Ethereum Foundation Announces Overhauled Treasury Strategy Amid Scaling Push

The Ethereum Foundation (EF) has overhauled its treasury strategy. The non-profit foundation that oversees the development and management of the Ethereum blockchain aims to strengthen the long-term sustainability and growth of the Ethereum ecosystem. The EF has also issued guidelines governing the sale of token and maintenance of internal fiat reserves. The development comes days after the EF laid off some team members as it looks to add more features to improve the blockchain's scalability.

The EF plans to prioritise the refinement of its asset-liability management policy by considering factors like risk, duration, and liquidity, it said in a statement on June 4. It also plans to support strongly decentralised, and open source applications. The foundation said that it will try to reallocate funds between protocols frequently, depending on market conditions, diversification, or new yield opportunities.

The EF plans to focus on analysing its Annual Opex and its Years of Opex Buffer. While Annual Opex is expressed as percentage of current total treasury, the latter represents the number of years of operating runway held in the reserves. Sharing its current targets, the EF said it plans to allocate 15 percent of its treasury on its yearly operations and keep 2.5 years worth of expenses in its reserves to ensure financial security. 

Both of these variables will now be evaluated by the EF's board and management to keep its short term operations aligned with other relevant variables, market dynamics, as well as community input.

This year, the EF will assess whether to sell internally held ETH tokens within the next three months, using periodic derivatives calculations of its fiat-denominated assets from the Opex buffer.

The foundation's fiat assets will be allocated towards cash and other liquid instruments. It also aims to invest in tokenised real world assets, fixed term deposits, and other investment grade bonds.

"To ensure transparency, accountability, and informed oversight, a structured internal reporting cadence is in place. Reports are prepared and maintained by the Finance team, with distribution based on scope and sensitivity," the EF noted.

In March, crypto analyst Benjamin Cowen reportedly predicted that Bitcoin's surge over Ethereum could impact the latter's ecosystem. He also pointed out that ETH has maintained its price at around $2,500 (roughly Rs. 2.14 lakh) for the last two years.

After recently upgrading the network validator experience through the Pectra upgrade, ETH claimed that it stands at the "edge of major breakthroughs". The EF now wishes to pivot its focus towards writing mission-critical code, publishing thorough research work, and coordinating large initiatives. Moving forward towards this aim, this month, the EF said it is restructuring its teams.

The EF also unveiled its "Trillion Dollar Security" initiative to load up the blockchain with advance security capabilities in May.