Ethereum Foundation Cuts 20% of Workforce as Chain Enters ‘Third Iteration’

This alert was originally sent directly to clients of Galaxy Trading and Galaxy Asset Management on June 23, 2026. Trade or invest with Galaxy to receive the most timely research directly in your inbox.

Overview

On Tuesday, the Ethereum Foundation (EF) announced it had cut roughly 20% of their employees, 54 people, as part of a “months-long process of reorganization.” Meanwhile, Ethereum creator Vitalik Buterin said the foundation would cut its budget by 40%.

The restructuring follows a period of significant leadership turnover. In February, Tomasz Stańczak stepped down as co-executive director, and the board appointed Bastian Aue as interim co-executive director. On June 18, after returning from sabbatical, Hsiao-Wei Wang stepped down from her co-executive director role, leaving Aue as the key interim executive lead during the transition. The reorg also comes amid a broader rethinking of Ethereum’s technical roadmap, with the recently announced Strawmap, and the emergence of a set of alternative Ethereum-focused organizations driving research and adoption, most notably Ethlabs, announced on Monday.

The EF is shrinking and narrowing its mandate around protocol stewardship, neutrality, and Ethereum’s core self-sovereignty properties, while other organizations are emerging to drive research, adoption, and ETH-aligned growth. That transition has created uncertainty, but it also marks a more explicit division of labor across the Ethereum ecosystem. After years of criticism that Ethereum’s roadmap was too diffuse and its institutions too slow-moving, the pieces of a more focused operating model are starting to come into view.

Background

The EF’s June restructuring is part of a broader strategic reset spanning the foundation's role in stewarding Ethereum and its technical roadmap. There are four primary developments worth noting:

Senior Personnel Departures and EF Reorganization

In 2025, two notable EF researchers, Dankrad Feist and Max Resnick, left the EF for competing chains. Resnick joined Solana, while Feist joined the Stripe-backed Tempo chain. The departures were the most visible early signs of dissatisfaction within the EF and led to vocal criticisms of the organization for allegedly misguided development priorities following the 2022 Merge upgrade and alleged underpayment of foundation employees. In February 2026, departures began to accelerate, beginning with former co-executive director Stanczak, who had widely been viewed as an important voice in the EF for driving practical adoption of the chain and its native asset, ETH. Following his departure, nine other senior EF employees left, culminating in Wang's departure last Thursday. The pace and scale of the departures coupled with a lack of communications from the EF and those departing created widespread consternation over the underlying cause.

Tuesday's restructuring completes the process those exits began. The names above were the most senior departures, while the 54 additional cuts address the EF’s shrinking funding. The EF is now organized around five clusters, each defined by a layer of the technology stack where Ethereum either delivers self-sovereignty or fails to. This includes a protocol layer (hardening and scaling the base layer), an access layer (the path from silicon to frontend for reading, transacting, proving, and exiting without trusted intermediaries), a user layer (keeping the work anchored to real users rather than making the EF a product studio), a community layer (defining the EF against financialized and corporate crypto), and an institutional layer. Operations and management clusters sit alongside the five clusters. This structure is aligned with the Mandate of March 2026 (discussed below). Even the institutional layer, the one place adoption work might sit, is framed around showcasing integrations that maximize CROPS (the properties of censorship resistance, open-source code, privacy and security) guarantees rather than courting institutions on their terms.

The Mandate

In March, the EF published a 38-page document it called the Mandate, recasting itself from Ethereum's primary steward into "one of many nodes" with a focus on defending CROPS. The document commits the foundation to a narrowly scoped role as "technological protocol stewards," explicitly stating that the EF is "NOT a casino" and will not optimize for token price, spend on policy, or engage in activities outside direct protocol development. The foundation also restated its goal to deliberately reduce its surface area under the principle of “subtraction,” which aims to make the EF less necessary over time. At the time, reports surfaced that EF staff were told to sign the document or resign, driving some of the above departures, although those reports have yet to be verified. Following its release, Buterin, Ethereum’s creator, clarified the Mandate’s focus. Out-scaling faster chains while staying only marginally more decentralized would be a losing strategy, he argued, saying the EF should instead pursue depth in the properties rivals can't easily replicate, represented in the CROPs statement.

