Ethereum Foundation Cuts Costs in Half While Forming Long Term Strategies
Under the leadership of its new executive director Ming Chan, the Ethereum Foundation has reduced its monthly expenditure from a 2015 peak of approximately 400,000 EUR per month to about 175,000 EUR, according the protocol’s founder, Vitalik Buterin.
As Buterin admits, the Foundation was running with very high expenses as it rushed to release the Ethereum blockchain on July 30, 2015. The costs were mostly for a combination of development, communications, administration and security audits. Expenditure was further compounded by administrative inefficiencies, including the foundation having six organizational entities in four jurisdictions.
By October, Buterin felt the need to publicly reveal that the Ethereum project only had the equivalent of US$2.5 million in cash remaining in its reserves. At the time, Buterin stated that the major cause of the foundation’s limited funds was the failure to sell off its holdings in bitcoin before the price dropped to $220 in early 2015. This apparently resulted in the loss of $9 million in capital, while the project’s requirements actually expanded.
Much of the Ethereum Foundation’s new cost savings have come from reduction of administrative expenses, by consolidating the legal entities from six to three, reducing employee housing costs in Switzerland, and reducing the reliance on outside contractors by having Ming Chan present in the Swiss office.
Buterin provides a more detailed outline of the cost savings:
All in all, the Foundation’s monthly expenditures have now been reduced by over half from our 2015 peak of over 400,000 EUR per month, and currently stand at a monthly sum of about 175,000 EUR (~188,000 USD). This roughly consists of:
- 22,000 EUR per month for C++ development (down by ~75%)
- 65,000 EUR per month for Go development (down by ~10%)
- 5,000 EUR per month for Python development (down by ~50%)
- 13,000 EUR per month for IT, hosting, maintaining build servers, release coordination, etc (down by ~35% with more cuts likely coming soon)
- 6,000 EUR per month for communications (down by ~85%)
- 20,000 EUR per month for research (roughly unchanged)
- 40,000 EUR per month for top-level administrative and executive staff, accounting, office management, legal and other expenses (down by ~50% with more cuts likely coming soon)
As it has reduced its overhead, the project marshalls in a more focused approach, starting “in earnest” the development of Serenity, the next significant release of the Ethereum protocol. Serenity is meant to have more powerful software abstraction features, the Casper consensus algorithm and the “basic scaffolding” that will permit development of scalability features.