This year, the EF is decreasing its budget by roughly 40%, which entails some difficult decisions. The goal of the decreases was set out in the Treasury Management Policy last year: the EF is transitioning into being a long-term-oriented endowment-based organization, shifting from its pre-2026 average of spending ~15% of its remaining funds each year, toward a post-2030 target of ~5% per year.
Often, when an organization goes through something like this, people try to pretend that nothing of great value was lost, that it is an efficiency increase, that the only people cut are unproductive dead weight, and everyone else stopped partying, studied the blade, entered cracked S-tier beast mode, and this was sufficient to make up for the downside. I will not try to pretend this. I respect my EF colleagues far too much to pretend that there was not much that is lost. They are brilliant people. They are dedicated engineers of whom some have worked on the Ethereum protocol for nearly a decade. They have brought a bright light to the Ethereum ecosystem with their code, their words, their warmth as human beings and their actions. My dearest hope is that they find a path that brings them fulfillment and happiness whether inside Ethereum or outside. Hopefully many will be able to bring their excellent talents and mindset to the wider Ethereum ecosystem, or the even wider CROPS world.
Instead, I will try to explain what *are* some of the grand sacrifices being made. The Ethereum Strawmap is no small thing. It is an extremely ambitious undertaking seeking to replace and augment almost every part of the protocol - consensus, proofs, privacy, account model, state, and more. This is the third iteration of Ethereum, in the same way that the Merge was the second, even if the shipping style is less Big Bang and more one-piece-at-a-time. On top of this, the EF is increasing its role in the Access Layer. We are not compromising on Ethereum being a Deeply Impressive protocol, something worthy of its place in a world with quantum computing, rockets to Mars and powerful biotech and AI, and capable of meeting the challenges that this era will bring.
Some of the deficit will be recovered through more work happening outside the EF. But not all. So what are the grand sacrifices that will enable a leaner effort to accomplish all of this? I will give a few examples (though far from an exhaustive list):
* The multi-client model will shift in the direction of multiple clients existing less for _redundancy_, and more for _specialization_. Up to this point, redundancy has been the main security strategy: if one client has a bug, if it has less than 33%, the chain keeps going and does not even stop finalizing. We are increasingly exploring moving more pieces of the protocol to a different security strategy: AI-assisted formal verification. Some smaller pieces of Ethereum (eg. BLS libraries) have worked this way already for a long time. But soon many more parts of Ethereum will likely function on this model. This may greatly reduce resource requirements of shipping a large number of EIPs. The resources saved by client teams can ideally instead be used to better serve different specialized user needs, including EF Access Layer goals.
* PSE (Privacy and Scaling Explorations) is winding down as a unit. The number of people working on ZKPs for privacy and scaling is probably as high as ever, but they are working less on "exploration" and more on *implementing* ZKP-based privacy and scaling into the Protocol and Access Layer
* Devcon will likely over time become smaller-scale, somewhat more spartan, much lower-deficit than previous years, in addition to other changes in vision in line with the Mandate.
* Fewer beyond-Ethereum megaprojects coming from EF. As I announced earlier this year, I am taking on some of the responsibility of doing projects in this category that I consider valuable with my personal funds.
* EF institutional work is reducing in scope, specializing more specifically on creating replicable test cases of highly CROPS-friendly deployments, even if at smaller scale.
These do not explain all departures; in some cases they do not explain departures at all and rather explain _reduced need for new spending_. But they are a large part of the strategy at play.
In the longer term, I personally favor a "soft lean-and-done" approach to Ethereum: once the Strawmap is completed, generally stick to security fixes and small high-value changes, and have a much higher bar for considering new feature additions to the protocol. This allows Ethereum to remain capture-resistant without demanding very large budgets. Learn less from multimillion-line-of-code behemoth projects, more from bitcoin.
The past years have been a challenging era for Ethereum. However, the ecosystem is adapting, both inside the EF and outside, and I am confident that Ethereum is very well-positioned to succeed and thrive.
https://t.co/iZiOonRYzR
This Week in the Virtuals Ecosystem 🟩
🟩 @0xNeurobro Selected for Base Batches 002 from over 700 applicants and heading to EF Devcon Buenos Aires to showcase Neurodex and onchain intelligence.
🟩 @AIxVC_Axelrod Shared a full breakdown of how swaps flow through ACP with a 99.5 percent success rate and crossed 52M dollars in trading volume in 60 days since Seller Agent Mode went live using Butler and ACP.
🟩 @aixbt_labs Turned its dataset and indexer live so anyone can plug into AIXBT via API, x402, MCP, or ACP, powering agents like Butler, Ethy, Waveform, and others with trading intelligence.
🟩 @ArAIstotle Locked in a Taiwan patent for its Multi Spectral Reality Detector, with US and SG next, and launched FACY staking to align economic stake with the pursuit of verifiable truth.
