Key Takeaways:
The Ethereum Foundation's 2026 restructuring has reshaped the ecosystem's governance, spinning out three independent organizations and cutting roughly one-fifth of its workforce.
The Ethereum Foundation cut 54 positions — roughly 20% of its staff — and reduced its annual operating budget by about 40% in June, capping a year of leadership departures and organizational restructuring that has fundamentally altered how Ethereum's development is governed.
"The changes are not a sign of decline but a necessary part of a broader organizational reset," foundation leadership said, as the organization pivoted from being the ecosystem's primary builder to a long-term steward.
The shakeup began in February when co-executive director Tomasz Stańczak stepped down. By June, co-executive director Hsiao-Wei Wang had also resigned, joining at least nine senior leaders, researchers and executives who departed over the year. The foundation published a new mandate in March built around the CROPS framework — censorship resistance, resilience, openness, privacy and security — recasting its role as a coordinator rather than a central developer.
The restructuring has spawned three independent organizations in as many weeks: ETHLabs, a nonprofit focused on protocol research backed by the ecosystem's largest ETH treasury holders; Ethereum Institutional, a nonprofit coordinating adoption by banks and asset managers; and EthSystems, a for-profit startup commercializing privacy infrastructure for financial institutions. Together, they represent the most significant reorganization in the foundation's 12-year history.
The Spinout Wave
EthSystems launched July 14 as the first for-profit entity to emerge from the foundation. Founded by Mo Jalil, Oskar Thorén and Aaryamann Challani — who previously ran the foundation's Institutional Privacy Task Force — the startup builds confidentiality tools for banks and asset managers using Ethereum, including private bond issuance, confidential stablecoin transfers and cross-chain settlement systems. The company is backed by BitMine Immersion Technologies, SharpLink, Ethereum co-founder Joseph Lubin and SNZ.
"Commercial engagements need a commercial counterparty," EthSystems said in a statement, explaining its decision to operate as a for-profit business. "The model is simple: we continue the work we've been doing, only now we charge for it."
The company argues that confidentiality is the key barrier preventing financial institutions from moving real-world assets onto public blockchains. Ethereum already hosts about $16 billion in tokenized real-world assets and $159 billion in stablecoins, according to RWA.xyz. EthSystems CEO Mo Jalil said privacy is "the difference between Ethereum holding billions today and running trillions tomorrow."
A Leaner Foundation
The remaining foundation staff were reorganized into five core operating groups focused on areas the foundation said only it was uniquely positioned to support. The budget reduction of roughly 40% and the workforce cut of 54 positions were part of a plan to make the organization leaner and more financially sustainable, according to Vitalik Buterin.
The events of 2026 have amounted to the most significant reorganization in the Ethereum Foundation's history. What began with community criticism over governance and technical priorities — with many arguing Ethereum's roadmap had become overly focused on layer-2 scaling while neglecting base-layer improvements — ended with a smaller foundation, new leadership, a redefined mandate and an ecosystem increasingly reliant on independent organizations to drive research, institutional adoption and protocol development.
This article is for informational purposes only and does not constitute investment advice.
