Ethereum Foundation Transfers $131M to DeFi, Expanding Treasury Strategy

Ethereum Foundation moved $131 million in ETH to a multi-signature wallet, signaling an increased focus on decentralized finance activities.

The foundation allocated 50,000 ETH to DeFi last month, representing nearly 20% of its total holdings to strengthen its treasury.

Criticism over EF’s stance on DeFi prompted responses from Vitalik Buterin, who emphasized the importance of sustainability and active DeFi usage.

The Ethereum Foundation (EF) recently moved $131 million worth of Ethereum (ETH) to a multi-signature wallet. This address has previously interacted with major decentralized finance (DeFi) protocols, including AAVE. The transfer suggests that EF is actively looking to increase its involvement in DeFi, potentially leveraging its holdings to generate yield.

Last month, the Ethereum Foundation dedicated 50,000 ETH to study DeFi business opportunities. The adopted ETH amount corresponds to an estimated 20% of its complete ETH stockpile. The organization continues to expand its treasury holdings through this strategic financial decision while strengthening its financial stability

EF's increased DeFi participation might represent a fundamental adjustment of its strategic direction during conversations about the organization's position regarding decentralized finance.

Addressing Criticism Over DeFi

StanceKain Warwick, a leading figure in the DeFi space, has criticized the Ethereum Foundation for its limited involvement in the sector. Warwick argued that DeFi has been instrumental in Ethereum’s growth and accused EF of neglecting its role

In response, Ethereum co-founder Vitalik Buterin emphasized that projects must be sustainable. Buterin also mentioned that he actively uses decentralized exchanges, aiming to counter claims that the foundation has overlooked DeFi.

Multi-Signature Wallet Established for DeFi Expansion

To formalize its DeFi strategy, the Ethereum Foundation created a multi-signature wallet in January. This wallet is expected to facilitate its growing participation in the sector. While the exact details of how the funds will be deployed remain unclear, previous interactions with DeFi platforms suggest a focus on lending and liquidity provision. By engaging with these protocols, EF may seek to strengthen the network’s economic foundation while optimizing its asset management.

Evaluation of Ethereum’s market behavior shows ETH experienced a weakening value compared to Bitcoin. The ETH/BTC pair reached a multi-year minimal point which mirrored the market conditions before the NFT and DeFi boom took place in 2021. The unfavorable market position has sparked debates about EF's leadership capabilities because people wonder if the foundation is taking sufficient action to strengthen Ethereum's market standing.