Vitalik Defends EF’s ETH Dumping Amidst Staking Criticism

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Vitalik Buterin, a key figure in the creation of Ethereum, justifies the Ethereum Foundation’s choice to liquidate Ether (ETH) rather than opting for staking or self-withdrawal.

Based on Spot On Chain’s information, the Ethereum Foundation, in the early days of 2025 on January 8th, sold 100 Ether (ETH) and received approximately 329,463 DAI tokens as a result. This transaction was made at the start of the year. Data from the blockchain shows that throughout the entirety of 2024, the Ethereum Foundation had sold a total of 4,466 Ether for around $12.61 million, which equates to an average price of about $2,823 per Ether. It is suggested that these sales frequently take place just before significant price declines.

Traders on platform X swiftly criticized EF for persistently unloading ETH, rather than staking it through their own system.

To remain completely impartial, it seems we can’t employ the very system we’re supposed to defend and strengthen. I apologize,” said DCinvestor, adopting a mocking tone, echoing the EF’s stance.

Another Ethereum trader with the handle eric.eth commented something along these lines: “The EF primarily relies on the chain for its top use case, which is essentially offloading ETH. This suggestion is beyond reasonable!” They further suggested that the Ethereum Foundation should consider staking ETFs and utilizing DeFi to manage their internal expenses instead.

Vitalik Buterin, one of the co-founders of Ethereum, defended the Ethereum Foundation by explaining in response to critics why they choose not to stake Ether (ETH). He cited two primary reasons for this decision.

Historically, our worries have primarily revolved around regulatory issues, and if EF were to take a stance in the event of a contentious hard fork, it would implicitly require us to take a position on future disputes. However, these concerns are less prevalent now, but they still exist. We’ve been actively seeking ways to mitigate them recently.

— vitalik.eth (@VitalikButerin) January 20, 2025

Buterin pointed out regulatory issues as the primary concern due to Ethereum being one of the biggest cryptocurrency protocols by market value. Staking a substantial amount of ETH could draw undesired attention from regulators, leading them to question if Ethereum is still considered a security. This is an issue that many crypto companies have grappled with for quite some time.

Buterin’s second point emphasizes that supporting ETH staking might necessitate the Ethereum Foundation to express a viewpoint on any future controversial updates (hard forks) within the Ethereum ecosystem. This could potentially lead to disagreements within the community, causing some members to favor one blockchain version over another.

Consequently, should EF decide to secure its own tokens through a single blockchain rather than another, it could be perceived as an endorsement or statement of support for that particular blockchain.

Vitalik Buterin notes that regulatory worries have diminished over time, but another factor persists.

“There’s definitely ways to minimize, and we’re recently been exploring them,” he wrote.

Furthermore, he clarified that cashing out ETH might take more time than just selling the tokens, a delay commonly caused by the large number of validators who also rely on the same chain. Consequently, if the Ethereum Foundation (EF) is the sole entity withdrawing ETH, it would require approximately 2.6 days to be fully processed.

In such a scenario where a significant number of stakers decide to withdraw their funds together with the EF (Ethereum Foundation), it might take as long as 58 days for the process to be completed. This is assuming that approximately 20% of Ethereum stakers choose to withdraw concurrently.

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2025-01-20 17:13