The Ethereum Foundation announced plans to allocate 50,000 Ether, valued at around $165 million, to bolster Ethereum’s decentralized finance (DeFi) ecosystem. Ethereum co-founder Vitalik Buterin shared the news on Jan. 20 via X, emphasizing a renewed commitment to transparency and supporting app developers.

This significant allocation, constituting 18.5% of the Foundation's treasury, will be managed through a secure three-of-five multisig wallet on Safe. A test transaction has already been conducted using the Aave lending protocol, though the wallet setup may take several days, according to the Foundation’s Hsiao-Wei Wang.

Critics, including Infinix founder Kain Warwick, have accused the Ethereum Foundation of neglecting DeFi development and causing Ether sell pressure to fund operations. Meanwhile, Ethereum core developer Eric Conner suggested staking rewards could cover operational costs, reducing the need for such treasury usage.

The Foundation’s treasury has seen a sharp decline, falling 56% from 617,000 Ether in January 2020 to 269,000 Ether today, worth approximately $894 million, as per Arkham Intelligence data. This move is seen as a way to capitalize on the Ethereum network’s growing DeFi ecosystem while addressing community concerns over transparency and leadership.

Vitalik Buterin, however, dismissed the notion of the Foundation taking a more ideological or regulatory lobbying stance, reaffirming its neutral and value-driven approach. His position received praise from CryptoQuant CEO Ki Young Ju, who commended the Foundation’s focus on long-term value creation over profit.

As Ethereum grapples with its evolving role in the DeFi space, the move has sparked both optimism and skepticism, highlighting the ongoing tension between innovation and governance in the blockchain world.