Major Shake-Up at Ethereum Foundation: Staff Cut by 20% Amid Shift to Five-Cluster Strategy

The Ethereum Foundation has cut 54 jobs, reduced its 2026 budget by 40%, and reorganized into five core clusters as part of a broader shift toward a leaner operating model and a long-term plan to cap annual treasury spending at around 5% by 2030.

In a June 23, 2026 announcement, the Foundation confirmed it had reduced its workforce by roughly 20% from about 270 employees. Alongside the layoffs, it introduced a major budget cut and transitioned to a cluster-based structure supported by dedicated operations and management teams, according to a post shared via Vitalik Buterin on the Ethereum Foundation’s official blog.

The changes represent more than cost optimization. They mark a strategic shift away from the Foundation’s historical role as Ethereum’s central development engine toward a more limited mandate focused on protocol oversight and long-term sustainability.

Five-cluster organizational model

The new structure replaces the previous functional setup with five specialized clusters: Protocol Layer, focused on post-quantum security, zkEVM development, and Layer 1 privacy; Access Layer, building tools that enable users and AI agents to interact with Ethereum without intermediaries; User Layer, analyzing real-world network usage to guide protocol decisions; Community Layer, managing ecosystem outreach across crypto, open-source, and research communities; and Institutional Layer, engaging governments, enterprises, financial institutions, and academic partners.

The Protocol Layer’s mandate explicitly states that Ethereum should not be optimized for short-term market appeal or converted into a traditional financial rail dominated by intermediaries. This highlights a deliberate boundary between core protocol development and TradFi-oriented applications, even as institutional engagement continues through other clusters.

Treasury strategy and financial repositioning

The restructuring is tied to a broader treasury overhaul that began in 2025 and was formalized in a 2026 policy framework.

At present, the Foundation spends about 15% of its treasury each year. Under the updated endowment-style model, it aims to gradually reduce this to roughly 5% by 2030, a level it considers sustainable for long-term operations, according to analysis cited by CoinMarketCap Academy.

Employees affected by the layoffs will receive severance packages of at least one month’s salary per year of service, along with retirement support and access to career transition services, including coaching and ecosystem placement assistance. Since early 2026, several senior figures have departed, including former co-executive directors Tomasz Stańczak and Hsiao-Wei Wang, with interim leadership currently overseeing operations.

The announcement also coincides with the launch of Ethlabs, an independent protocol research group formed by former Ethereum Foundation contributors, underscoring a broader shift of development work toward external ecosystem organizations.

Funding outlook and ecosystem transition

Following the announcement, concerns have emerged that Ethereum’s core development ecosystem could face a funding gap within the next three to nine months as existing incentive programs expire while Foundation spending is reduced.

This short-term window is viewed as a key transition phase, distinct from the longer-term question of whether the new financial model can sustain ongoing research at scale.

In the near term, focus is expected to shift away from ETH price reaction—which dipped modestly to around $1,668 following the news—and toward whether independent groups like Ethlabs and other ecosystem-funded teams can absorb research responsibilities previously handled by the Foundation.

Meanwhile, ecosystem players such as Consensys continue advancing work in areas like zero-knowledge proofs, some of which overlaps with domains the Foundation is stepping back from. The central issue is no longer whether restructuring was necessary, but whether decentralized funding mechanisms can maintain continuity in Ethereum’s development pipeline.