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# The Ethereum Foundation seems like it knows what it's doing, actually
- URL: https://theindex.site/the-quiet-death-of-the-standalone-app/
- Published: 2026-06-17T10:00:00.000Z
- Updated: 2026-09-07T06:08:08.000Z
- Author: Jeffrey Albus 
- Tags: Technology, #Import 2026-07-05 22:13, Issue 01

Many have read its layoffs, leadership departures and spinouts as signs of decline. But the Ethereum Foundation has spent years saying it wants to become smaller.

Commentators have become keen on writing Ethereum’s obituary. *CoinDesk* [warned](https://www.coindesk.com/tech/2026/05/21/ethereum-s-identity-crisis-is-deepening-after-high-profile-brain-drain-frustrates-the-community?ref=theindex.site) that its “identity crisis is deepening” amid a high-profile “brain drain.” *Protos* [blamed](https://protos.com/bizarre-ethereum-foundation-anime-letter-blamed-for-mass-resignations/?ref=theindex.site) mass resignations on a “bizarre Ethereum Foundation anime letter.” *PYMNTS* [claimed](https://www.pymnts.com/cryptocurrency/2026/ethereum-doesnt-know-what-its-supposed-to-be-anymore/?ref=theindex.site) that “Ethereum doesn’t know what it’s supposed to be anymore.”

It’s not hard to see how the crisis narrative took hold. The Ethereum Foundation[ cut 54 positions](https://blog.ethereum.org/2026/06/23/ef-structure?ref=theindex.site), roughly one-fifth of its staff, back in June. Around the same time, Ethereum co-founder Vitalik Buterin[ announced a 40% budget reduction](https://www.coindesk.com/tech/2026/06/23/vitalik-buterin-says-ethereum-foundation-will-cut-budget-40-in-major-reset?ref=theindex.site). Both co-executive directors (only appointed last year) have since resigned — [Tomasz Stańczak in February](https://blog.ethereum.org/en/2026/02/13/leadership-update?ref=theindex.site) and[ Hsiao-Wei Wang in June](https://www.coindesk.com/tech/2026/06/18/ethereum-foundation-loses-another-key-leader-as-co-executive-director-hsiao-wei-wang-resigns?ref=theindex.site).

Then, within 22 days, three groups led or staffed by former foundation contributors launched as independent organizations:[ Ethlabs](https://ethlabs.org/?ref=theindex.site),[ Ethereum Institutional](https://www.coindesk.com/tech/2026/07/01/ethereum-institutional-launch-draws-support-from-across-the-ethereum-ecosystem?ref=theindex.site), and[ EthSystems](https://ethsystems.org/blog/introducing-ethsystems/?ref=theindex.site). Their remits reconstitute research, institutional outreach, and privacy engineering.

From a distance, the whole thing seems to be ripping apart at the seams. But from my vantage point, the layoffs and spinouts look like an act of supreme clarity. The organization has spent years saying it wants to become smaller, hand work off, and make itself less essential. Moreover, the very few people it has recently added or elevated suggest the foundation is tightening around core values much of the rest of crypto has shed.

In a 2022 report, the foundation said it [resisted](https://ethereum.foundation/report-2022-04.pdf?ref=theindex.site) “the natural tendency of organizations to grow and accumulate power.” Instead of pulling work in-house, it would push resources into the community. “The story of the Ethereum ecosystem,” it wrote, “should not become the story of the Ethereum Foundation.”

March’s[ Ethereum Foundation Mandate](https://ethereum.org/foundation/mandate?ref=theindex.site) committed that philosophy to open practice. Its “Only-EF Rule” says the organization should focus on critical work that has no other natural home. Its “Handoff for Ecosystem Maturity” says a function should move outside the foundation as soon as an aligned actor can manage it. The document calls this “subtraction for resilience.”

On June 23, the foundation said its months-long reorganization was explicitly part of implementing the mandate and its treasury policy. It [emerged](https://blog.ethereum.org/2026/06/23/ef-structure?ref=theindex.site) with significantly fewer colleagues and a new set of so-called clusters; working groups focused on the protocol, access, users, community, and institutions. Three weeks earlier, foundation President Aya Miyaguchi[ had written](https://x.com/AyaMiyagotchi/status/2061476758122295757?ref=theindex.site) that as the EF became “more focused and more opinionated,” its team would “naturally become smaller and more concentrated.”

So far as I can tell, the foundation told us what it intended to do, then it did it.

On July 29, after more than a month of limited public discourse and in its first major governance [announcement](https://blog.ethereum.org/en/2026/07/29/ef-board-update?ref=theindex.site) since the layoffs, the foundation appointed the pseudonymous security researcher pcaversaccio to its board for a voluntary, one-year term.

It described “pc” as a “privacy and security maximalist” who had “consistently championed the values at Ethereum’s core” — one who co-founded the emergency security collective SEAL 911, is a member of the foundation’s Silviculture Society advisory group, and was thanked by name for advising on the March mandate. They were also the author of the 2024 document known as the “[Ethereum Cypherpunk Manifesto](https://hackmd.io/@pcaversaccio/the-ethereum-cypherpunk-manifesto?ref=theindex.site).”

After weeks of questions about lost organizational capacity, the Ethereum Foundation answered with a single appointment based on value alignment.

