‘Mutiny’ at the Ethereum Foundation? Why ETH holders are calling for a ‘Wartime CEO’
2025-01-23
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On Wednesday morning, a mysterious X profile emerged calling itself the “Second Foundation,” an apparent reference to a splinter organization from the Ethereum Foundation, which has come under fire in recent days due to a widespread perception that one of Ethereum’s leading research and development units is falling behind. 
While not much is known about the @2nd_foundation_ entity, which only follows the first and to date only official Ethereum Foundation account on X, one thing seems certain: it was not created by Lido founder Konstantin Lomashuk, despite ongoing rumors and some erroneous media reports suggesting as much. 
In a private Discord chat, Lomashuk confirmed that he is not involved with the project, according to messages The Block has reviewed. “So that the news is fake. I didn't create any foundations,” Lomashuk said. “It is just a twitter account, 2nd foundation, not real 2nd foundation yet.”
Although the Second Foundation appears to be a lark, its creation and the subsequent conversation around it are significant. The situation has struck a nerve within the Ethereum community, which is currently splintering amid a period of intense self-criticism and apparent strife within the Ethereum Foundation. 
“People explicitly challenging the original EF is a real demonstration of lack of faith by the community,” Columbia Business School associate professor Austin Campbell told The Block in a direct message.
“Its basically a mutiny,” said a prominent DeFi founder, who asked not to be named.
Ding, dong, ditch
A wide-ranging debate over the past and future of Ethereum is taking place on social media platforms like X and Discord — and privately among Etheruem’s coterie of influential decision makers — with many once adamant ETH defenders declaring they’ve lost hope on the protocol. 
“The sentiment from what I can tell is that ppl are fed up with EF inaction/lack of leadership vision,” Wazz, a pseudonymous crypto trader and frequently critical commentator, told The Block in a direct message. 
Perhaps most notably, Ethereum co-creator and Consensys CEO Joseph Lubin called upon Danny Ryan, a former EF researcher who led the network’s complicated switch to proof-of-stake, and Ethereum France President Jerome de Tychey to co-lead the foundation and exert “energy, talent, outside the box thinking” in Ethereum’s marketing and output. 
This would be to replace current EF Executive Direct Aya Miyaguchi, who has drawn particular ire from many in the Ethereum community due to her perceived dovishness.
“The problem here is that Ethereum leaders like Aya lack skin in the game,” internet theorist Roko Mijic told The Block. “Imagine taking your entire net worth, withdrawing it as cash and handing this giant pile of cash to the squirrel in the garden, and the squirrel starts burying it in the ground and using it to make a nice nest and so on. and you're like FUCK YOU YOU SAID YOU WOULD INVEST MY MONEY NOT MAKE A NEST WITH IT. that is basically the situation that Eth whales are in with Aya et al.”
It’s a point echoed by many and exacerbated by the rising competition from alternative blockchains as well as the ETH token’s relative market underperformance. For instance, the ETH/BTC price ratio, which tracks the relative value of Ethereum to Bitcoin, is at its lowest point since 2021. 
“I think most crypto natives, myself included, are frustrated with [the EF’s] lack of competitiveness. feels like they got complacent being #2, and now Solana is clearly threatening that,” another pseudonymous ETH support, Gleb, told The Block. 
“Haven’t written them off just yet, but obviously we want to see some major changes in leadership that can make decisions that benefit holders instead of themselves. i think that would turn sentiment around and have a positive impact on the community and price.”
Underperformance
One of the most consistent complaints centers around the Ethereum Foundation’s arguably untenable burn rate. The organization, which currently holds approximately $800 million worth of ETH, spent around $240 million combined in 2022 and 2023, according to a year-end report (the 2024 figures have yet to be published) — with many saying it has little to show for the spending. 
“There is no real clarity on how the EF works, what its governance model is, how decisions are made, who works for the EF, what they are paid, how the money is spend in any detail,” Bob Summerwill, an early Ethereum supporter who is now executive director for the ETC Cooperative, told The Block.
Moreover, for years, the EF has been criticized for “dumping” ETH to pay salaries. To be sure, roughly three-fourths of its annual spending goes to Layer 1 R&D and funding “new institutions” and “community development.” All told, the EF spends about as much — approximately 8% per annum — on “internal ops” as it does on separate L2, ZK and blockchain tooling R&D. 
Asked what he’d want the EF to spend money on, Campbell said: “Actually focus on the things users and future users care about instead of your niche personal or technical interests?”
This isn’t to suggest that everyone disagrees with the EF’s direction. Blockchain lead at EY, Paul Brody, said that while he doesn’t agree with all its decisions, “at the big picture level, they have successfully delivered.” 
“There are some substantive complaints about the EF,” Brody said. “It's not business friendly. They spend too much money, and not always on the right things. They don't monetize things they could like DevCon … I don't think they will, but they could replenish the ENTIRE amount of money by monetizing just DevCon and permitting sponsorships.”
Others have suggested the organization could be more active onchain, beyond simply using CoW Swap — a decentralized exchange aggregator— to trade ether for DAI. Over the past several days, there have been many suggestions for the EF to stake a portion of its holdings to earn revenue to fund the organization or participate in decentralized finance.
The EF holds “hundreds of millions of dollars and have huge impact on how the Ethereum ecosystem plays out,” Summerville said. 
