1. Introduction
Ethereum Community,
The outlook for Ethereum is promising. Throughout the past year, the Ethereum community — a worldwide assembly of developers, entrepreneurs, researchers, and enthusiastic users — has achieved remarkable advancements. Each week, new applications constructed on Ethereum are launched to the mainnet, scalability solutions are introduced, and ETH 2.0 approaches pivotal milestones. Ethereum continues to be the principal platform for decentralized applications, and it is utilized daily to safeguard billions of dollars in digital assets.
The Ethereum Foundation’s personnel is excited to witness the advances occurring throughout the community. We have endeavored to bolster the ecosystem since Ethereum’s inception as a non-profit committed solely to acting in Ethereum’s best interests.
As the ecosystem has evolved, the Ethereum Foundation has sharpened its focus. “Acting in Ethereum’s best interests” doesn’t imply attempting to do everything — it signifies concentrating on areas where we can provide the most value, while allowing space for others to contribute where they can be most effective.
So, what is the Ethereum Foundation’s role at present?
The Ethereum Foundation serves as a resource allocator, an advocate within the ecosystem, and a promoter of Ethereum to the wider world.
Resource Allocator
Currently, the Foundation possesses approximately 0.6% of all ETH, in addition to reserves maintained in cash. These assets are designed to dwindle over time, as they are invested in essential tasks throughout the ecosystem. Although these are considerable amounts of capital, they are not limitless. It is our duty to guarantee that every single dollar and wei is allocated effectively.
We are also striving to expand the Ethereum ecosystem’s funding base. This includes encouraging additional organizations outside the Foundation to back high-priority initiatives, and supporting innovative funding mechanisms like Gitcoin grants and MolochDAO. Actions like these provide us with better leverage from our existing resources, and assist in establishing a sustainable pathway for financing crucial projects well into the future.
A voice in the ecosystem
We acknowledge that many regard the Foundation as a significant voice, even while we work to proactively enable others. That voice is a resource that can be utilized effectively to promote Ethereum. For example, we can spotlight important but relatively obscure projects, disseminate valuable information about Ethereum’s advancements to the public, and foster the development of regional Ethereum communities.
Looking ahead, anticipate the Ethereum Foundation to take on a more active role within the Ethereum community.
An advocate for Ethereum to the world
To external observers, Ethereum can seem perplexing — and that might be an understatement. Many newcomers struggle to grasp our dynamic and decentralized ecosystem since they’ve never encountered anything similar before.
When an individual (be it a major enterprise, a government, or an everyday person) enters our realm, the Ethereum Foundation is frequently their initial point of contact. The first aspect we tend to clarify is that the Ethereum ecosystem is decentralized and not owned or operated by any single foundation or organization. Our Foundation helps to represent Ethereum to the outside world as an effective conduit through which individuals can access the ecosystem itself.
We also recognize a necessity to be more proactive in expanding the Ethereum ecosystem, onboarding developers, and enhancing the developer experience. As elaborated in greater detail below, we plan to allocate substantial resources towards these objectives.
2. Our Philosophy
Ethereum is not a conventional open-source initiative, and the Foundation is not a typical organization. Successfully nurturing a vibrant decentralized Ethereum ecosystem demands a distinctive methodology.
Even as we invest considerable resources throughout the ecosystem to enhance Ethereum, we must do so in a manner that preserves the foundational spirit of decentralization. We have intentionally adopted a philosophy of subtraction, which influences everything we undertake.
In simple terms, adhering to a philosophy of subtraction means combating the natural inclination of organizations to expand and accumulate value within themselves, and ensuring instead that this value is generated outside the Foundation within the broader Ethereum ecosystem.
Rather than seizing opportunities for our own gain, we distribute those opportunities to the community. Instead of consolidating everything internally, we allocate our resources externally to teams throughout the ecosystem. We do not compete with the ecosystem — we are delighted when other organizations generate value, as that indicates Ethereum is becoming increasingly decentralized and sustainable.
