Ethereum co-founder Vitalik Buterin recently spoke about why he chose to sell the ETH held by the Ethereum Foundation, the nonprofit organization that supports the blockchain network, rather than stake it.
His comments come in the wake of growing criticism from the community, calling on the foundation to manage its resources more responsibly.
Why the Ethereum Foundation does not stake ETH
In an October 27 post on X, Buterin outlined the rationale behind the foundation's decision to sell ETH on a regular basis. He noted that staking could allow the foundation to take an “official position” on certain network upgrades, especially in the event of a contentious hard fork, something the foundation wants to avoid.
However, Buterin revealed that the foundation is exploring other ways to get involved in staking. These options include issuing grants with staked ETH. This allows grant recipients to stake their ETH, control withdrawal timelines, and retain their rewards. Another potential approach is to delegate staking responsibilities to multiple organizations on behalf of the foundation.
“One of the interesting ideas being considered in this regard is to give some subsidies in the form of 'you can stake your ETH, you choose how you do it, as long as it's ethical, and you keep the profits'.” said Buterin.
Staking is integral to Ethereum's proof-of-stake (PoS) mechanism, where users lock up ETH to verify transactions and earn rewards. Many in the cryptocurrency community argue that by staking ETH, the Ethereum Foundation could fund its operations through these rewards, potentially reducing the need to sell assets.
Read more: Ethereum (ETH) Price Prediction 2024/2025/2030
Recently, blockchain analysis platform ScopeScan reported that the foundation sold 4,066 ETH (equivalent to $11.24 million) on-chain through the decentralized exchange CoWSwap this year. ScopeScan also estimates that if the current annual staking profit is 3.1% and the Foundation holds 271,000 ETH (equivalent to approximately $673 million), it will earn 8.4 million ETH (or approximately $20.8 million) annually. It was calculated that there is a possibility of producing
During this conversation, Buterin encouraged the cryptocurrency community to recognize the Ethereum Foundation's extensive contributions to digital assets.
He said the proceeds from the sale of ETH will be used to pay important payments to developers and researchers responsible for major network upgrades. These include Ethereum's transition to proof-of-stake, consistently low transaction fees, fast processing speeds averaging around 30 seconds, and more.
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Buterin also highlighted the foundation's support for innovations such as zero-knowledge technology to enhance privacy and account abstraction to improve security. Additionally, the Foundation sponsors local Ethereum events around the world to strengthen community and network security.
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