Ethereum Foundation reduces workforce by 54, closes ZK Research Lab, and decreases budget by 40%
June 24, 2026
The Ethereum Foundation recently underwent a significant restructuring, which included the layoff of 54 employees, approximately 20% of its workforce. This restructuring marked the most sweeping changes in the non-profit organization’s history and also involved a budget reduction of around 40% for the year 2026. Vitalik Buterin, co-founder of Ethereum, disclosed this budget decrease and explained that it was part of a strategic move towards an endowment model, aiming for a long-term annual spending rate of 5% of treasury assets by 2030, down from the previous rate of roughly 15%.
The revamped Ethereum Foundation now operates with a focus on five key areas: censorship resistance, resilience, openness, privacy, and security, which it refers to as CROPS. This shift not only reduced the Foundation’s staff numbers but also altered the structure through which Ethereum’s protocol development is organized, funded, and held accountable. Notably, this restructuring occurred shortly after the launch of Ethlabs, an independent non-profit organization supported by key figures in the Ethereum community, signaling a transition away from the single-foundation model that had been in place since Ethereum’s inception.
The new Ethereum Foundation is organized into five domain clusters: Protocol Layer, Access Layer, User Layer, Community Layer, and Institutional Layer, each with its unique responsibilities, accountability frameworks, and mandates. For developers seeking grants or research collaboration, this new structure necessitates engagement with specific clusters depending on their focus areas. The Protocol Cluster, for instance, oversees protocol forks, research into post-quantum security, and L1-native privacy, while the User Cluster grounds protocol decisions in real user research and evaluation.
One significant consequence of the restructuring is the shutdown of the Privacy and Scaling Explorations unit (PSE), which focused on applied cryptography and zero-knowledge proof research. PSE’s work on privacy-enabled transfers, voting systems, anonymous credentials, and other privacy initiatives played a crucial role in Ethereum’s privacy roadmap. The dissolution of PSE raises concerns about the future of Ethereum’s privacy engineering capacity, particularly as other organizations like Ethlabs may need to pick up the slack.
Furthermore, Buterin’s announcement clarified that the budget cuts were not merely a response to financial constraints but a permanent shift in the Foundation’s financial model. The move towards an endowment model means that the Foundation will only spend returns on invested treasury assets, ensuring its sustainability in the long term. While some initiatives will be scaled back or eliminated, the Foundation’s commitment to operating within this new financial framework is aimed at ensuring its longevity and continued impact in the blockchain space.
