report

April 2022

Table of contents
Message from the Executive Directo
What is the Ethereum Foundation?
What is the EF’s philosophy?
How does the EF support the ecosystem?
2021 Financial Summary

Page 03

Page 04

Page 07

Page 1 1

Page 20* All dollar figures in this report are USD.

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Message from the Executive Director
The last few years have been very eventful, both globally and in the Ethereum ecosystem. While wehave no control over some of the difficulties we were forced to face, these years of traveling lessfinally gave me an opportunity to breathe and reflect. With this time of reflection and feedback fromthe community, we have had a chance to clarify the EF’s vision and principles. The vision of theInfinite Garden, the expression I have been using in the community, was born through this journey. 

This report is not just about what we did in 2021. More importantly, we want to explain the reasoning
and philosophy that help us decide where to prioritize our efforts. The philosophy we describe here
provides our community of EF teams with guiding principles. Since we are not a normal top-downorganization, these principles help us stay aligned.

This report also shares more information on how we allocated resources in 2021. I want to clarify
that these numbers of course represent only a small glimpse of all the exciting work done by the
Ethereum community. We also believe that more decentralized funding is important for the future of
the Ethereum ecosystem. We continuously try to allocate resources to third parties that we believe
can make better decisions than us within certain domains. It is exciting to see more and moregroups becoming involved in deciding how the EF should allocate resources, and we discuss several
examples in this report.

Beyond allocating financial support, there are many important stories to tell about how EF teams
contribute to the ecosystem. There is a lot of non-financial work that EF community members do
behind the scenes as well. The support and coordination of conversations related to core protocol
development, connecting EF Fellows’ projects from emerging economies with the rest of the
Ethereum community, and coordinating with educational groups and efforts are just a few
examples.

I appreciate everyone in the Ethereum community that has supported us and given us feedback,both positive and critical. Your voices have given us inspiration to constantly improve. We can neversay we are perfect, but we are always trying to better serve the community – just like Ethereum
does. Thank you for your understanding, patience and support so far. I look forward to doing morekaizen work together to grow the Ethereum ecosystem and to create a better world.

Aya Miyaguchi

Executive Director, the Ethereum Foundation

Ps. If you have feedback, please send it to questions@ethereum.org. 

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What is the EthereumFoundation?

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

Behind that simple description, the EF is hard to categorize. We are not a techcompany, or a “normal” non-profit. Just as Ethereum requires new concepts
and technologies, it has spawned new kinds of organizations.

We are at the frontier of a new kind of organization: one that supports a
blockchain, without controlling it. Every day we learn more about what kind oforganization the EF needs to be, to support Ethereum’s long term growth.

One key thing to understand is that the EF is more like a community of teams
than a traditional organization. 

1/2

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2/2

All of the teams that are part of the EF community share a common vision andpassion for helping Ethereum make a positive contribution to humanity. But

the EF contains many different teams that can be quite independent fromeach other. Teams have their own processes, goals, budgets, and products.

The EF is a community of teams that are highly aligned, but loosely coupled

Some teams are focused on the development and maintenance ofimportant pieces of the Ethereum technology stackSome teams explore the technical frontiers of what Ethereum and its

ecosystem can become

Some are focused outward, on the ecosystem itself, trying to understand it

and looking for challenges and opportunities

And others are focused internally, ensuring that the EF's resources areallocated well, that we are working on the right problems, and that theteams and groups that make up our community have the support theyneed to achieve their own goals.

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What is the EF’s philosophy?
In the years since the EF was first established, we have learned more about
our special role in the Ethereum ecosystem. Certain key ideas or principles
have become foundational guides for how the EF thinks and acts.

These core principles guide the decisions of EF leadership, and are an
important influence throughout the EF’s community of teams.

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Long term thinking
The EF community’s impact will be measured in decades and centuries - notquarters and fiscal years. Ethereum is a protocol for human coordination, andif it continues to be a useful protocol, its lifespan will stretch long into the
future. 

This means that the EF naturally has a long-term mindset. We care for not only
the interests of the community as it exists today, but for the community thatwill exist in the future. Like a gardener, we are planting seeds that we may notlive to see grow.

