Ethereum Foundation's First Public Layoffs: A Delayed Self-Correction

CN
3 days ago

Original Author: Nancy, PANews

In the face of increasing external criticism regarding the ambiguity of its technological direction, low collaboration efficiency, and centralized governance, the Ethereum Foundation (EF) is undergoing a profound organizational restructuring.

R&D Team Renamed and Restructured, Strategic Adjustments Spark Controversy

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

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

The Ethereum Foundation explicitly stated that the newly formed Protocol team will pursue these three strategic goals and appoint leaders 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 be supported by renowned researcher and cryptographer Dankrad Feist, who is the namesake of Ethereum's new sharding proposal "danksharding." Feist previously faced controversy for receiving a large number of tokens due to his advisory role with Ethereum's restaking protocol EigenLayer, after which he resigned from the advisory position.

Ethereum Foundation's First Public Layoffs: A Delayed Self-Correction

Organizational Structure of the Ethereum Foundation Before Restructuring Source: Internet

At the same time, the foundation also indicated that some R&D members would no longer continue their tenure. Although the official announcement did not disclose a specific layoff list, it appears that about a dozen R&D personnel have left, and the departmental responsibilities have become more detailed and clear. EF encourages other ecosystem projects to absorb these experienced talents and announced the recruitment of new members, with key positions including user experience lead and performance engineering lead.

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

"We hope this brand-new organizational structure will allow internal teams to focus more and drive key initiatives forward. At the same time, we have had to make some very difficult decisions. It is heartbreaking to say goodbye to talented and dedicated colleagues. This decision does not reflect a disregard for their value or contributions," 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," stated Ethereum core developer Peter Szilagyi, emphasizing that great companies have long understood that their most valuable asset is people—team members. Google even explicitly states in its onboarding manual: developers come before users, who are ubiquitous. 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 adjustments, pointing out that the definition of "focus" usually means reduction rather than increase, especially emphasizing that there should be no conflict between goals. When considering from the perspective of the third goal (i.e., L1 and L2 network scaling, improving user experience), the first goal (i.e., layoffs) contradicts the second goal (i.e., clarifying responsibilities).

Miles Jennings, policy director and general counsel at a16z crypto, recently pointed out that the crypto industry needs to move beyond the nonprofit foundation model, as it no longer meets current needs. He believes that while the foundation played a role in avoiding regulation and promoting decentralization in its early days, it has now evolved into a centralized gatekeeper due to misaligned incentives, legal and economic constraints, and operational inefficiencies, deviating from its original intention. With the U.S. Congress proposing a maturity-based regulatory framework, the crypto industry is presented with an opportunity to break free from foundations. Ordinary corporate structures are superior to foundations, allowing for efficient capital deployment, attracting top talent through equity incentives, and achieving rapid response and continuous growth through market feedback. Jennings emphasized that companies align incentives with token holders through market discipline and clear financial metrics (such as revenue and profit margins), while foundations struggle to optimize resource allocation due to a lack of accountability and profit-driven motives, and employee incentives are limited by token price fluctuations, making sustainability difficult. Existing tools such as public benefit corporations, network revenue sharing, milestone token lock-up periods, and contracts can address potential misalignments between companies and token holders. Additionally, emerging solutions like DUNA and BORGs provide simplified pathways to implement these solutions while eliminating the complexity and opacity of foundation structures. The next era of crypto will be built on scalable systems—systems with real incentives, real accountability, and real decentralization.

Advancing Internal Organizational Restructuring, A Delayed Self-Correction

The Ethereum Foundation's organizational restructuring did not come out of the blue but is a culmination of years of accumulated structural contradictions and external criticism.

In the past, external critics have accused the foundation of being overly engrossed in long-term research while neglecting the short-term needs of users and developers, and there has been ongoing skepticism about its centralized governance structure. For instance, former Ethereum Foundation engineer Hari candidly pointed out this year that Ethereum and its virtual machine (EVM) lack a clear and cohesive technical vision, and that R&D progress is slow. He warned that without decisive changes, the future could become rigid. He suggested reducing reliance on pure research and shifting towards a product-oriented delivery pace.

Similar calls have come from early Ethereum member Anthony DOnofrio, who criticized EF as a "centralized decentralized organization," with an executive director, finance department, and a paid developer circle. While this structure is effective in coordination, it deviates from the ideal of decentralization. He urged that the future Ethereum needs not only technical research but also "visionary leaders" who understand its social and political impacts.

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

As one of the most symbolic figures of Ethereum, co-founder Vitalik Buterin's role in the Ethereum Foundation has also long been a subject of controversy. For example, in February of this year, community member Ameen Soleimani even initiated a vote to explore whether Vitalik plays the role of "king" (governance decision-maker) or "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 hold 3 out of 5 seats on the EF board has not been true since 2017; since then, I have only held 1 out of 3 seats."

In the face of criticism and structural challenges, the Ethereum Foundation also initiated several internal reform measures earlier this year. As early as January, Vitalik publicly announced a transformation of the foundation's leadership model aimed at enhancing technical expertise and strengthening communication with developers. According to Dragonfly managing partner Haseeb Qureshi, the EF leadership had gradually broken away from the closed-door mentality of "not created by me," showing greater openness and inclusivity towards external ideas.

In February, former Ethereum Foundation executive director Aya Miyaguchi was promoted to chair. Aya has long advocated for a "subtraction philosophy," arguing that the foundation should avoid becoming a highly centralized power entity, promoting decentralization and community-led development, and likening Ethereum to an "infinite garden" that encourages open, permissionless innovation, emphasizing long-term sustainability over short-term gains. However, her idealistic style has also sparked some controversy, with critics questioning its abstract nature and lack of execution. After her transition to chair, she primarily focuses on promoting strategic partnerships and maintaining relationships, reducing her direct involvement in specific affairs, which has been interpreted by the community as a "demotion."

Additionally, the Ethereum Foundation has also begun exploring the integration of AI and governance, appointing Devansh Mehta as the head of AI × public product governance, and continuing to strengthen its technical backbone by appointing Hsiao-Wei Wang and Tomasz Stańczak as co-executive directors, both of whom are key contributors to the Ethereum Beacon Chain and founders of the Nethermind execution client, respectively.

While high-level adjustments are frequent, core members of the Ethereum Foundation continue to leave. For instance, in January, Ethereum core developer Eric Conner announced on social media that he was leaving the Ethereum Foundation, citing issues of opacity, disconnection from the community, and resistance to change, believing that the foundation could still operate normally with an 80% budget cut. Ethereum Foundation researcher Danny Ryan also announced his departure after contributing to the foundation for seven years. Just before Aya's appointment, he was seen as the most supported potential leader in an informal community survey, reflecting the community's strong expectations for practical technical talent. The aforementioned Peter Szilagyi, maintainer of the Ethereum core client Geth, also announced a temporary departure last November, ending nearly a decade-long career with Ethereum. He had previously stated, "Ethereum is losing its direction."

It can be said that this organizational change within the foundation is both a delayed self-correction and an experiment in future sustainable governance models. However, how to balance idealism with execution efficiency, technological research 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.

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