So What if the Ethereum Foundation Holds Fiat?

The Ethereum Foundation disclosed in an annual report that nearly 20% of its treasury is made up of non-crypto investments.

AccessTimeIconApr 27, 2022 at 11:30 a.m. UTC
Updated May 11, 2023 at 4:36 p.m. UTC
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ETH devs connect in Amsterdam

This past Monday capped off the final day of Devconnect – a week-long gathering for Ethereum developers organized by the Ethereum Foundation (EF). The conference in Amsterdam overlapped with 4/20 (or April 20, apparently a working holiday in Ethereum-land), but the real draw was the expert talks on everything from maximum extractable value (ooh) to applied zero-knowledge technology (ahh).

The Devconnect itinerary was jam-packed with panels and presentations featuring everyone from Ethereum co-founder Vitalik Buterin to pseudonymous crypto-sage Hasu.

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum’s evolution and its impact on crypto markets. Subscribe to get it in your inbox every Wednesday.

The conference also aligned with the release of the Ethereum Foundation’s 2022 annual report, marking the first time the organization has publicly disclosed a summary of its finances.

In the report, the non-profit steward of the Ethereum ecosystem disclosed that it holds around 0.3% of all ether (ETH). While there’s been a good bit of reporting on this number, you could have just looked up the EF’s Ethereum address yourself if ever you wanted to know how much ETH was in the organization’s treasury.

What’s more interesting is that in addition to $1.3 billion in ETH and $11 million in other cryptocurrencies, the EF disclosed that it holds $300 million in non-crypto investments.

Ethereum Foundation Treasury as of March 31, 2022 (Ethereum Foundation)
Ethereum Foundation Treasury as of March 31, 2022 (Ethereum Foundation)

Fiat to the moon?

While it would be easy to poke fun at the Ethereum Foundation for holding some of its treasury in cold, hard, government-issued cash, I don’t agree with the Twitter critics who say this signals the EF doesn’t have faith in ETH as a true store of value.

It’s not anti-Ethereum to admit that ETH still suffers from relatively high volatility, so having a bunch of fiat on hand to invest and pay the bills makes sense on a practical level.

Mind you, the Ethereum Foundation hasn’t always been so flush with cash. Crypto journalist Laura Shin recorded the Ethereum Foundation’s rocky financial past in her recently published (and highly entertaining) history of Ethereum, “The Cryptopians.”

The Ethereum Foundation, which is registered as a Swiss non-profit, was formed in 2014 to manage the original ETH token distribution event and serve as an official hub for Ethereum ecosystem development.

Around 3 million ETH (or 5% of the initial ETH supply) went to a long-term EF endowment, according to crypto research firm Messari, but – as Shin notes in her book – a large portion of that ETH was sold in Ethereum’s earlier years to keep the fledgling project afloat.

Throughout its early history, the Ethereum Foundation was apparently plagued by financial mismanagement, enough to nearly imperil the entire project.

While $300 million is a whole lot of fiat, a diverse investment portfolio could go a long way toward helping the EF (and perhaps Ethereum as a whole) weather the storm should ETH ever take a major hit to its price.

Following the money

In addition to providing a breakdown of the EF treasury, the report includes details on how the treasury has been used to spur ecosystem growth over the past year.

The EF said it spent $48 million last year to continue its mission of growing the Ethereum ecosystem. “Approximately $20 million of this total was in the form of external spending, which includes grants, delegated domain allocations, third party funding, bounties, and sponsorships,” according to the report. “The remaining $28 million was used to fund teams and projects within the EF community.”

Ethereum Foundation 2021 Spending (Ethereum Foundation)
Ethereum Foundation 2021 Spending (Ethereum Foundation)

In its report, the EF spoke about how it has partnered with third-party organizations like Gitcoin to use quadratic funding to reward grants to public goods projects.

In Ethereum development, “public goods” refer to infrastructure which benefits the broader Ethereum ecosystem and development community. Organizations like Gitcoin award grants to public goods according to a community vote. They use “quadratic funding” – a simple mathematical formula – to ensure the largest projects don’t run away with all of the funding.

Keep an eye out for a future edition of this newsletter to hear a bit more about my thoughts on the advantages (and disadvantages) of what Gitcoin calls an “optimal” method of public goods funding.

A shadow of a merge

EF report aside, no Ethereum newsletter can end without some mention of The Merge – Ethereum’s upcoming shift in consensus mechanisms.

