum ecosystem deployed $497 million to support community projects.

Conclusion

The Ethereum Foundation's 2024 financial report provides a clear understanding of the Foundation's financial status and strategic direction. The report demonstrates the Foundation's unwavering commitment to long-term development, community building, and the healthy growth of the Ethereum ecosystem, while also explaining the considerations behind its financial strategy. This transparent report helps build community trust in the Foundation and lays a solid foundation for the future development of the Ethereum ecosystem.