An image of Aya Miyaguchi
Justin Saglio

Blockchain / Ethereum

Ethereum’s foundation is pumping $30 million into “transformative” upgrades

The long-promised overhaul that will unlock what creator Vitalik Buterin calls the “world computer” needs a cash infusion.

May 23, 2019
An image of Aya Miyaguchi

Ethereum may not have a center, but it does have something that resembles a beating heart. The Switzerland-based Ethereum Foundation not only employs many of the researchers and developers crucial to its goal of creating a “world computer” but also pumps moral and financial support for the community’s ambitious vision throughout the ecosystem. After all, changing the world can at times be a discouraging—and expensive—undertaking.

In a new blog post, the foundation sheds some light how it intends to dole out $30 million over the next 12 months to “key” Ethereum projects. The cash has been drawn largely from the foundation’s Ether holdings, which it says amount to about 0.6% of all the coins in circulation, or about $155 million.

The first priority is “ETH 2.0,” a long-promised software upgrade that will include a switch from proof of work to proof of stake—a wholesale change to the way the network reaches agreement about the information in its blockchain. Instead of requiring “miners” to participate by spending lots of computing resources, the new system will rely on “stakers” to validate new transactions, proving themselves trustworthy by first locking up large sums of money (called “staking”). A number of other changes, taken together, are supposed to let Ethereum operate at an efficiency and scale that finally lives up to the original promise. (Creator Vitalik Buterin has quipped that right now Ethereum is more like “a smartphone from 1999 that can play Snake.”)

The foundation will award $19 million in grants to projects focused on “building the Ethereum of the future,” including ETH 2.0 software clients, new “layer two” systems that will allow faster transactions by eliminating the need to record each one on the main blockchain, and futuristic privacy technologies that use zero-knowledge proofs so that users can verify certain things about themselves without having to supply identifying information.

Looking further down the road, though, the Ethereum Foundation is grappling with the paradox of being an organization that prioritizes decentralization. Aya Miyaguchi, the group’s executive director, spoke about this earlier this month at MIT Technology Review’s Business of Blockchain event. When the foundation was launched, the community was so small that the foundation essentially was Ethereum. Five years later, many independent teams are working to improve the system’s infrastructure. That means her group’s role must change, said Miyaguchi: “To maximize the potential that this decentralized ecosystem has, we need to find a way to subtract our power as much as possible.”

For instance, it’s encouraging the creation of more independent funding initiatives like MolochDAO, which crowdsources funding for Ethereum infrastructure projects. Not only is it more sustainable if the community can rely on other funding sources besides the foundation, argued Miyaguchi; it’s also more decentralized.  

But achieving ETH 2.0 will be a massive and complicated task, and success is far from assured. That’s true even if all the necessary research breakthroughs really are already in the bag, as Buterin claimed this week in a tweet. Perhaps it can be pulled off without centralized leadership. But it will probably require at least a little bit of heart.