None of this should surprise anyone who has been paying attention. Despite all the podcast hours dedicated to the mandate’s art style and deliberately lurid “Source Seppuku License,” its text is quite direct. The foundation’s bottom line is “not profit, nor organizational growth, nor blind adoption at all costs.” It will support adoption only when that adoption does not compromise censorship resistance, open-source software, privacy, and security (known by the acronym CROPS within the organization).

It also defines “right association” as a strategic principle. The foundation will prioritize people and projects that share its values, including allies in open-source software, civil liberties, public-interest technology, and resilient local communities. Given the choice, it says it would rather work with principled people outside crypto than crypto insiders operating by “a very different set of standards.” It openly [states](https://ethereum.org/foundation/mandate?ref=theindex.site#limits): “The Foundation does not build for everyone.”

That is a door policy.

Not a door policy for the Ethereum network itself, which remains permissionless; the foundation isn’t able (or seemingly inclined) to stop memecoin traders, casino operators, banks, or governments from using it. Instead, the distinction concerns what the EF itself will fund, champion, celebrate, and place at the nexus of its work.

It might be wishful pareidolia on my part, but I read this as the foundation’s answer to the false choice crypto has spent the past several years presenting as inevitable: the degen casino most visibly associated with Solana’s memecoin economy on one side, and the suit-and-tie campaign to re-centralize blockchain into traditional financial infrastructure on the other.

The mandate is a bet that a third constituency still exists. People who are tired of all the now-ubiquitous degen bullshit, but also have no interest in replacing it with the authoritarian rigidity of banks and world governments. Cypherpunks, open-source maintainers, privacy researchers, artists, and public-goods builders who still believe decentralized systems should give users power, privacy, and exit, rather than merely produce better chips for gamblers or better rails for Wall Street.

Speculative capital can and will continue to use Ethereum, but it does not get to define the culture the foundation itself treats as legitimate.

The point of the manifesto (and its ketamine nightmare anime aesthetic) was to communicate very publicly that the foundation had no interest in sanding off its strangest edges to win respectability from the same institutions that blockchain was created to deprecate. Nor a willingness to cater to the loudest, dumbest voices coming from inside our own industry. The cringe is the point. And not caring what outsiders think is punk rock.

Of course, that does not make every departure wise or render every one of the foundation’s layoffs expertly managed. Former foundation researcher Dankrad Feist[ offered](https://x.com/dankrad/status/2068109571814502733?ref=theindex.site) the rebuttal that, “the people who are leaving the Ethereum Foundation are CROPS believers. The problem isn’t with the strategy, it’s with management.”

And sure, a coherent strategy can still be executed badly. Cutting 40% of a budget in one year is practically an act of violence, particularly when the foundation’s own 2025 treasury policy [called](https://blog.ethereum.org/en/2025/06/04/ef-treasury-policy?ref=theindex.site) for annual spending to fall “roughly linearly” from 15% of reserves to 5% over five years. Losing experienced researchers creates risks that no manifesto alone can resolve.

But that’s where the three spinouts are sharpening the division of labor.[ Ethlabs](https://ethlabs.org/?ref=theindex.site) can pursue independent research and development.[ Ethereum Institutional](https://www.coindesk.com/tech/2026/07/01/ethereum-institutional-launch-draws-support-from-across-the-ethereum-ecosystem?ref=theindex.site) can court banks and asset managers.[ EthSystems](https://ethsystems.org/blog/introducing-ethsystems/?ref=theindex.site) can sell privacy engineering and consulting. All can take outside funding, hire beyond the foundation, and operate with incentives the EF considers inappropriate for itself.

There is an obvious catch: all three spinouts count BitMine, SharpLink, and Ethereum co-founder Joe Lubin among their backers. BitMine alone now [holds](https://www.sec.gov/Archives/edgar/data/1829311/000149315226028224/form8-k.htm?ref=theindex.site) about 4.8% of the ether supply, while the foundation [controls](https://x.com/AyaMiyagotchi/status/2061476758122295757?ref=theindex.site) less than 0.2%. So far, subtraction is doing a better job of decentralizing the work than the money. The offices moved next door, but the same three patrons keep showing up with the rent.

With that in mind, I have three predictions:

**First,** the foundation will not refill most of the 54 seats. New appointments will disproportionately resemble pcaversaccio: security, privacy, and open-source people whose alignment with stated values is as important as their résumé.

**Second,** commercial advocacy and “number go up” politics will migrate to independent Ethereum organizations. The EF will tolerate and sometimes cooperate with them, but with no interest in becoming them, regardless of profit motive.

**Third,** the real test will be whether subtraction produces multiplication. If the spinouts survive, diversify their funding, and ship work the foundation no longer needs to coordinate, the restructuring is going to start looking prescient pretty quickly. If they remain dependent on the EF’s legitimacy or a small circle of wealthy backers, the foundation will merely have fragmented its power without actually decentralizing it.

The Ethereum Foundation may still fail. Its critics may be right that Ethereum needs more competitive urgency and less civilizational prose. But to me, the layoffs, the spinouts, the new structure, the mandate, and now the board appointment all point in the same direction: to an organization with unusual clarity about what it is, the people it wants to support, and the culture it hopes to nurture. If its refusal to optimize for price or mass approval is off-putting to you, consider that you may simply not be the community’s intended audience.