The Ethereum Foundation, led by Vitalik Buterin, has been heavily criticized for selling its token.
The foundation, which is supposed to believe in Ethereum’s long-term potential and hold it more instead of selling it, views this as a bearish move.
Vitalik Buterin the co-founder of Ethereum has come out to clarify the assertions leveled against the foundation for selling their tokens.
In his argument, Buterin noted that the foundation was selling Ethereum tokens to raise funds which it uses to fund various developmental projects on the ecosystem.
This developmental project includes supporting zero-knowledge technology for privacy, account abstraction for user security, and several events promoting Ethereum globally.
Buterin added that the developmental projects funded by proceeds of selling Ethereum tokens have helped maintain the security and stability of the Ethereum blockchain which has experienced no downtimes since 2018.
$11 million worth of Ethereum sold
According to data from the scope scan foundation, the Ethereum foundation has sold over 4,066 ETH worth nearly $11 million. Scopescan further agreed that the Ethereum Foundation could make as much as $20.08 million per year if it staked the 271,000 ETH it owns.
- Vitalik Buterin in his explanation on why the Ethereum foundation does not stake its token explained that one of the main reasons the organization doesn’t stake its ETH is to avoid any “official choice” in the event of a contentious hard fork.
“We don’t want to be in the situation of being forced to make an ‘official choice’ if there’s a contentious hard fork.”
- His argument borders on avoiding the challenge of conflict of interest or having the Ethereum foundation wield undue advantage in the Ethereum ecosystem.
- The decision not to stake is aimed at maintaining Ethereum’s decentralized ethos by letting other entities stake on behalf of the network. This would ensure that no single foundation has an outsized influence on the blockchain.
For this reason, the Ethereum foundation’s preference remains to fund development and operations directly, which Vitalik Buterin argues aligns better with Ethereum’s long-term goals.
What to Know
- Staking is when you lock crypto assets for a set period to help support the operation of a blockchain. In return for staking your crypto, you earn more cryptocurrency. Many blockchains use a proof of stake consensus mechanism.
- A hard fork is a branching of a cryptocurrency’s blockchain that splits a single cryptocurrency into two. This happens when the users of a blockchain cannot come to an agreement on rule changes or upgrades to the blockchain. Hard forks are different from soft forks, which don’t create a new blockchain.