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Home Cryptocurrency Ethereum

Crypto Founder Demands Ethereum Foundation Be Dissolved Amid Rumors of Price Manipulation

Scott Matherson by Scott Matherson
August 26, 2024
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Crypto Founder Demands Ethereum Foundation Be Dissolved Amid Rumors of Price Manipulation
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In a thought-provoking turn of events that has rippled through the cryptocurrency community, Marc Zeller, the visionary behind the Aave Chan Initiative (ACI), has boldly proposed the dissolution of the Ethereum Foundation. This audacious call came in the wake of a transaction that cast the Foundation in a controversial light, once again stirring debates about its operational motives concerning the management of Ether (ETH), the native cryptocurrency of the Ethereum blockchain.

The crux of Zeller’s argument centers around the financial stewardship of the Ethereum Foundation, particularly following the anticipated completion of the Purge and Verge upgrades to the Ethereum network. Zeller voiced his concerns over the Foundation’s annual budget, which stands at a staggering $100 million, querying the necessity for such an exorbitant sum. He highlighted the discrepancy between the Foundation’s lavish budget and the relatively modest compensation awarded to the Geth team, despite their crucial contributions to the Ethereum ecosystem.

Zeller’s observations came in direct reaction to revelations from Aya Miyagotchi, the Executive Director of the Ethereum Foundation, via an X (formerly Twitter) post. Miyagotchi disclosed that the Foundation’s deposit of 35,000 ETH, worth approximately $94.07 million, into the cryptocurrency exchange Kraken was a part of its treasury management strategy. She elaborated that the sizable budget primarily covers grants and salaries, indicating the Foundation’s reliance on ETH sales to meet its fiscal obligations, given that some grant recipients and staff require payment in fiat currencies.

Miyagotchi also shed light on the timing of these treasury activities, attributing the delay to regulatory challenges, including scrutiny from the US Securities and Exchange Commission (SEC) regarding ETH’s classification as a security. Fortunately, these regulatory hurdles have since been overcome.

The Ethereum Foundation’s substantial ETH deposit into Kraken understandably sparked apprehensions about a potential sell-off, which could have far-reaching implications for ETH’s market price. Nonetheless, Miyagotchi reassured the community, stating that any sales would be executed gradually, in a planned manner.

The Underlying Sustainability Question

Ignas, a diligent crypto researcher, raised an alarm over the sustainability of the Ethereum Foundation’s financial model. With an annual expenditure of $100 million and a reserve of 273,776 ETH, valued at roughly $748.88 million, the Foundation’s ETH stash could deplete in just eight years without substantial adjustments to either its budget or ETH’s price. Ignas suggested two potential solutions: an appreciation in ETH’s price or the commencement of ETH staking to generate yields, thus prolonging the Foundation’s operational runway.

Further scrutiny of the Ethereum Foundation’s spending reveals that grants consume the lion’s share of its budget. According to their 2021 financial report, which remains their latest public financial disclosure, a mere 10% is allocated towards salaries and the Foundation’s upkeep. This revelation prompted Zeller to advocate for a drastic reduction or complete elimination of grant funding from the Foundation’s budget.

ETH price still under $3,000 | Source: ETHUSDT on Tradingview.com

Featured image created with Dall.E, chart from Tradingview.com

In conclusion, the discourse around the Ethereum Foundation’s financial practices and the proposed dissolution raises critical questions about the future of Ethereum’s governance and the stewardship of its resources. The controversy reveals deeper issues related to transparency, fiscal responsibility, and the equitable distribution of resources within the crypto ecosystem. As the Ethereum community grapples with these challenges, the evolving narrative underscores the importance of aligning the Foundation’s objectives with the broader goals of decentralization and community empowerment.

For the enthusiasts who thrive on staying abreast of the latest tremors and triumphs in the DeFi space, this saga is a vivid tableau of the complexities and controversies that define the cryptocurrency world. As we navigate the turbulent waters of digital finance, the tale of the Ethereum Foundation serves as a cautionary epic, reminding us of the delicate balance between innovation and integrity, ambition, and accountability.

For more riveting narratives and in-depth analyses that cut through the digital currency domain, keep your browsers locked on DeFi Daily News. Here, amidst the cacophony of market movements and technological tides, you’ll find clarity and insight, ensuring you’re always informed and engaged.

In the realm of cryptocurrency, where fortunes can be made or marred by the merest of margins, knowledge isn’t just power—it’s profit.



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