The Ethereum Foundation has reduced its workforce by 54 roles, cut its 2026 budget by 40%, and reorganized into five core clusters as part of a wider shift toward a leaner structure and a long-term objective of bringing annual treasury spending down to roughly 5% by 2030.

In a June 23, 2026 announcement, the Foundation said it had trimmed about 20% of its staff from a total of roughly 270 employees. Alongside the layoffs, it introduced a significant budget reduction and adopted a new cluster-based organizational model supported by dedicated operations and management teams, according to a post published via Vitalik Buterin on the Ethereum Foundation’s official blog.

The overhaul goes beyond cost reduction. It signals a strategic repositioning of the Foundation away from serving as Ethereum’s primary development hub and toward a more focused role centered on protocol oversight under a tighter financial framework.

New five-cluster structure

The redesigned model replaces the previous functional setup with five specialized clusters: Protocol Layer, focused on post-quantum cryptography, zkEVM development, and Layer 1 privacy; Access Layer, building tools that allow users and AI agents to interact with Ethereum without intermediaries; User Layer, which studies real-world network usage to inform protocol decisions; Community Layer, managing engagement across crypto, open-source, and research ecosystems; and Institutional Layer, which engages governments, enterprises, financial institutions, and academic groups.

The Protocol Layer’s mandate notably stresses that Ethereum should not be optimized for short-term market appeal or reshaped into a conventional financial rail dominated by intermediaries. This underscores a clear separation between core protocol development and TradFi-oriented use cases, even as institutional engagement continues through other channels.

Treasury overhaul and financial model shift

The restructuring is tied to a broader treasury policy shift initiated in 2025 and formalized in a 2026 framework.

Currently, the Foundation spends about 15% of its treasury annually. Under the new endowment-style approach, it aims to gradually reduce that figure to around 5% by 2030, a level it considers sustainable for long-term operations, according to analysis cited by CoinMarketCap Academy.

Employees impacted by the layoffs will receive severance packages of at least one month’s salary per year of service, plus retirement benefits and additional support such as career coaching and ecosystem placement assistance. Since early 2026, several senior figures have left the organization, including former co-executive directors Tomasz Stańczak and Hsiao-Wei Wang, with interim leadership currently in place.

The announcement comes alongside the emergence of Ethlabs, an independent protocol research group formed by former Ethereum Foundation contributors, highlighting a broader shift of development activity toward external ecosystem organizations.

Near-term funding and ecosystem transition risks

Following the announcement, concerns have been raised 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 declines.

This period is seen as a key transition window, separate from the longer-term question of whether the reduced-spending model can sustain ongoing research output at scale.

In the near term, attention is likely to move away from ETH price action—which slipped 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 supported by the Foundation.

Meanwhile, ecosystem participants such as Consensys continue advancing parallel work in areas like zero-knowledge proofs, some of which overlaps with areas the Foundation is now de-emphasizing. The core question is no longer whether restructuring was necessary, but whether decentralized funding channels can maintain continuity in Ethereum’s development pipeline.