Inside the Ethereum Foundation Overhaul: is a Multi-Node Structure Bullish?

The Ethereum Foundation cut 20 percent of its staff and reduced its budget by 40 percent, with two co-executive directors stepping down within months of each other. The foundation narrowed its focus to censorship resistance, decentralization, and foundational research, publicly telling the community it would do less and that others should step up. A former EF developer warned the foundation could face a funding crisis within three to nine months. Boonen acknowledged the foundation's communication was poor, the talent exodus was real, and the lack of clarity over the past year did real if not fatal damage, though he stopped short of calling it fatal.

Within weeks of the pullback, ETH Labs formed with 50 institutions and Ethereum leaders participating, including five senior researchers who spent years inside the Ethereum Foundation. Joseph Chalone described ETH Labs as the first of several private sector support initiatives forming what he called a multi-node distributed way of supporting the Ethereum ecosystem, with more organizations expected to be announced over the following weeks and into the summer. Anchor investors include Sharp Link, Joe Lubin, and Tom Lee's Bitmain, plus 50 other organizations and individuals, though a publicly shared wallet had raised only around 80,000 dollars at the time of the conversation, separate from anchor commitments.

ETH Labs is structured as a not-for-profit with full transparency, annual outside audits, board meetings, and rotating independent board seats. Chalone stated that Sharp Link and Tom Lee will not hold board seats and that funders cannot direct research, amend governance, or block disbursements. Core Ethereum development costs approximately 30 million dollars per year. The upcoming Glastonbury release is currently in testing and is expected to triple Ethereum throughput.

ETH Labs goals include cheap and fast transactions, confident asset storage, seamless L1 to L2 movement, larger contract sizes, and instant finality. Victor Boonen stated that using Ethereum Mainnet as a user feels terrible and that basic usability should be table stakes in 2026. He argued it is impossible for ETH the asset to win without Ethereum the protocol winning, and that subsidizing early L2 activity mirrors how nations and businesses build market share before monetizing. Boonen also said the focus must be playing to win rather than playing not to lose, and noted there is natural competition between ETH Labs and the Ethereum Foundation over which EIPs get prioritized in each fork, even if they are not in direct competition overall.

Chalone cited that over 50 percent of all stablecoin transactions and settlements occur in the Ethereum ecosystem including mainnet and L2s, over 60 percent of real-world asset activity occurs in the Ethereum ecosystem, and Solana has less than one-tenth of the stablecoin activity of the Ethereum ecosystem. He argued institutions do not want to move from a vendor-locked-in world to another vendor-locked-in chain and need neutral characteristics that cannot be changed by concentrated ownership or governance. Chalone also said Ethereum is ahead of any other major chain on quantum proofing, which he expects to become a competitive advantage, and that privacy features are expected to be built natively into Ethereum mainnet, which will matter for institutions.

Current transactions touching multiple smart contracts across mainnet and L2s happen in sequence with each step able to succeed or fail independently, which is problematic for institutions requiring finality. Synchronous composability would allow a transaction spanning multiple smart contracts or networks to execute atomically within a single block, and Chalone framed this as critical for institutional adoption.

Boonen described Ethereum as betting on fragmentation with multiple organizations and competing priorities in each hard fork, contrasting this with Solana's single foundation and clear direction. He acknowledged the optimal government in theory is a benevolent dictatorship but that it cannot be guaranteed to remain benevolent or that successors will be. Chalone countered that democracy is the best of bad forms of government and that decentralized governance is the least terrible option for building a global settlement layer. Boonen said he gyrates on an almost daily basis between terror and enthusiasm regarding Ethereum's trajectory, while Chalone predicted the current period will be looked back on as a moment that mattered, using Joe Lubin's phrase the summer of Ethereum love.