As Devconnect was wrapping up this past weekend, developers could be found huddled together in conference rooms to monitor the second shadow fork of the Ethereum mainnet. If you’ve been following along the past few weeks, you may recall hearing about shadow forks, which are like practice runs of Ethereum’s transition into a proof-of-stake network.

Ethereum core developer Tim Beiko gives a more detailed overview of shadow forks in his Ethereum Roadmap FAQ – a solid visit if you’re looking for a more in-the-weeds update on how the Merge is progressing.

Per Beiko’s FAQ: “TL;DR: a shadow fork is a new devnet created by forking a live network with a small number of nodes. The shadow fork keeps the same state & history, and can therefore replay transactions from the main network.”

As for why shadow forks are important, Beiko explains that they “allow us to see how nodes react when The Merge happens using only a small number of nodes and without disrupting the canonical chain.”

Ethereum developers have been running shadow forks on Ethereum testnets for the past several weeks, and they ran the first shadow fork on Ethereum’s mainnet around two weeks ago.

A mainnet shadow fork is like the Mount Everest of shadow forks, simulating how the network will respond under the most realistic (read: most complicated) conditions.

While the past two mainnet forks have been “successful” – meaning the network was able to successfully transition from proof-of-work to proof-of-stake – node operators have run into issues that still need to be addressed before the actual Merge takes place (hopefully sometime later this year).

Pulse check

The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

Valid Points Network Health 4.26
Valid Points Network Health 4.26
CoinDesk Validator Health 4.26
CoinDesk Validator Health 4.26

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Validated takes

Fireblocks, a cryptocurrency custody specialist, saw $500 million deployed into Terra DeFi in the first week.

  • WHY IT MATTERS: Fireblocks gave institutional customers access to Terra, the blockchain ecosystem and issuer of UST, the largest stablecoin after USDT and USDC. Consequently, institutional customers stampeded into decentralized finance (DeFi). Fireblocks CEO Michael Shaulov said pent-up demand from members of the company’s early access program, including crypto hedge funds, venture capital firms and high net-worth individuals, has been “crazy.” Read more here.
  • WHY IT MATTERS: In the latest chapter of the Elon Musk-Twitter saga, Tesla and SpaceX’s chief executive reached a deal to buy Twitter at a $44 billion valuation. “Twitter is the digital town square where matters vital to the future of humanity are debated,” said Musk. Twitter’s independent board chair, Bret Taylor said, “the proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.” Read more here.
  • WHY IT MATTERS: While there isn’t a direct correlation between dogecoin’s price and Musk’s acquisition, Musk has repeatedly endorsed the meme coin. In a tweet on April 9, he suggested using dogecoin payments for the Twitter Blue premium service. Moreover, Tesla already accepts DOGE payments on its online merchandise store, and Musk has indicated he worked with dogecoin developers to improve its efficiency. Read more here.
  • WHY IT MATTERS: Many Russians abroad were unbanked soon after the Feb. 24 invasion when Visa and Mastercard stopped processing payments for Russian cards. The lack of traditional options spurred cryptocurrency adoption for Russian emigrés globally. For some Russian emigrés, cryptocurrency was their backup option given that nothing else worked. Read more here.

Residents in Buenos Aires, the capital of Argentina, will soon be able to pay their taxes using cryptocurrencies, according to Mayor Horacio Rodríguez Larreta and Secretary of Innovation and Digital Transformation Deigo Fernández.

  • WHY IT MATTERS: This is the latest step Buenos Aires is taking to integrate cryptocurrency into their society. The announcement follows Buenos Aires’ white paper presentation back in March that proposed a blockchain-based digital identity platform that aims to give the city’s residents control over their personal data. Read more here.

Factoid of the week

Valid Points Factoid 4.27
Valid Points Factoid 4.27

Open comms

Valid Points incorporates information and data about CoinDesk’s own Ethereum validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:


Search for it on any Eth 2.0 block explorer site.


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Sam Kessler

Sam is CoinDesk's deputy managing editor for tech and protocols. He reports on decentralized technology, infrastructure and governance. He owns ETH and BTC.

Sage D. Young

Sage D. Young was a tech protocol reporter at CoinDesk. He owns a few NFTs, gold and silver, as well as BTC, ETH, LINK, AAVE, ARB, PEOPLE, DOGE, OS, and HTR.