Ethereum Foundation Sets New Treasury Policy, Caps Annual Spending at 15%
The Ethereum Foundation (EF) has unveiled a comprehensive treasury policy to ensure long-term financial stability and support for the Ethereum ecosystem. Key features include a 15% cap on annual spending, ETH-to-fiat conversion strategies, and a framework for conservative DeFi participation.
In a shared on X, EF says the new approach reflects a shift toward sustainable, mission-aligned asset management inspired by endowment-style practices used by nonprofit institutions.
The Ethereum Foundation will limit its operational spending to no more than 15% of its total treasury value each year with the goal to maintain reserves that can sustain 2.5 years of operations under current cost structures.
Over the next five years, EF intends to lower the cap to 5%, aligning its financial posture with long-term sustainability models.
To manage market volatility, EF has adopted a dynamic formula that adjusts its ETH holdings based on expected expenses and prevailing prices. If ETH rises, fewer tokens will be liquidated; if prices drop, EF may convert more ETH to fiat to meet liquidity needs.
and technical requirements.
The foundation’s DeFi exposure will remain modest and carefully segmented. Rather than pursue high-risk, high-yield opportunities, EF will prioritize capital flexibility and security.
Additionally, deployments will include supplying wrapped ETH (wETH) to established lending protocols, maintaining a small footprint to avoid dominating liquidity in any single protocol. EF emphasized that all DeFi activities will reflect its commitment to decentralization, safety, and protocol neutrality.
EF will only sell ETH when needed to maintain fiat reserves, using both off-ramps and decentralized exchanges. All sales will follow a risk-aware, transparent strategy to avoid sudden market impacts.
ETH is also deployed via solo staking and lending on decentralized finance (DeFi) platforms that meet stringent criteria around decentralization, transparency, and technical resilience.
EF may also borrow stablecoins to improve capital efficiency, subject to strict protocol evaluations that assess smart contract risk, governance exposure, custodianship issues, and oracle dependencies.
The Ethereum Foundation also laid out plans to structure its fiat reserves across three key segments. First, it will hold sufficient cash reserves. These are to cover immediate operational needs and ensure real-time liquidity is always available.
Alongside this, the Foundation will allocate funds to liability-matched assets such as investment-grade bonds and fixed-term deposits, which are designed to meet longer-term financial obligations.
Lastly, tokenized real-world assets (RWAs) will be incorporated into the reserve strategy. This will be treated on par with fiat holdings, provided they meet all relevant regulatory standards and risk management criteria.
Beyond fiscal responsibility, EF reaffirmed its ideological commitment to Ethereum’s cypherpunk roots. Through its “Defipunk” framework, EF will support privacy-focused, open-source, and permissionless DeFi protocols and apply these principles to its internal operations and external ecosystem support.
EF warned that as Ethereum continues to grow and attract institutional capital, the risk of coercion, censorship, and centralization increases. In response, it plans to deepen support for tools that preserve privacy, even if they come with higher gas fees or user friction.
Notably, EF’s Co-Executive Directors (Co-EDs) will continue to report directly to the Board, supported by the Foundation’s finance team. Quarterly reports will disclose investment performance, protocol engagement, and treasury composition.
Additionally, the EF’s annual report will offer an expanded breakdown of its holdings — including idle ETH, deployed ETH, fiat, and DeFi positions — as part of its commitment to community trust, fiscal transparency, and responsible governance.