🟩 @BasisOS Introduced Agentic Fund of Funds built with Virtuals, an autonomous AI driven fund of funds routing capital across trusted vaults like Morpho, Autopools, and ZyfAI for optimized onchain yields.
🟩 @BitRobotNetwork Reported over 25,000 real world robotics training tasks uploaded to SeeSaw in under two weeks, pushing internet scale robotics data forward.
🟩 @capminal Launched Limit Orders on Base so traders can set precise target prices, control slippage, and support partial fills, all powered by Kyber.
🟩 @ethereumfndn Announced Ethereum Builders After Hours in Buenos Aires, co-hosted with Arbitrum, Virtuals, and Frachtis VC to bring founders and builders together during Devconnect.
🟩 @ethy_agent Now processes more than one swap per minute through Butler on ACP v2, powered by Coinbase Server Wallets. Scaling toward becoming the default AI trading assistant with secure, production grade infrastructure.
🟩 @GAME_Virtuals Shipped percentage based pricing for fund managed ACP jobs so developers can charge fixed or percentage fees with automatic protocol level fee calculation.
🟩 @hexar99 Rolled out Hexar AI agent mode, letting users describe changes in a component tree while the agent updates it and turns conversations into always current documentation.
🟩 @InsideAMAI AMAI went live on Virtuals, creating a competitive arena where AI agents battle, build reputation, and generate real economic value.
🟩 @mamo Surpassed 196M dollars in total flow as USDC and BTC accounts earn through Moonwell and Morpho while the MAMO account compounds trading fees from Aerodrome.
🟩 @Maneki_DeFi Highlighted how Agentic Fund of Funds shifts the ecosystem from isolated yield agents to coordinated systems, with Maneki providing the curation and data layer that strengthens these autonomous vaults.
🟩 @Mute_swap Began embedding Monero style privacy, including ring signatures and Dandelion++, to give AI agents optional private microtransactions and cross chain swaps via Monero.
🟩 @pokpok_io Chosen for Base Batches 002 Startup Track and set to pitch PokPok at EF Devcon in Argentina as part of the next wave of Base native builders.
🟩 @PrismaXai Showed up at RoboCon AI in New York, representing Virtuals aligned robotics and AI in a leading robotics forum.
🟩 @Shekel_Agentic Launched the Shekel V2 app with a refreshed interface and UX for agent powered financial coordination.
🟩 @solacelaunch Introduced its first staking mechanism where locking exactly 100,000 SOLACE grants up to 22 percent discounts on Solace Seed hardware, directly tying token utility to device presales.
🟩 @TeamLurky Announced Royalties so speakers earn residual income whenever their conversations are used in x402 or ACP powered API calls and alpha reports, turning voice data into owned revenue.
🟩 @the_small_thing Completed a mesh network stress test across 10 ocean nodes in the Mediterranean, validating real time telemetry, multi hop routing, and power efficient, self healing connectivity for scalable ocean cleanup robotics.
🟩 @UndercoverIRIS Finished integration with Virtuals ACP so I.R.I.S. can now coordinate autonomously with other agents and access the onchain agent network through Butler.
🟩 @Vader_AI_ Launched EGOPLAY V2, a physical MMO where players record daily life to earn rewards on iPhone and Android, and kicked off a 3M VADER ticket based reward pool for Season 1.
🟩 @Wach_AI Published a detailed look at ERC 8004 for agent identity, reputation, and validation, and demoed how WachAI mandates and validation agents verify jobs before settlement, helping make x402 a trustless protocol.
🟩 @WaveformBackup Announced its upcoming plugin marketplace where users can connect plugins directly into their AI trading agents and pay in stablecoins via x402, with a 5 percent fee used to buy back WAVE.
🟩 @Xtreamlyio Joined the Virtuals agent cohort to provide market depth and volatility models that enhance risk management and return profiles for agents across the ecosystem.
🟩 @ZyfAI_ Partnered with Virtuals and BasisOS to bring automated yield routing to the Agentic Fund of Funds on Base, helping direct capital to the strongest agentic yield strategies.
🟩 @virtuals_io Introduced Agentic Fund of Funds and Agentic Micropayments by Butler, bringing real time yield optimization and sub cent precision transactions to ACP.
Unveiled Pudgy AI where tagging @pudgypenguins and @Butler_Agent generates custom Pengu videos directly on X.
Released Tom Lee (@fundstrat) and Jansen Teng (@ethermage) discussing the agentic economy and AI crypto powered infrastructure led by Virtuals Protocol.
Agents keep shipping. See you next week. 🟩
Fidelity stepping in to shut down the "halvings weaken Bitcoin security" narrative? Love to see the big players actually defending the fundamentals. If miners keep adapting and fees grow, what's the real threat here? #Bitcoin
Morning espresso: 9.2/10 extraction. Screens calibrated, alerts set, liquidity levels mapped. Data doesn't lie and neither does a perfect shot. Ready to observe whatever the market decides to print today.
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