Ethereum Foundation Announces First Public Layoffs: A Delayed Self-Correction

Original author: Nancy, PANews

In the face of increasing external doubts about the unclear technical direction, low collaboration efficiency, and centralized governance, the Ethereum Foundation (EF) is undergoing a deep organizational restructuring.

The renaming and restructuring of the R&D team has sparked controversy over strategic adjustments.

On June 2, the Ethereum Foundation announced a reorganization of its research and development team, making significant structural adjustments to the internal "Protocol Research and Development Team (PR&D)" and officially renaming it to "Protocol." This restructuring is considered not merely a simple organizational adjustment, but a systematic transformation from strategic goals, talent allocation to governance philosophy.

The newly formed "Protocol" team will focus on three strategic goals: expanding the mainnet (L1), enhancing data availability (blobs), and improving user experience (UX), in order to establish a closer collaboration mechanism and clear resource allocation.

The Ethereum Foundation has clearly stated that the newly formed Protocol team will pursue three strategic goals and has appointed a leader for each strategic direction: Tim Beiko and Ansgar Dietrichs will be responsible for L1 scaling, Alex Stokes and Francesco D'Amato will handle blob scaling, while Barnabé Monnot and Josh Rudolf will focus on enhancing user experience. They will receive support from renowned researcher and cryptographer Dankrad Feist. Feist is the namesake of Ethereum's new sharding scheme "danksharding" and was embroiled in controversy after receiving a large amount of tokens due to his advisory role with Ethereum's restaking protocol EigenLayer, after which he resigned from the advisory position.

Ethereum Foundation Reorganization of Organizational Structure Source: Internet

At the same time, the foundation also said that some R&D members will not continue to serve. Although the official list of layoffs has not been disclosed, from the perspective of PR&D restructuring changes, about a dozen R&D personnel have left, and the division of responsibilities of the department is more detailed and clear. EF is encouraging other ecosystem projects to include this group of experienced talent, and is announcing new recruits, with a focus on leading user experience and performance engineering.

The Ethereum Foundation stated that this restructuring will accelerate the pace of converting research outcomes into products and advance Ethereum's scalability and user-friendliness with higher standards.

"We hope that this brand new organizational structure will allow internal teams to focus more and drive key initiatives forward. At the same time, we also have to make some very difficult decisions. Saying goodbye to those talented and diligent colleagues is heartbreaking. This decision does not reflect that their value or contributions are overlooked," said Hsiao-Wei Weng, Co-Executive Director of the Ethereum Foundation.

However, the restructuring of the Ethereum Foundation has also sparked intense reactions from core developers and the industry. "At this moment, the term 'decentralization' has quietly and permanently been removed from Ethereum's roadmap." Ethereum core developer Peter Szilagyi stated that great companies have long understood that their most valuable asset is people—team members. Google even explicitly mentions in its onboarding manual: developers come before users, who are everywhere. Organizations that cannot understand this will ultimately become marginalized. Yes, that is the subtext.

Kyle Samani, co-founder of Multicoin Capital, also questioned the Ethereum Foundation's strategic alignment, noting that the definition of "focused" usually means reducing rather than increasing, especially emphasizing that there should be no conflict between goals. When considered from the perspective of the third goal (i.e., L1 and L2 network expansion and improving user experience), there is a contradiction between the first goal (i.e., layoffs) and the second goal (i.e., clarifying the division of responsibilities).

Miles Jennings, head of policy and general counsel at a16z crypto, recently pointed out that the crypto industry needs to move beyond the non-profit foundation model, as it is no longer fit for purpose. He believes that although foundations played a role in circumventing regulation and promoting decentralization in the early days, they have now evolved into gatekeepers of centralized control due to problems such as misalignment of incentives, legal and economic constraints, and operational inefficiencies. With the U.S. Congress proposing a control-based maturity regulatory framework, the crypto industry has an opportunity to move away from foundations. Ordinary development companies are better structured than foundations, able to deploy capital efficiently, attract top talent through equity incentives, and achieve rapid response and sustained growth with market feedback. Jennings emphasized that the company aligns with the incentives of token holders through market discipline and clear financial metrics (e.g., revenue, profit margins), while the foundation struggles to optimize resource allocation due to a lack of accountability and profit drive, and employee incentives are limited by token price fluctuations. Public interest corporations, network revenue sharing, milestone token lock-up periods, and contract protection existing tools address potential misalignments between companies and token holders. In addition, two emerging programs, DUNA and BORGs, provide a streamlined path to implementing these solutions while eliminating the cumbersomeness and opacity of foundation structures. The next era of crypto will be built on systems that scale – systems with real incentives, real accountability, and real decentralization.