The Ethereum Foundation flourishes if Ethereum flourishes, and Ethereum flourishes with a robust decentralized community. That principle governs our approach to work.
3. Highlights from Ethereum Foundation-supported teams
The past year has marked a pivotal period for Ethereum, and we have exerted great effort to assist teams throughout the ecosystem. Covering all the strides made by teams aided by the EF in this correspondence is unattainable, but here is a curated selection:
ETH 2.0 client teams
ETH 2.0 refers to a series of groundbreaking updates for the Ethereum protocol. Last year, this undertaking transitioned from a research initiative to an engineering project. Client teams supported by the Foundation, such as Nimbus, Prysm, Sigma Prime, and Substrate Shasper, are among those striving to make ETH 2.0 a reality.
In recent months, the Nimbus, Prysm, and Sigma Prime’s Lighthouse testnets have been launched. These teams and others are currently stabilizingand enhancing their clients, preparing for multi-client testnets.
Numerous resources are transitioning into testing, fuzzing, and audits over the next several months. We have enlisted Runtime Verification to officially validate the deposit contract and to formally articulate the Beacon Chain. This complements significant efforts by the research, development, and security teams engaged in ETH 2.0 to ensure reliability and security.
ETH 1.x
The ETH 1.x project, initiated last year, concentrates on enhancing Ethereum’s short-term scalability and sustainability with a view to facilitating the transition to ETH 2.0. The initiatives we’ve supported include Alexey Akhunov’s studies on stateless clients and state fees, and Andrew Ashikhmin’s research on improvements in sync protocol.
Ongoing efforts are also being made on vital projects like Geth and Solidity, and regular updates from all supported teams are forthcoming.
ZK-rollup
ZK-rollup employs concise zero-knowledge proofs to allow Ethereum to achieve hundreds of transactions each second. We’ve backed Barry Whitehat and Matter Labs’ partnership, which has spearheaded research, development, and implementation.
ETHGlobal
ETHGlobal organizes Ethereum hackathons across the globe, aimed at onboarding new developers into the ecosystem and facilitating the creation of projects and companies. At a recent gathering, ETHCapeTown, 70% of participants hailed from South Africa and 40% were newcomers to Ethereum.
Ethereum Academic and Research Cooperation
The Ethereum Foundation held three research workshops at Stanford and MIT, connecting dozens of skilled mathematicians, computer scientists, and economists to research challenges arising from Ethereum. Many have continued to engage with these issues, yielding advancements in areas critical to Ethereum’s future, such as Casper CBC, VDFs, Plasma structures, succinct zero-knowledge proof systems, liveness, and safety limits for Ethereum 2.0 among others.
Moreover, the Cryptophage collaboration between the Ethereum Foundation, Supranational, and Protocol Labs accomplished a solution to famed cryptographer Ron Rivest’s LCS35 time capsule crypto-puzzle that was resolved in only two months, rather than the anticipated 35 years.
Collaborating with leading organizations to promote their involvement with the Ethereum ecosystem
In our capacity as advocates for Ethereum to the external world, the Foundation has aimed to inspire high-profile organizations to engage with Ethereum in ways that enhance the entire ecosystem.
In particular, we have been collaborating closely with Microsoft in a long-term endeavor to improve the Ethereum developer experience via Visual Studio Code and the new Azure Blockchain Service.
We have also connected with significant entities such as HTC and Opera, motivating them to engage with the Ethereum community and endorse Ethereum-based applications, as well as partnering with non-corporate organizations like UNICEF to explore utilizing Ethereum for social good.
There’s a great deal more being accomplished by Foundation-supported teams than just the instances mentioned above. Stay tuned for more updates that will be released by these teams in the upcoming weeks.
4. Allocating Resources in the Upcoming 12 Months.
A comprehensive view for Ethereum support
Today, we are thrilled to share additional insights regarding the Foundation’s objectives for the coming year and how we intend to allocate resources throughout the ecosystem.
