The Ethereum Foundation, the organization that oversees the development of the second-largest blockchain by market capitalization, is allocating 50,000 ether (ETH), worth around $165.3 million at the time of writing, to actively engage with the decentralized finance (DeFi) ecosystem.
This strategic initiative will see the Foundation establish a 3-of-5 multisig wallet through Safe, which has been recognized for its proven safety and user-friendly experience. An initial test transaction has been sent to Aave, one of the leading lending protocols in the Ethereum ecosystem, following closely behind the liquid staking protocol Lido.
Engaging in the DeFi space could be a significant driver for the growth of the Ethereum Foundation’s treasury, particularly after the recent 39% shrinkage over a span of less than three years, reducing it to $970.2 million as of October 31. Notably, the nonprofit holds a substantial portion of its treasury in ether, which has recently faced challenges, including a dip to a four-year low in value against bitcoin.
According to Ethereum co-founder Vitalik Buterin, the Foundation has thus far refrained from staking its ETH to generate revenue through staking rewards due to regulatory and neutrality concerns. At the current CESR Composite Ether Staking Rate, the Foundation could potentially earn a yield of 3.31% on its ether holdings.
In an update over the weekend, Buterin also confirmed that the organization is experiencing significant transformations in its leadership structure, a process that has been ongoing for nearly a year. These changes aim to enhance technical expertise within the Ethereum Foundation’s leadership, foster better communication and collaboration with stakeholders across the Ethereum ecosystem, and actively support application builders.
Importantly, Buterin emphasized that the Foundation is not looking to pursue any radical ideological shifts, engage in aggressive lobbying of regulators, nor transform into a highly centralized entity. The focus remains on maintaining its decentralized ethos while promoting growth and innovation within the Ethereum network.
