Vitalik’s Smaller Ethereum Foundation Plan Could Help ETH
Ethereum is under heavy discussion again after Vitalik Buterin said the Ethereum Foundation should become smaller, more focused, and sell less ETH.
At first, that may sound bearish.
Some people may think a smaller Foundation means Ethereum is losing support. Others may see the phrase “sell less ETH” and immediately connect it to years of community frustration around Ethereum Foundation treasury sales.
But this change may actually be one of the healthier directions for Ethereum’s long-term future.
To understand why, we need to look at three things: what the Ethereum Foundation actually does, why it sells ETH, and why those sales have created such a strong emotional reaction among ETH holders.
What Is the Ethereum Foundation?
The Ethereum Foundation is a non-profit organization that supports the development and long-term growth of Ethereum.
It is not the owner of Ethereum. It does not control the network. It does not run Ethereum like a company runs a product.
Instead, the Foundation acts more like a steward. Its role is to support important work across the ecosystem, including research, developer funding, grants, public goods, protocol coordination, education, and long-term security.
It also helps protect Ethereum’s core values, such as decentralization, censorship resistance, openness, privacy, and security.
This distinction matters.
Ethereum is not supposed to depend on one organization. If the entire ecosystem relies too heavily on the Ethereum Foundation, then Ethereum becomes socially centralized, even if the technology itself remains decentralized.
That is why Vitalik’s latest message matters. A smaller Foundation does not automatically mean a weaker Ethereum. It may mean Ethereum is becoming more mature.
Why Does the Ethereum Foundation Sell ETH?
One of the biggest criticisms against the Ethereum Foundation is that it sells ETH.
Many holders believe these sales create pressure on the market. Some even argue that ETH cannot perform strongly because the Foundation keeps selling.
But the reality is more complicated.
The Ethereum Foundation sells ETH mainly because it needs money to operate. Like any non-profit organization, it has expenses. These include grants, salaries, research funding, developer support, events, infrastructure, legal work, and other ecosystem-related costs.
Aya Miyaguchi previously explained that the Foundation has an annual budget of around $100 million, largely made up of grants and salaries, and that some recipients can only accept fiat currency. This means the organization sometimes needs to convert ETH into fiat to pay for real-world expenses.
So yes, selling ETH to pay salaries is partly true. But it is not only about salaries.
A more accurate explanation is that the Foundation sells ETH as part of treasury management to fund operations, grants, ecosystem development, and staff compensation.
Ethereum Foundation Selling Is Not the Main Reason ETH Struggles
From a direct market impact perspective, Ethereum Foundation sales are usually not large enough to fully explain ETH’s price performance.
Vitalik said the Foundation currently holds around 0.16% of all ETH, which is much smaller than the treasury holdings of many other blockchain foundations.
That means the Foundation is not sitting on a massive share of the ETH supply compared with the entire market.
Even when it sells ETH, the direct supply pressure is usually small relative to ETH’s total liquidity, market cap, and daily trading volume.
But crypto markets are not driven only by numbers.
They are also driven by confidence, emotion, and narrative.
That is where the real problem begins.
Why Ethereum Foundation Sales Create So Much Negative Sentiment
Even if Foundation selling does not directly crash the ETH price, it still creates a bad feeling among holders.
For many investors, the Ethereum Foundation represents the heart of the Ethereum ecosystem. So when it sells ETH, people do not see it as a normal treasury operation. They see it emotionally.
The reaction is simple:
“If the Ethereum Foundation is selling ETH, why should we hold?”
This may not always be logical, but it is powerful.
In traditional finance, treasury sales may be seen as normal business operations. In crypto, foundation token sales often feel personal. Holders may view them as a signal of weak conviction, even when the money is being used for development, grants, research, or salaries.
This becomes even more sensitive when ETH is already underperforming.
If ETH price is weak and the Foundation sells more tokens, the community becomes frustrated. People start connecting every sale with ETH’s poor price action, even when the real causes may also include macro conditions, weaker demand, competition from other chains, Layer 2 value capture debates, ETF flows, and overall market sentiment.
So the issue is not only selling pressure.
The bigger issue is trust.