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2. SubtractionWe

resistthenaturaltendencyoforganizations

to

grow

and

accumulate

power. Instead of capturing opportunities for ourselves, we distribute thoseopportunities to the community. Instead of pulling everything in-house, wepush our resources out to teams across the ecosystem. We don’t competewith the ecosystem — we are thrilled when other organizations create value
because

that

means

Ethereumisbecoming

more

decentralized

andsustainable.

This is one reason we are relatively quiet. If we did not follow the philosophy ofsubtraction, the EF would be a natural schelling-point for attention, prestige,
and influence as Ethereum grows and becomes more widely used around theworld. The story of the Ethereum ecosystem should not become the story of
the Ethereum Foundation.

As a result, we try to work with the community as much as possible. Instead ofasking “how do we solve this problem?” we ask “how can the Ethereumcommunity solve this problem, and how can we help?”

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3. Stewardship of values
Ethereum has a soul. The values of our community have helped make
Ethereum what it is. This includes values like open-source, decentralization,
open-access, privacy, and many more. This isn’t an exhaustive list, and the EF
doesn’t get to decide what the Ethereum community’s values are. But we careabout nurturing the ones we think are most important.

We often speak of the EF as a kind of gardener, nurturing Ethereum’s “natural
ecosystem”. Like a gardener, we do not try to control or force the direction ofnatural processes - our role is to nurture and support. And when we walkthrough the landscape, we are careful about where we step.

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How does the EF support 
the ecosystem?
Over the years we have experimented with many different ways of supporting
the Ethereum ecosystem. This has led to a “layered” model where we involve
many different groups in decision making about where to allocate resources. 

The first layer are EF teams - groups working within the EF who contributedirectly to the ecosystem. The second layer are Grants, where we fund teams
outside of the EF. The third layer we call Delegated Domain Allocators, where
we work with outside groups who help make decisions about what to fundwithin specific domains. And the final layer is Third Party Funding, where we
give money directly to outside groups and let them decide how to allocate it
effectively.

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EF teams
The EF is a community of teams. Those teams each make their own
contributions to the ecosystem, and many of them - like Geth, Solidity,
Devcon, and many others - are very visible parts of the Ethereum community. 

The teams within our community are diverse. Both in what they work on, andhow they choose to work. Some are very independent and prefer to operate asa distinct team. Others work closely with many different EF teams, and are
more integrated into our community. Some teams choose to be very visible
parts of the ecosystem, while others prefer a more quiet approach. The EF
works to accommodate a very wide range of team preferences. 

The EF supports these teams with funding and operational support.
Sometimes we create new teams in response to new needs from theecosystem, or wind down support for other teams.

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Example:

Devcon

The Devcon team’s goal is to support the ecosystem through events. This includes
hosting Devcon, the annual Ethereum developers conference, as well as new
initiatives like Devconnect. The team also supports community Ethereum events
throughout the year, and works to grow the Ethereum community around our events.

EF teams

Example:Geth

The Geth team is responsible for development and maintenance of go-ethereum(geth). People use the geth client and related libraries to access the Ethereum
blockchain. Geth is the most popular Ethereum execution client and an integral partof the Ethereum software ecosystem.
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Grants
The EF allocates significant funding in grants to the ecosystem. In 2021, we
allocated $19.6 million in grant funding*.

We run an open grants process called the Ecosystem Support Program (ESP).
The ESP team receives applications, processes them and solicits feedback
from experts, approves grants, and then manages grant relationships. The
ESP team also looks for other non-financial ways to support teams who apply
for grants.

Grants are also given out by other teams at the EF. For instance, individual
teams at the EF often source their own grants and help to manage them.
Grant-giving is a tool that EF teams can use to accomplish their goals within
the ecosystem.

This

includes

what

we

call

“proactive”

grants.

EF

teams

often

identify

opportunities to grow or improve the Ethereum ecosystem, and initiate aconversation about financial support with community members.

In many cases, we coordinate grants or co-fund activities with others in the
Ethereum

ecosystem.

For

instance,

in

2021

we

worked

with

a

group

of

community donors to raise $1.5M for execution client layer teams. 

This is all part of pushing power out to the edges. We want teams and team
leads

to

directfundingtoachieve

theirgoals,

ratherthan

runeverything

through a single funnel.