The Strawmap Release

In early 2026, the EF published the Strawmap, its first attempt to put Ethereum's multi-year layer-1 roadmap on a single page. It was the most significant reframing of the protocol's direction since The Merge, the 2022 upgrade that replaced Bitcoin-style mining with the proof-of-stake consensus mechanism. The Strawmap is an explicit course correction. After a cycle in which Ethereum prioritized supplemental, layer-2 networks and watched activity, fees, and developers migrate to Solana and other competitors, the Strawmap put base-layer scaling back at the center. It organizes development around achieving five "north stars" through the end of the decade. These goals include a fast L1 with near-instant finality, a gigagas L1 capable of processing10,000 transactions per second on the base layer, a teragas data layer for the rollups, post-quantum cryptography, and privacy as a protocol default.

Glamsterdam is the first major upgrade planned for the Strawmap. Originally scheduled for the first half of this year, it has already slipped from its original target toward Q3, not an encouraging sign, in our view. At its core, however, we believe the Strawmap is a welcome reset of Ethereum developer focus away from misguided post-Merge priorities. Most notably, it aims to scale the L1 through the implementation of a zero-knowledge Ethereum virtual machine (zkEVM) and ensure ETH’s relevance with the driving priorities of the broader crypto landscape through privacy, AI-compatibility, and quantum resistance. For the full technical breakdown of the Strawmap and its implications, see Galaxy Research's Mapping the Strawmap published in May.

Alternative R&D/Adoption Institutions

On June 22, the day before the layoffs, five former senior EF researchers launched EthLabs, an independent non-profit R&D lab. The founding team (Ansgar Dietrichs as executive director, alongside Barnabé Monnot, Caspar Schwarz-Schilling, Josh Rudolf, and Julian Ma) ran much of the EF's work on protocol economics, scaling, data availability, and finality. Until recently, Monnot helped lead the Protocol cluster. EthLabs’ backers are the two largest publicly traded ETH treasury companies, BitMine and SharpLink, along with Consensys founder Joe Lubin and additional support from custody specialist Anchorage, public-goods funding platform Octant, and incubator/VC SNZ. EthLabs states its mission plainly: make Ethereum "the settlement layer of the global economy." Its early agenda is faster settlement, native issuance, cross-chain movement, mainnet capacity, and research grounding ETH's monetary properties, all aimed at readying the network to absorb demand from stablecoins, tokenized assets, and AI agents. Funders receive quarterly reporting and an annual audit but no say over the research agenda.

The mandate the EF set for itself ruled out optimizing for token price or pursuing institutional adoption. Organizations like EthLabs fill that hole, funded by holders with direct exposure to ETH's price. The EF used its own June 22 thread to bless a coalition of organizations now carrying work it has stepped back from, including EthLabs, the Ethereum Applications Guild (applications and emerging markets), the Ethereum Economic Zone (rollup interoperability), and the Argot Collective (the Solidity programming language and compiler tooling). Etherealize, the institutional-adoption arm the EF previously spun out, sits in the same camp. Increasingly, expect the EF to retain protocol development focused on CROPS principles while the growth, adoption, and ETH-alignment work increasingly lives outside it.

For now, the dispersion of responsibility is less a rupture than an amicable division of labor. But the perils should not be ignored. As ETH development and adoption splinter, there is a possibility of competing factions, each with very different interest (CROPS vs. ETH price appreciation for example), that could hinder Ethereum’s growth and development.

Ethereum’s Standing

No discussion of ongoing developments is complete without acknowledging ETH's underperformance and the chain’s loss of market share across key metrics in recent years.

ETH has been one of the weakest performers among the top crypto assets this past cycle, with the ETH/BTC pair roughly 60% below where it sat when the Merge completed in September 2022 and back near levels last seen in 2020. At the time of writing, it sits roughly 65% below its all-time high. It has held its rank as the second-largest crypto asset without interruption since 2018, but its share of total market cap has eroded steadily.

