With Ethereum having launched and swiftly approaching its Homestead phase, we at the Ethereum Foundation have finally found some respite in recent months to strategize with a longer-term perspective. From the development angle, we have now fervently initiated the construction of Serenity, a significant redesign of the Ethereum protocol that will incorporate robust software abstraction features, the Casper consensus mechanism, and ideally some foundational elements to facilitate the development of scalability features over time with minimal interruptions. POC1 has been launched, and POC2 is anticipated to be released in approximately one month. In tandem with this, Martin Becze is diligently investigating methods to enhance the EVM using WebAssembly, while numerous groups are working on the implementation of various forms of advanced cryptography atop the EVM today.
While this work is thrilling, there also exists a considerable amount of equally vital, albeit somewhat less glamorous, tasks that must be addressed behind the scenes within the Ethereum Foundation itself to ensure that the organization can endure and ideally thrive long enough to realize the comprehensive Ethereum vision.
During the time of the most recent significant update of this sort, the Foundation faced primary challenges related to organization and finances. Expenditures were exceedingly high, reaching a peak of over 400,000 EUR monthly on a mix of development, communications, administration, and security audits. The ecosystem was rapidly flourishing, with numerous Ethereum-based enterprises either revealing themselves after months of silent development or newly entering the arena—a saving grace for the Foundation, as it no longer needed to fund the development of every layer of the ecosystem itself. However, this transition needed careful management to ensure all relevant stakeholders remained included in the development process. Administrative inefficiencies contributed to our struggles, with six entities across four jurisdictions complicating matters, and at times it appeared there was too much to manage.
It was at this juncture that we, under the leadership of our new executive director Ming Chan, embarked on a process to streamline our operations on multiple fronts, preparing the Foundation for its sustainable future.
End of one chapter, conclusion of one set of challenges, beginning of a new chapter, onset of another set…
On the front of non-administrative matters, perhaps the most notable highlight has been our efforts towards enhancing the transparency of the research and development process. Major initiatives in this regard include an increased focus on utilizing our Gitter channels for discussions instead of Skype, along with the EIP process for protocol upgrades; both have thrived with a significant portion of discussion taking place on those channels and numerous EIPs being created and debated. We are also actively reviewing our other forms of internal and external communication and media, encompassing forums, documentation, and tutorials, while welcoming community feedback on the best methods to enhance them.
The most considerable challenge, however, has evidently been financial. Open-source initiatives are often recognized for being underfunded, at times yielding very unfortunate outcomes, and although the unique characteristics of public cryptoeconomic blockchains have and may continue to present opportunities that are typically unavailable in most other situations, the issue persists. We concluded that before feeling comfortable searching for additional funding, we should first strive to operate more efficiently with the resources that we currently possess. Thus, significant progress has been made over the past four months, yielding very positive results.
From a development standpoint, we opted for a more concentrated approach, primarily focusing on the core Ethereum software, in particular, the Go client. This still encompasses much of the foundational Ethereum development plan, including light clients (which are progressing well), a mobile wallet, and Mist. We also continue to back C++ and Python to a lesser extent with a specific focus on development tools (Solidity and Mix), but we are leaving other facets of the ecosystem to the broader community. Despite the exciting idea behind Whisper, it currently receives no Foundation support—though we are actively pursuing partnerships and other avenues to facilitate the development of these additions. Our communications have been significantly streamlined, now consisting of a smaller group of part-time individuals who are more widely distributed globally.
Some of the most considerable improvements have been in administrative expenses. In the last four months, we have implemented a process to consolidate the legal entities through which Ethereum development is financed by the Foundation; of the six entities we maintained across Europe in 2015, three have now been effectively decommissioned and will soon commence the shutdown process. We have also vacated the house we rented when we anticipated a large number of developers working full-time in Zug and are now located in a smaller venue in the town center, saving us the equivalent of one employee’s salary in monthly rent and utilities. We have closed our physical office in London and are actively exploring options to reduce rental expenses in Berlin. With Ming frequently present in Switzerland, we have become less reliant on external contractors for our needs there, further enhancing our savings.
Somebody else’s electricity costs now…
Overall, the Foundation’s monthly expenditures have now been slashed by more than half from our 2015 peak of over 400,000 EUR per month, currently standing at approximately 175,000 EUR (~188,000 USD). This roughly breaks down into:
- 22,000 EUR per month for C++ development (a decrease of ~75%)
- 65,000 EUR per month for Go development(decreased by ~10%)
- 5,000 EUR per month for Python programming (reduced by ~50%)
- 13,000 EUR per month for IT, hosting, maintaining build servers, release management, etc (decreased by ~35% with further reductions likely forthcoming)
- 6,000 EUR monthly for communications (decreased by ~85%)
- 20,000 EUR monthly for research (approximately stable)
- 40,000 EUR monthly for high-level administrative and executive personnel, accounting, office supervision, legal and additional costs (decreased by ~50% with further reductions likely forthcoming)
The Foundation’s existing assets comprise approximately 2,250,000 ETH, 500 BTC, and $100,000 in fiat currencies, providing us with nearly one year of operational runway from this juncture, assuming both the ether price and our budgeting preferences remain stable. Some salaries are disbursed in ether; alongside this, we have established an ongoing agreement with Bitcoin Suisse to convert the Foundation’s ether into fiat at the rate of 5,000 CHF per day to ensure consistent liquidity (in addition to ~$650,000 worth of private sales to individuals and businesses). These figures represent actual holdings of the Foundation; nearly all ether from the genesis premine and the developer acquisition program has now been allocated to its rightful beneficiaries.
In the forthcoming months, we anticipate that optimizations and cost reductions will persist, and as our overhead diminishes, we will once again begin to intensify our initiatives across various fronts. We are soon incorporating Lisa Cheng into our team on a part-time basis for communications, and will also cautiously augment our spending on research activities to expedite the development of Serenity. Concurrently, we are actively investigating diverse strategies to extend the Foundation’s runway. Given the significant interest in Ethereum observed in North America, Europe, and particularly Asia, we are confident that we can devise a strategy that guarantees development will proceed not only beyond Serenity but also leading to an immensely scalable Ethereum 2.0 and beyond.