Promoting Internal Organizational Restructuring, A Delayed Self-Correction

The restructuring of the Ethereum Foundation did not happen suddenly, but rather is a result of years of accumulated structural contradictions and a concentrated outbreak of external criticism.

In the past, the outside world criticized the foundation for being overly obsessed with long-term research and neglecting the short-term needs of users and developers, while continuously questioning its centralized governance structure. For example, former Ethereum Foundation engineer Hari bluntly pointed out this year that Ethereum and its virtual machine (EVM) lack a clear and cohesive technical vision, with slow research and development progress. Without decisive reforms, it may fall into rigidity in the future. He suggested reducing reliance on pure research and shifting towards a product-oriented delivery rhythm.

Similar calls have come from early Ethereum member Anthony DOnofrio, who criticized the EF as structurally a "centralized decentralized organization," with an executive director, a finance department, and a circle of paid developers. While this structure is effective in coordination, it deviates from the ideals of decentralization. He called for future Ethereum to require not only technological research but also "visionary leaders" who understand its social and political implications.

Aave founder Stani Kulechov also previously tweeted suggesting that the Ethereum Foundation reform its budget and operational structure, dismiss irresponsible members, and allocate resources based on capability. He emphasized that the Ethereum Foundation should be a streamlined and efficient organization.

As the most symbolic figure of Ethereum, co-founder Vitalik Buterin's role in the Ethereum Foundation has long been a subject of controversy. For example, in February this year, community member Ameen Soleimani even initiated a vote to explore whether Vitalik plays the role of a "king" (governance decision-maker) or a "prophet" (value leader) in the Ethereum ecosystem, with 80.1% of voters believing he is closer to the latter. In response, Vitalik stated, "The claim that I have 3 out of 5 seats on the EF board has not been true since 2017; since then, I have only had 1 out of the 3 seats."

In the face of criticism and structural challenges, the Ethereum Foundation also launched several internal reform initiatives earlier this year. As early as January, Vitalik publicly announced reforms to the leadership model of the Foundation, aimed at enhancing technical expertise and strengthening communication with developers. According to Dragonfly Managing Partner Haseeb Qureshi, at that time, the EF leadership had gradually broken away from the closed-door mentality of "not invented here," demonstrating greater inclusivity and openness to external ideas.

In February, Aya Miyaguchi, the former executive director of the Ethereum Foundation, was promoted to chair. Aya has been an advocate of a "subtractive philosophy", arguing that foundations should avoid becoming highly centralized authorities, promoting decentralization and community-led decentralization, and likening Ethereum to an "infinite garden" that encourages an open, permissionless innovation ecosystem that emphasizes long-term sustainability rather than short-term benefits. However, her idealistic style has also sparked some controversy, with some questioning it as too abstract and lacking in execution. After Aya's transfer to the chairmanship, she is mainly responsible for promoting strategic cooperation and maintaining relationships, and will reduce the direct participation in specific affairs, which was once interpreted by the community as "rising and falling".

In addition, the Ethereum Foundation has also launched an exploration of the integration of AI and governance, appointing Devansh Mehta as the head of AI × Public Goods Governance, and continuing to strengthen its technical backbone by appointing Hsiao-Wei Wang and Tomasz Stańczak as co-executive directors, who are respectively key contributors to the Ethereum Beacon Chain and founders of the Nethermind execution client.

While there are frequent high-level adjustments, the core members of the Ethereum Foundation are also continuing to lose. For example, in January this year, Eric Conner, the core developer of Ethereum, announced his withdrawal from the Ethereum Foundation in a post on social platforms, pointing out that EF has problems such as opacity, disconnection from the community, and resistance to change, and believes that the foundation can still operate normally after cutting the budget by 80%. Ethereum Foundation researcher Danny Ryan, who also announced his retirement in 2024 after seven years of contributing to the foundation, was seen as the most supported potential leader in an informal community survey on the eve of Aya's appointment, reflecting the community's strong expectations for do-it-yourself tech talent. The aforementioned Peter Szilagyi, the maintainer of Geth, the core client of Ethereum, also announced his temporary departure in November last year, ending a nearly decade of Ethereum career. He once confessed that "Ethereum is losing its way." ”

It can be said that this organizational reform of the foundation is both a belated self-correction and an experiment for a future sustainable governance model. However, how to balance idealism with execution efficiency, technological research and development with ecological coordination, and the vision of decentralization with practical governance will be a long-term proposition for EF and the entire Ethereum ecosystem in the next phase.