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Is the Ethereum Foundation a “master of escape”?
On August 23, the Federal Reserve released expectations of interest rate cuts, and the cryptocurrency market ushered in a wave of upward trend.However, an on-chain operation followed one after another – the Ethereum Foundation transferred 35,000 ETH to the Kraken Exchange in the early morning of August 24.
The last time the Ethereum Foundation transferred a large amount of ETH to Kraken was on May 6 last year, when the foundation transferred 15,000 ETH to the Kraken exchange.In the following 6 days, the price of ETH plummeted from US$2,006 to US$1,740, a drop of 13%.
Due to the record of several relatively high-level shipments in the past, the Ethereum Foundation is nicknamed the “Master of Escape” by the market.
For example, the Foundation successfully completed two shipments at its high point in the 2021 bull market:
(1) On May 17, 2021, the Ethereum Foundation sold 35,053 ETH at an average price of US$3,533. The crypto market then experienced a “5.19 plunge”, and the currency price fell to around US$1,800, almost halved.;
(2) On November 11, 2021, the Ethereum Foundation once again sold 20,000 ETH at an average price of US$4,677, and the market began to decline all the way.Both shipments can be regarded as accurate escape.
However, from a longer-term perspective, the Ethereum Foundation is not always selling at its highest point.
According to data compiled by Wu Blockchain, the Ethereum Foundation also sold 100,000 ETH at a unit price of US$657) and 28,000 on December 17, 2020 (a unit price of US$657) and 28,000 on March 12, 2021 (a unit price of 1790)ETH), both sold out before Ethereum soared, and missed the subsequent huge increase.
Judging from the transfer records of the Ethereum Foundation in the past year, it is not difficult to find that its operations are basically regular sales. It is actually not accurate to call it “the master of escape from the top” just by just a few high-level sales.
Why did the Ethereum Foundation sell ETH?
Regarding the recent transfer of 35,000 ETH to the exchange, Aya Miyaguchi, executive director of the Ethereum Foundation, explained, “This is part of the Ethereum Foundation’s fund management activities. The Ethereum Foundation’s annual budget is about US$100 million, mainly byThe grants and wages are made up, and some recipients can only accept fiat currencies. For a long time this year, the Ethereum Foundation has been told not to engage in any funding activities, because the regulation is complicated and the plan cannot be shared in advance. However, thisETH transfer transactions do not mean sales, and subsequent sales may be gradually sold in a planned manner.”
According to data from crypto analyst DefiIgnas, after transferring 35,000 ETH, the Ethereum Foundation still holds about 273,000 ETH, accounting for about 0.25% of the total ETH supply.According to the latest report, the Ethereum Foundation allocated $30 million in the fourth quarter of 2023 and $8.9 million in the third quarter.Funds are mainly used for global conferences (such as the famous Devcon and Devconnect), online courses, innovative projects, etc.
In addition, from the 2021 report, the Ethereum Foundation’s total expenditure on internal expenditure, external grants and rewards is US$48 million, of which L1 R&D expenditure is US$21 million, and community development (including grants and education) expenditure is US$9.7 million.Internal operations (salary, legal expenses, etc.) expenditures were US$5.1 million.
In addition, the foundation’s sale of tokens is not an isolated case. For example, Polkadot was once controversial for its crazy spending.
The market impact of the Ethereum Foundation’s sell-off and direction of improvement
Since the listing of Ethereum ETF on July 23, as of August 26, Grayscale’s ETHE has accumulated a total of 799,000 ETH, with an average daily net outflow of 32,000 (other ETHs are all net inflows, with an overall net outflow of about 10,000.141,900).In contrast, the 35,000 ETH sold by the Ethereum Foundation recently is not particularly large.
In fact, it is understandable that the Ethereum Foundation sells ETH, after all, the team development and operation require financial support.Moreover, the 273,000 ETH held by the foundation only accounts for 0.25% of the total supply.Judging from the proportion of market value, the foundation’s selling behavior has a small direct impact on market liquidity, and the negative effects are more reflected in market sentiment, such as causing ETH holders to suffer from frustration in their confidence and following the trend to sell.
In addition, the Ethereum Foundation had previously announced a $100 million budget, but the community’s recent reaction highlighted the growing demand for regular financial details disclosures.For example, regularly publish detailed reports containing financial and basic updates, including team spending, timing of selling ETH (how to reduce the impact on the market should be fully considered), how and where funds are used, team size and allocation, etc., andProvide the community with interfaces such as announcements, activities, financial activities, etc. about the Ethereum Foundation. In this way, the community sentiment will become more stable, and ETH holders will pay more attention, understand and support the Ethereum Foundation to help promote Ethereum.development.
We look forward to the ETH Foundation’s continuous R&D PR, community operation and market education, which can bring more developers and users to Ethereum’s most famous smart contract blockchain.
