Ethereum Foundation Unveils New Treasury Strategy and Embraces 'Defipunk' Vision

The Ethereum Foundation has released a revamped treasury policy, aiming to transform how its reserves are managed and invested—bringing its financial strategy more in line with the on-chain world it helped pioneer.

This updated approach introduces two major shifts. First, the Foundation plans to cut its annual spending from 15% of total assets to just 5% by 2030. Second, it intends to deploy part of its treasury into DeFi protocols.

These efforts are expected to "earn acceptable returns on treasury assets" while remaining "consistent with Ethereum's underlying principles," according to Hsiao-Wei Wang, co-executive director of the Foundation, in a statement on Wednesday.

The policy introduces a structured, rule-based framework for managing the Ethereum Foundation’s ETH holdings. This includes a systematic method of converting Ethereum to fiat when necessary, creating a “predictable glide path and baseline” for expenditures, Wang explained.

As part of this plan, ETH will only be sold when cash reserves dip below a threshold equal to 2.5 years of operating expenses—roughly 37.5% of the treasury. ETH sales will occur quarterly based on the projected cash needs, using centralized exchanges or on-chain swaps.

“The target cash reserve, calculated as annual operating spend, multiplied by the desired runway, directly informs the size and the cadence of ETH sales,” Wang added.

The Foundation also stated that while it “expects to remain a long-term steward,” it sees its role “gradually narrowing” over time.

In a philosophical turn, the Foundation introduced a new concept: “Defipunk,” which draws from cypherpunk ideals and applies them to the world of decentralized finance and the Ethereum ecosystem.

The term borrows heavily from the Cypherpunk Manifesto, authored in 1993 by American programmer and mathematician Eric Hughes, who asserted that “privacy is essential for an open society in the electronic age.” He emphasized that maintaining privacy requires individuals to build practical defenses “through cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.”

“For privacy to be widespread, it must be part of a social contract,” Hughes wrote.

Echoing this sentiment, Wang emphasized that privacy carries “inherent network effects” but has so far received “very little attention.” She argued that “strong, early institutional support” from organizations like the Ethereum Foundation could prove “uniquely valuable in flipping the equilibrium” toward greater privacy in DeFi.