* Figures on this page reflect dollars paid out for grants in 2021. Elsewhere the EF has reported total grantmoney that has been committed through a grant agreement, which will often stretch over multiple years ofdeliverables. The committed figures will be larger for 2021 because they reflect money that has been committed
to a project, but not all of which may have been paid out in that calendar year.

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Example: 2018

Uniswap

In 2018, the EF provided some of the first external funding to a self-taught Ethereum developer working on a
new decentralized exchange called Uniswap. The EF provided a grant of $50K and 120 ETH, which were used foran audit, documentation, and UI design before Uniswap’s mainnet debut at Devcon 4. Since then, Uniswap has
become key infrastructure for the Ethereum ecosystem, and the Uniswap community governs a treasury of $4.8
billion - used in part to give grants to the ecosystem.

GrantsExample: 2018 to present

Consensus (“Eth2”) clients

Since 2018, the EF has provided grant funding to multiple teams working on consensus clients (previously
referred to as “Eth2 clients”). We are proud of the teams who have made Ethereum’s transition to Proof of Stakea reality through years of work. The results of this multi-year collaboration speak for themselves: based onrecent milestones, we expect there will be five consensus clients ready for the merge.

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Delegated Domain Allocators
The EF works with domain experts to help guide allocations. This means
identifying expert partners outside of the EF, and giving them the power to
identify and make grants within a certain domain. 

We have worked with delegated allocators in domains like zero-knowledgetech, developer experience improvements, staking infrastructure, developer
onboarding, and various geographic or national regions. 

The EF itself will always have blindspots, and this is why we need to work withthe broader community to help allocate resources effectively to fund public
goods in the ecosystem.

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Example:

Nomic LabsThe EF began collaborating with Nomic Labs in June 2019. Initially we provided grant funding for Nomic Labs towork on key improvements to the Ethereum developer experience, and over time this relationship developed
into having Nomic act as a delegated domain allocator. This meant helping us source opportunities and identify
ways to allocate funding throughout the ecosystem to improve Ethereum’s developer experience. Read more.

Delegated 

Domain Allocators

Example:Devfolio
The EF has worked with the Devfolio team since 2019. Since
then, Devfolio has helped guide our support for the Indian
Ethereum

ecosystem,

givinggrants,runningafellowship

program, and supporting events to onboard developers.

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Third Party Funding
As the ecosystem has matured, we’ve begun to redistribute greater andgreater amounts of funding to independent third-party organizations. We givelarge amounts of funding to aligned organizations who share a commitment tosupporting the ecosystem and funding public goods. 

We do this by working with orgs like 0xPARC, Nomic Foundation, ETHGlobal,
and by using on-chain applications like CLRs / Quadratic Funding to put powerin the hands of the community.

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Example:

CLRs / Quadratic Funding

Quadratic Funding is a democratic mechanism for funding public goods. Since 2019, we have collaborated withorganizations like Gitcoin and CLR.FUND, allocating significant funding which is then matched to individual
donations from the Ethereum community. We are continuing to invest in making Quadratic Funding scalable andsecure, so that these tools can be used by the community to allocate funding.

Third Party Funding

Example:0xPARC

0xPARC is a new organization dedicated to supporting
decentralized application development. In 2021 the EF
provided a major grant to 0xPARC, which the new org will
use to fund its own activities as well as allocate out into theecosystem through grants and other initiatives.

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Example:Nomic Foundation

In 2021, Nomic Labs announced their transition to the
Nomic Foundation. This new non-profit foundation will work
to improve the Ethereum developer platform by building
tools and infrastructure. The EF is providing an $8M grantto this new organization, which will also provide grants toserve its mission.
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2021 Financial Summary

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EF Treasury
As of March 31 2022, the EF’s treasury was approximately $1.6 Billion, split
between $1.3 Billion in crypto*, and $300M in non-crypto investments andassets.

The vast majority (99.1%) of our crypto holdings are held in ETH. This ETH
represents 0.297% of the total ETH supply on March 31 2022. 

The EF follows a conservative treasury management policy that ensures wehave sufficient resources to fund the EF’s core objectives even in the case of amulti-year market downturn. This part of our budget is immune to changes in
the price of ETH on a significant timeline. 

We also increase our non-crypto savings in response to rising ETH prices,which provides a greater safety margin for our core budget and would enable
us to continue funding non-core but high leverage projects through a market
downturn.

