The Ethereum Foundation (EF) is in a difficult situation. The ongoing decline in the Ethereum (ETH) price has put the foundation’s financial situation under severe pressure. Since the majority of the treasury consists of Ethers, the dependence on the price is enormous. A prolonged bear market could therefore have serious consequences for the future of Ethereum.
Increasing financial pressure
As of October 31, 2024, the value of the EF treasury was $970.2 million – a significant drop from the $1.6 billion in March 2022. The combination of a falling Ethereum price and annual expenses of around $120 million means that reserves are shrinking at an ever faster rate.
More than 81% of the treasury consists of cryptocurrencies, with ETH playing the dominant role. This shows that the foundation has confidence in its own network, but at the same time makes it vulnerable to turbulent market conditions.
To cover ongoing costs, the EF has sold ETH several times recently. In December 2024, 100 ETH was converted into 374,334 DAI, bringing the total amount of ETH sold this year to 4,266. These sales generated a total of $12.21 million, with an average sale price of $2,796 per ETH.
Such transactions show that the Foundation is actively trying to manage its financial position. However, if the price continues to fall, it will be forced to sell ever larger amounts – at increasingly unfavorable prices. This could set off a negative spiral.
DeFi experiments put Ethereum Foundation at risk
Another problem is the EF’s recent involvement in DeFi platforms. In January 2025, 50,000 ETH – then worth $165.3 million – was deposited in Aave, a decentralized lending protocol. Such constructions can bring additional returns, but also carry significant risks.
If the ETH price falls too much, automatic liquidations could be triggered, dumping the EF’s assets on the market. This would not only harm the foundation, but also put additional selling pressure on ETH.
To limit the risks, the Ethereum Foundation has taken some measures. For example, part of the ETH treasury is being converted into stablecoins such as DAI to reduce the dependence on price fluctuations.
The foundation also tries to choose its sales times strategically to minimize the impact on the market. In addition, new sources of income are being sought via DeFi platforms – an endeavor that remains associated with considerable risks.
The big question is whether these measures are enough to get the EF through a prolonged bear market. If the ETH price continues to fall, the foundation could be forced to make more aggressive sales or seek external sources of funding. This would not only change the foundation’s long-term strategy, but also affect its position within the Ethereum network.
Image by Miloslav HamĹ™Ăk from Pixabay
[newsletter_form lists="1"]