Repeated ETH sales can make holders feel that Ethereum’s core organization is not aligned with them. That perception can damage morale, even if the actual market impact is limited.
Vitalik’s Message: Smaller, More Focused, and Selling Less ETH
Vitalik Buterin has now responded to these concerns with a clearer direction.
According to reports, he said the Ethereum Foundation should become a “smaller ship,” sell less ETH, and focus more narrowly on long-term survival instead of trying to do everything. He also described the Foundation’s focus through the idea of CROPS: censorship resistance, capture resistance, openness, privacy, and security.
The core idea is simple:
The Ethereum Foundation should choose longevity over size.
Instead of becoming a large organization that tries to manage every part of Ethereum, it should focus only on areas where it can provide unique value. These include Ethereum’s long-term resilience, security, privacy, openness, and resistance to capture or censorship.
This is an important shift.
A smaller Foundation means fewer expenses. Fewer expenses mean less need to sell ETH. Less selling means less negative sentiment from holders.
More importantly, it reduces the risk that Ethereum becomes too dependent on one central organization.
The Ethereum Foundation Should Be One Node, Not the Center of Ethereum
One of the strongest points from Vitalik’s message is that the Ethereum Foundation should not be seen as the center of Ethereum.
Ethereum is supposed to be an open ecosystem made of many independent contributors: client teams, researchers, Layer 2 teams, wallet developers, app builders, DeFi protocols, infrastructure providers, educators, investors, and users.
If the Foundation becomes too big, the community may start expecting it to solve everything. That creates dependency. It also creates political pressure, because every decision it makes becomes too important.
Vitalik’s direction is the opposite.
The Ethereum Foundation should be one important node in Ethereum’s wider network, but not the boss of Ethereum.
This matches the idea that Ethereum’s strength should come from its ecosystem, not from one organization. The Foundation can support important work, but it should not become the permanent center of power.
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A Smaller Ethereum Foundation Could Make Ethereum Stronger
Some people may look at a smaller Foundation and think it means Ethereum is losing support.
But that is not necessarily true.
A smaller structure could make Ethereum stronger in several ways.
- First, it can reduce unnecessary ETH selling. If the Foundation spends less, it needs to sell less. This can weaken one of the most negative narratives around ETH.
- Second, it can force the broader ecosystem to take more responsibility. Ethereum is already much bigger than one foundation. Layer 2 networks, app developers, infrastructure companies, and research groups should not wait for one organization to lead every direction.
- Third, it can make the Foundation more focused. A smaller organization can concentrate on the most important long-term problems instead of spreading itself too thin across too many areas.
- Fourth, it supports Ethereum’s decentralization philosophy. If Ethereum is truly decentralized, its future should not depend too heavily on the Foundation, or even on Vitalik himself.
There Are Still Risks
Of course, this change is not automatically perfect.
If the Foundation becomes smaller too quickly, some important work may lose support. Research could slow down. Coordination may become harder. The community may feel uncertain, especially when senior contributors leave or when internal direction changes.
So the key question is not only whether the Ethereum Foundation becomes smaller.
The real question is whether the rest of the Ethereum ecosystem is ready to take more responsibility.
If independent teams, Layer 2s, researchers, developers, and community groups step up, then this could become a major positive turning point.
But if everyone still expects one central organization to lead while that organization is shrinking, the transition could create confusion.
Conclusion
Vitalik’s idea of making the Ethereum Foundation smaller should not be viewed only as bad news.
It may actually be a necessary step for Ethereum’s maturity.
The Foundation has played an important role in funding research, supporting developers, and protecting Ethereum’s core values. But Ethereum cannot depend forever on one central organization.
Its ETH sales may not be the main reason ETH price struggles, but they have clearly created negative sentiment among holders. Every sale becomes a symbol. It makes some investors feel that the Foundation is not fully aligned with the market, even when the money is used for grants, salaries, and ecosystem operations.
By becoming smaller, spending less, and selling less ETH, the Foundation can reduce this negative narrative.
More importantly, it can push Ethereum closer to what it is supposed to be: a decentralized ecosystem supported by many independent builders, not one foundation.
In the long run, a smaller Ethereum Foundation may not mean a weaker Ethereum.
It may mean a healthier Ethereum.