Ethereum’s activity metrics have also suffered. Decentralized exchange (DEX) volume share dropped from roughly 68% to about 20%, while Solana’s climbed from nothing to overtake Ethereum. Network fees, the metric tied most directly to ETH burn, fell to a share of around 10%, with Solana and Tron each now generating fee revenue comparable to or greater than the Ethereum L1. Application fees slid to roughly a quarter of the market as activity fragmented across Solana, Base, Hyperliquid, and BNB Chain.

Two forces drove Ethereum’s loss of standing. First, users went where execution was cheap and fast. Second, Ethereum cut its own fees, with the EIP-4844 upgrade reducing L2 data costs by about 99% and gas-limit increases lowering costs on the base layer, so less ETH burns even at flat volume.

Ethereum's moat remains asset issuance and settlement, and there it has held. It still hosts roughly half of all stablecoin supply, a share that’s been stable for two years. Its share of tokenized real-world assets has compressed from near total in 2024 to a slim majority today. But that reflects the broader market expanding off a small base rather than issuers leaving, and the absolute value of RWAs on Ethereum has grown more than 12x over the same window. Even after this year's KelpDAO exploit drained the Aave lending protocol of nearly $10 billion in a week, a coordinated relief effort raised more than $160 million in ETH to cover the shortfall within days. Ethereum's lending share remains in the mid-50s.

Ethereum continues to retain the trust of capital while losing the attention of users. Because value accrues through usage rather than deposits, ETH the asset has tracked the latter. Closing that gap is what the Strawmap aims to do on the supply side, and what the new ETH-aligned organizations are betting they can deliver on the demand side.

Ethereum’s ‘Third Iteration’

Opinions on Ethereum's current situation largely sort into two camps. One has lost faith in the vision, or never held it, and reads the cuts and exodus as confirmation that Ethereum lacks the practical features and the external demand to become the world's credibly neutral settlement layer. The other camp treats the reset as overdue and desperately needed. In this view, the EF is finally addressing years of criticism about its technical direction and failure to drive adoption while protecting the neutrality that is its reason to exist.

Our honest read sits between them. Recent developments show that the prior status quo was not the right direction, resulting in an organization that had grown diffuse, slow, and unsure of its priorities while faster chains and permissioned alternatives took market share. But recent changes answer the loudest complaints directly. They cut the EF's surface area and address concerns that one foundation, and largely Buterin, steered Ethereum. They trim bloat, even at the cost of real talent, and they clear room for a new set of organizations to drive the adoption work the EF has stepped back from.

That handoff is worth watching in the coming years. The work of making ETH valuable is moving to the holders with the most direct stake in its price, and whether that leads to healthy alignment or becomes a neutrality problem is yet to be seen. The bull case is that it produces a leaner, more professionalized and results-oriented EF, complemented by a surrounding set of organizations (BitMine, SharpLink, Etherealize, and others) that drive the real adoption the foundation has stepped back from. The open question is whether those two halves complement each other in a way that compounds Ethereum's growth or pull against each other into conflict. Principles and pragmatism aren't inherently at odds. The task now is making them work together. And no matter the outcome, we believe it speaks well of the EF that the foundation is voluntarily shrinking its own power, a precedent close to unheard-of in this industry.

In an X post following the announcement of the cuts, Buterin acknowledged the past few years were "a challenging era for Ethereum.” He framed what follows as Ethereum's "third iteration," a period of change on par with the Merge and encompassing a near-total rebuild of the protocol, from consensus and proofs to privacy, the account model, and state. This is the correct framing for Ethereum, as it suggests that Ethereum is finally back on the right path from both a technical and governance perspective.

Success is in no way inevitable. The nearest-term measuring stick will be Ethereum’s ability to deploy the Glamsterdam update in Q3. The timeline has already slipped from the first half of the year. Given how much the rest of the roadmap depends on Glamsterdam shipping first, another delay would signal that the EF can't hold to its own plan. It would also lend credence to the argument that recent restructuring has done little to address EF bloat and disfunction, a concern Stańczak stated in his own X post following the announcement of the cuts.

We find the foundation’s reorg to be an encouraging sign that Ethereum is back on track, but ultimately execution will be the only way to put doubts to rest.