The Ethereum Foundation, the nonprofit overseeing the development of Ethereum, is reallocating 50,000 ether (ETH), worth approximately $165.3 million, to participate in the decentralized finance (DeFi) ecosystem.
Strategic Move Into DeFi
The Ethereum Foundation is setting up a 3-of-5 multisig wallet through Safe to manage the ETH, ensuring security and usability. The Foundation’s first step in this initiative involves sending a test transaction to Aave, one of the largest lending protocols within the Ethereum ecosystem, behind Lido, a liquid staking protocol.
This participation marks a significant move to engage more directly with the DeFi space, which could potentially help grow the Ethereum Foundation’s treasury after it experienced a 39% reduction in value over the past three years. As of October 31, the nonprofit’s treasury stood at $970.2 million, predominantly held in ether. This is notable, as ether’s value recently dropped to a four-year low relative to Bitcoin.
Ethereum Foundation’s Financial Strategy
The Ethereum Foundation has previously avoided staking its ether to earn staking rewards due to concerns over regulatory issues and its stance on neutrality. Despite the opportunity to earn a 3.31% yield based on the current CESR Composite Ether Staking Rate, the organization has chosen a more cautious approach with its holdings.
Leadership Changes at the Ethereum Foundation
Over the weekend, Ethereum co-founder Vitalik Buterin confirmed that the Ethereum Foundation is undergoing significant changes in its leadership structure, a process that has been in progress for nearly a year. The goals behind this restructuring are to enhance the technical expertise within the leadership team, improve communications between the Foundation and the broader Ethereum ecosystem, and better support developers and app builders.
Buterin emphasized that the Foundation is not aiming to shift its ideological direction, lobby aggressively for regulatory changes, or become a more centralized entity. Instead, the focus is on strengthening the organization’s foundation to ensure continued support and growth for Ethereum and its ecosystem.
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