We choose to hold the remainder of our treasury in ETH. The EF believes in
Ethereum’s potential, and our ETH holdings represent that long-term
perspective.

* These ETH figures include the 39,168 ETH already committed to the Client Incentive Program, which will be
released over time to client teams, following the schedule described here.

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EF Treasury
As of March 31, 2022

Non-crypto assets & investments 
18.8% / $302M

Other Crypto 
0.7% / $11M

TOTAL 
$1.6B

ETH 

80.5% / $1.294B
0.297% of total ETH supply

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2021 spending
In 2021, the EF spent approximately $48 million. Approximately $20 million ofthis total was in the form of external spending, which includes grants,
delegated domain allocations, third party funding, bounties, and sponsorships. 

The EF’s grant activities are regularly published on the EF blog
Allocation Update Q1 202
Allocation Update Q2 202
Allocation Update Q3 + Q4 2021

The remaining $28 million was used to fund teams and projects within the EF
community.

The total $48 million can be broken out into a few different categories, each ofwhich includes both internal and external spending
L1 Research & Development - $21.8 millio
L2 Research & Development - $1.9 millio
Applied ZK Research & Development - $3.6 millio
Developer Platform - $5.9 millio
Community Development - $9.7 millio
Internal operations & support - $5.1 million

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2021 spending
Internal Ops & Support 
10.6% / $5.1M

Community 
Development 
20.2% / $9.7M

L1 R&D TOTAL 
$48M

45.5% / $21.8M

Developer Platform 
12.3% / $5.9M

Applied ZK 

7.5% / $3.6M

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L2 R&D 

4.0% / $1.9M

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1. L1 R&D - $21.8M

This category includes all R&D related to mainnet upgrades, Geth, internal
security research, cryptography R&D, economic modeling and mechanism
design, longer term research to achieve the Ethereum community roadmap,
and grants to external execution & consensus layer clients.

This category also includes many grants to external parties, ranging fromnetwork stress testing to outside research on specialized cryptography.

This total does not include the Client Incentive Program, which client teams
will unlock in the future according to this schedule. The CIP totals 39,168 ETH,
valued at $132.5 million as of March 31, 2022.

2. L2 R&D - $1.9M

This includes internal teams who contribute to L2 research & development, as
well as grants to external parties to improve the L2 ecosystem. These grants
include educational resources, stress-testing and monitoring tools, L2 SDKs
and other developer tooling, security reviews for external projects, and more.

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3. Applied ZK R&D - $3.6M
This includes funding for teams who work on projects like MACI, ZKEVM,
UniRep, and other projects.

This category also includes many grants, ranging from ZK developer tooling,
ZK ceremony design UX, ZK application proof of concepts, and more. It also
includes the grant given to the 0xPARC foundation in October 2021.

4. Developer Platform - $5.9M
This category includes all work related to improving Ethereum as a developer
platform. This includes EF teams like Solidity, Remix, and support for the
Python ecosystem. It also includes Zokrates, and grants to third party
allocators like Nomic Labs. 

This total does not include the $8M donation to the Nomic Foundation, which
will be recorded in 2022.

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5. Community Development - $9.7M
This category includes various work to support different segments of the
Ethereum community. This ranges from engaging with core protocol
communities (e.g. support for staking community), Next Billion, Devcon, as
well as Ethereum.org and other educational resources. 

This category also includes many grants, ranging from grants to specificregions like Honduras and Colombia, education, and more. It also includes the$1M to advocacy organizations announced in November 2021, and the $1M instaking community grants announced in February 2021.

6. Internal operations - $5.1M
This category includes general expenses that support all teams at the EF. This
includes all costs related to internal and external legal, accounting, andfinancial services, and org-wide subscriptions and service providers, ranging
from data services, operational tools, and technical infrastructure. It also
includes all fees related to individual investments within our treasury
management strategy, as well as salaries of all operational and administrative
staff. 

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Uluru, Australia

Berlin, Germany

Gifu, Japan

Merzouga, Morocco

Amazon, Brazil

Tabora Region, Tanzania

Istanbul, Turkey

Serranía de Hornocal, Argentina

Phú Quốc, Vietnam

Wadi ad-Dawasir, Saudi Arabia