Wartime footing
These critiques and suggestions are not going unheard.
On Sunday, Ethereum co-creator and spiritual leader Vitalik Buterin said on X the EF had been planning changes to the foundation for the past several months to make the organization more transparent and better able to execute. The following day, Hsiao-Wei Wang, who was recently appointed to a leadership role at the EF, said the firm planned to diversify its significant ETH holdings by participating in DeFi.
For many, however, this is too little, too late — a problem only compounded by later posts suggesting Buterin remained in support of Miyaguchi, who Buterin named executive director in 2018. On Tuesday, Buterin responded to criticisms of Miyaguchi as an “attempted scapegoat attack,” and noted he was the ultimate decision-maker until a “proper board” is established.
Buterin’s claims to be in charge of restructuring the foundation, as well as Miyaguchi’s fate, have drawn mixed reactions. Some see his declaration of being the ultimate decision maker as a sign of him stepping into the role of a “wartime CEO” Ethereum while others note it emblematic of Ethereum’s ivory tower. 
“you can't reform a kingdom while a king sits on the throne,” prominent NFT influencer DCinvestor said on X. 
“Vitalik *is* the leader, but he does not want to be the leader,” Summerwill wrote The Block. “Vitalik has to lead with the current setup, but, IMHO, should have set up professional leadership years ago and been in a Chief Scientist kind of role, with those professionals driven with community input.”
Second look
All of this circles back to the idea of the “Second Foundation,” a type of organization that could help take some of the organizational responsibilities away from the Ethereum Foundation. 
On Tuesday, in response to Buterin saying that the “EF is only one part of the world computer,” Uniswap founder Hayden Adams pitched the idea of “moving technical development” to an alternative organization funded by the EF, Consensys and “various ethereum aligned orgs,” noting that Uniswap’s treasury alone sits at over $6 billion. 
It was an idea that has seemingly caught on despite differing views on what this auxiliary organization might do. For instance, Amanda Cassatt, founder of PR firm Serotonin and former marketing lead at Consensys, noted that Ethereum needs a “marketing engine” and that EF isn’t fit for purpose. 
“It's important to work with professional marketers who have dealt with these issues,” David Phelps, co-founder of JokeRace, told The Block. “Spinning off a second foundation without any of the support of the Ethereum community or the EF is just antagonistic. But if they're going to do a bunch of marketing EF isn't going to do, it's a win.”
As ever, views of the situation are complicated, especially considering it’s not yet clear who is behind the project or whether it forebears Buterin’s coming, promised changes to the structure of the Ethereum Foundation. Later in the afternoon, Lido's Lomashuk, who pitched the idea of creating an R&D-focused entity in December, confirmed the @2nd_foundation_ account was "just a tweet."
One Crypto Twitter mainstay, Aleph, noted that, at best, “without doxed founders and a plan to get money to cover funding it seems unlikely to do anything.” And at worst? “Grift.”
Others note that even if it’s real, there’s a huge chance things will go awry. 
As Andre Cronje remarked in a direct message, “the foundation's ‘power’ is its funding. Without EF willingly moving all its funds (which it wont), 2nd foundation is meaningless.” There are also no barriers in place to prevent further forks, perhaps leading to a situation of multiple warring organizations if they cannot remain aligned. 
“It's definitely an untried idea (I think at least). High risk if it would really work,” Leighton Cusack, ecosystem lead at Tools for Humanity and founder of the PoolTogether protocol, told The Block. “Protocols should have multiple foundations, maintaining decentralization by having multiple foundations that have different specialties and operate in a centralized way.”
That said, Cusack said there’s a certain unnoticed benefit to how the Ethereum Foundation has operated over the years. In being insular and a bit out of touch, the EF has largely avoided the eye of watchdogs like the Securities and Exchange Commission and helped maintain the vision of Ethereum as truly decentralized. 
“We had the perfect foundation for a hostile regulatory environment. Based in Switzerland, super under the radar,” he said. “The Ethereum ETF that would not have happened if they were more active.”
'Loud and clear'
Others note that even if the Second Foundation doesn’t come to pass, the recent conversation — while perhaps fraught at times — can also lead to substantive change at the existent EF. 
“I think V has gotten the message loud and clear and is working on a restructure,” Infinex and Synthetix founder Kain Warwick said, referring to Buterin. “While it’s frustrating it’s taken this long, now that there is movement we should have some patience and see how it plays out.”
That would be a good result to a messy process that University of Dublin lecturer Paul Dylan-Ennis calls “bikeshedding,” or the unending nitpicking that frays Ethereum’s “social layer.” 
To some extent, many of the complaints being raised are old news — the Ethereum Foundation has always sold ether, has always been insular and has always focused more on Ethereum’s long-term values than the price of ETH.
“A lot of the criticism of the EF was valid and EF is putting in the work to listen and become more active with builders,” Phelps said. “Overall while the EF could be better, they’re being scapegoated for issues beyond their control.”
“From my perspective Ethereum is doing better than ever, really strong solid position, growth, momentum, unique vibrant, differentiated ecosystem,” MakerDAO’s Rune Christensen said. “Like it doesnt matter what they do — they cant fuck it up even if they tried.”
“This doesnt mean the EF may not be totally mismanaged, in my experience organizations like that usually are.”
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