Ethereum Foundation (EF) report: ETH holds $1.3 billion in crypto assets, accounting for 99.1%

On April 18, the Ethereum Foundation (EF) released its 2021 annual report, describing the work done by the foundation in 2021 and how to allocate resources and funds to the Ethereum ecosystem. As of March 31, 2022, the EF Treasury currently holds assets worth nearly $1.6 billion, including $1.3 billion in crypto assets and $300 million in non-crypto investments and assets. Among the crypto assets held, ETH accounts for 99.1%, accounting for approximately 0.197% of the total ETH supply.

Meanwhile, in 2021, EF spent a total of approximately $48 million, of which nearly $20 million was external spending, including grants, delegated domain allocations, third-party funding, bounties, and sponsorships.

Ethereum’s Infinite Garden Vision

Aya Miyaguchi, Executive Director of the Ethereum Foundation, said, "The past few years have been eventful both globally and in the Ethereum ecosystem. While we cannot control some of the difficulties we have had to face, the travel restrictions over the years have finally given me a chance to breathe and reflect. Through this time of reflection and feedback from the community, we have the opportunity to clarify the vision and principles of EF. An expression I have been using in the community, the "Infinite Garden" vision, was born during this period."

This report is not just about what we’re doing in 2021. More importantly, we want to help explain the priorities and philosophies we’ve decided to prioritize. The philosophies we describe here provide guiding principles for our EF team community. Since the Ethereum Foundation is not a typical top-down organization, these principles help us stay aligned.

This report also shares more about how we are allocating resources in 2021. I want to clarify that these numbers are of course only a small fraction of all the exciting work being done by the Ethereum community. We also believe that more decentralized funding is important for the future of the Ethereum ecosystem. We continually try to allocate resources to third parties who we believe can make better decisions than we can in certain areas. It’s exciting to see more and more groups involved in deciding how EF should allocate resources.

Ethereum Foundation’s operating model

The Ethereum Foundation (EF) is a non-profit organization that supports the development of the Ethereum ecosystem. It is part of a larger community of organizations, individuals, and companies that fund protocol development, grow the community, and advocate for Ethereum.

EF is not a tech company, nor is it a “normal” nonprofit. Just as Ethereum required new concepts and technologies, it gave rise to new types of organizations.

EF is at the forefront of a new kind of organization: one that supports blockchain but does not control it.

A key point to understand is that EF is more like a community of teams than a traditional organization.

How does the Ethereum Foundation support Ethereum development?

EF adopts a hierarchical resource allocation decision model

EF has taken many different approaches to supporting the Ethereum ecosystem in the past, gradually arriving at a “layered” model in which EF involves many different groups in making decisions about where to allocate resources.

The first tier is the EF Team, a group from EF that contributes directly to the ecosystem.

The second tier is grants, which are used to fund teams outside of EF.

The third level is what we call delegated area allocation, where we work with external groups who help decide what to fund within a particular area.

The final tier is third-party funding, which provides funds directly to outside groups and lets them decide how to allocate them effectively.

Overview of EF Funding Allocation in 2021

According to published data, as of March 31, 2022, EF held approximately $1.6 billion in funds, divided into $1.3 billion in cryptocurrencies and $300 million in non-crypto investments and assets.

The vast majority (99.1%) of cryptocurrency held is ETH, which accounts for 0.297% of the total ETH supply (as of March 31, 2022).

Since the EF follows a conservative financial management policy that ensures that there are sufficient resources to fund the EF's core objectives even in the event of a multi-year market downturn, this part of the budget is not affected by changes in the price of ETH on a significant timeline.

At the same time, EF has also increased non-cryptocurrency savings in response to rising ETH prices, which provides a greater safety margin for the core budget and enables it to continue funding non-core projects during market downturns.

We choose to keep the remaining funds in ETH. EF believes in the potential of Ethereum, and the proportion of ETH held reflects this long-term view.

The report shows that in 2021, EF spent approximately $48 million. About $20 million of this was spent on external expenditures, including grants, authorized domain name allocations, third-party funding, bounties, and sponsorships. Another $28 million was used to fund teams and projects within the EF community.

The total $48 million can be broken down into a few different categories, each of which includes both internal and external spending:

• L1 R&D - $21.8 million

• L2 R&D - $1.9 million

• Applied ZK R&D - $3.6 million

• Developer Platform - $5.9 million

• Community Development - $9.7 million

• Internal operations and support - $5.1 million

From the above data, we can see that the $21.8 million allocated to L1 R&D accounts for the largest share of EF expenditure, reaching $21.8 million. This part of the funds is mainly used for Ethereum mainnet upgrade R&D, Geth client development, internal security research, cryptography R&D, economic modeling and mechanism design research, long-term research to achieve the Ethereum community roadmap, and funding for external execution and consensus layer clients.

Also included are numerous grants to external parties, ranging from network stress testing to external research in professional cryptography.