As we have learned and refined our approach, we have made essential adjustments to our processes and priorities. When the Ethereum ecosystem was significantly smaller, it was logical for the Foundation to focus on several “in-house” teams tackling the most fundamental projects. As the community expanded, we initiated a Grants program that allowed us to assist more teams across the ecosystem.
Currently, it should not matter to the Foundation whether a project is “internal” or “external.” What is important is that we are utilizing resources efficiently and that Ethereum’s objectives are achieved. This is why we are progressing towards an “ecosystem level view” when distributing resources by assessing the overall situation instead of merely a segment of it.
In the forthcoming year, the Ethereum Foundation aims to allocate $30 million USD toward crucial projects within the ecosystem. This budget is safeguarded against declining ETH price fluctuations.
We are convinced that this is a pivotal moment for Ethereum, warranting substantial investments in critical initiatives across the ecosystem.
Distributing resources across such a diverse and energetic ecosystem presents a significant optimization challenge. We are perpetually reassessing and enhancing our strategies, and new avenues for leverage arise daily.
To elucidate how we establish our top priorities, we outline below three principal categories of resource allocation: (i) Creating the Ethereum of the future, (ii) Supporting the Ethereum of the present, and (iii) Developer Expansion & Awareness.
i. Shaping the Ethereum of the future
$19 million allocated over the next 12 months
Ethereum continues to be a hugely ambitious technical endeavor, requiring substantial resources to finance the R&D necessary to fulfill the Ethereum community’s aspirations. Essential activities are in progress across the ecosystem, focusing on ongoing engineering projects such as ETH 2.0, and on long-term initiatives aimed at enhancing the academic community’s engagement with Ethereum technology.
This encompasses:
- ETH 2.0: Client teams, Research, VDF, documentation, and communication
- Layer 2: State channels & Plasma
- Ongoing development of eWASM
- Smart contract programming languages
- Formal validation, auditing, and specification efforts
- Zero-knowledge R&D, including ZoKrates
- Ethereum “Phase 3 and Beyond” R&D
- Collaborating directly with academic institutions to attract outstanding research talent
ii. Sustaining the Ethereum of today
$8 million designated over the next 12 months.
Ethereum is presently utilized to safeguard billions of dollars in assets and serves as a foundational layer for countless active applications. We deem it essential to persist in bolstering these efforts to guarantee that “Ethereum 1.0” remains the preeminent smart-contract platform globally.
This includes:
- Numerous initiatives under the “ETH 1.x” banner
- Geth
- Solidity
- Web3.js and Ethers.js
iii. Developer Expansion & Awareness
$3 million designated over the next 12 months
Developers, developers, developers.
Ethereum acts as a platform, and the developers who create on it are pivotal to our future. It is essential to invest in developer relationships, education, and onboarding now to expand the Ethereum community and ensure our ongoing success. This holds particular significance in Asia, where remarkable opportunities for Ethereum growth exist.
This amount also encompasses more conventional efforts to enhance awareness of Ethereum, via marketing initiatives targeting both technical audiences and users of Ethereum-based applications.
This includes:
- Developer education & onboarding
- Support for community event organizers concentrating on developers, like ETHGlobal
- Continuing to host Devcon as an annual gathering for the Ethereum ecosystem
- Backing regional Ethereum community organizations
- Enhancements to developer experience and tooling
- Attracting exceptional developer talent
- Encouraging browsers and other mass-market technologies to smoothly integrate Ethereum into their user experiences
- Ongoing enhancements to ethereum.org
5. Our Appreciation!
The advancements made by Ethereum in the past 12 months deserve celebration, and as we look towards the future, we’re more enthusiastic than ever.
All of the initiatives mentioned earlier, every technical enhancement, event, and project was achieved thanks to you. This might be a letter from the Ethereum Foundation, but it’s a letter about the Ethereum community. Regardless of whether you are a newcomer or have been part of this journey since Genesis, we appreciate your support and contributions. We are eager to continue developing the Ethereum ecosystem together.