Ethereum Foundation cuts 20% staff, budget down 40% as ETH falls 44%

Ethereum Foundation announced a 20% workforce reduction—54 employees let go—and a roughly 40% budget cut, even as Ether slid to about $1,670, a 44% year‑to‑date decline [2]. The move underscores a widening gap between soaring network usage and weakening token economics, raising questions about ETH’s price trajectory.

Record usage meets falling fees

The first quarter of 2026 saw Ethereum’s on‑chain activity hit new highs: monthly active users rose to 13.2 million, up 53.5% from the prior quarter and 85.9% year‑over‑year; transaction volume climbed 38% quarter‑over‑quarter to 200.4 million, pushing throughput to a record 25.78 tps [2]. Despite this surge, layer‑1 fee revenue plunged 48% quarter‑over‑quarter to $39.9 million and fell 81.9% from a year earlier, reflecting lower demand for base‑layer blockspace.

Funding shortfall and market impact

The foundation’s budget contraction follows a 30.3% drop in Ethereum’s fully‑diluted market value to $290 billion and an 11% decline in total value locked to $316.2 billion [2]. Tokenized assets on the chain grew to $203.4 billion, yet institutional investors have not translated that usage into ETH purchases; spot Ether ETFs recorded seven weeks of outflows totaling nearly $1 billion [2]. The disconnect left ETH vulnerable to broader market weakness, contributing to its 44% YTD slide.

Outlook for ETH price

Analysts note that Ethereum upgrades historically take months to affect price, with the Merge and Dencun showing delayed reactions [1]. The upcoming “Glamsterdam” hard fork, slated for mid‑2026, aims to cut fees by roughly 78% and boost throughput toward 10,000 tps, but any price impact will likely be gradual [1]. In the near term, ETH remains anchored near its recent low of $1,670, with upside constrained by the current funding and fee environment.

What to watch

• $1,800 resistance – a break could signal renewed buying pressure.
• Glamsterdam mainnet launch – scheduled for mid‑2026; monitor fee reductions and on‑chain activity post‑upgrade.
• Spot Ether ETF flows – weekly net inflows/outflows, especially any reversal of the recent $1 billion outflow trend.

The foundation’s restructuring highlights a structural tension: record network usage is not yet translating into token demand. Whether upcoming protocol upgrades can bridge that gap—and lift ETH from its current lows—remains an open question.