Few periods in Ethereum's 11-year history have brought as much change as the past year. The network that began as a bold experiment in decentralized computation is now entering its second decade in a very different shape: the Ethereum Foundation has been transformed by leadership changes, layoffs, and structural spinouts, while the broader ecosystem has pushed forward with technical upgrades and deeper ties to Wall Street.

At the heart of the upheaval is a question that has followed Ethereum since its founding: how should the core organization that supports the network evolve? The Ethereum Foundation has long served as a steward of research and development, allocating grants and coordinating protocol work. But as Ethereum has grown into a multi-trillion-dollar asset class and the foundation block of decentralized finance, the pressure on its leadership structure has intensified. This year, that pressure produced dramatic changes.

Leadership shakeups at the foundation

The most visible sign of change came from the top. The Ethereum Foundation saw a series of senior leadership departures, as long-serving executives left or were replaced amid a broad reorganization. The foundation's executive team, which had remained unusually stable during the network's early years, became the focus of intense community debate. Critics argued that the organization concentrated too much decision-making power in a small group, while defenders pointed to the foundation's role in maintaining protocol neutrality and scientific rigor.

In response, the foundation implemented a significant restructuring. Staff reductions, described as layoffs, were part of a broader effort to realign the organization's priorities. The foundation also introduced a new CROPS mandate, a set of principles and objectives intended to clarify how the organization would allocate resources across protocol work, research, and ecosystem support. While the exact details of the mandate remained a subject of discussion, the direction was clear: the foundation intended to do less direct operational work and instead catalyze greater participation from independent teams and community organizations.

Spinouts: EthLabs, Ethereum Systems, and Ethereum Institutional

Perhaps the most consequential structural decision was the decision to spin out several of the foundation's core functions into separate entities. Three organizations emerged from this process: EthLabs, Ethereum Systems, and Ethereum Institutional. Each was designed to take on a specific set of responsibilities that had previously sat inside the foundation.

EthLabs, by most accounts, is focused on client development and the more practical engineering side of the protocol. Ethereum Systems appears intended to handle infrastructure, tooling, and the broader technical stack that supports application builders. Ethereum Institutional, as its name suggests, is aimed at the growing intersection between Ethereum and traditional finance, serving institutions that want to interact with the network in a compliant and scalable way.

The spinouts are a major departure from the earlier model, in which the foundation was the clear center of gravity for Ethereum development. By pushing these functions into independent organizations, the foundation is betting that a more decentralized ecosystem will be more resilient, faster to innovate, and harder to capture by any single group. The approach mirrors the ethos of Ethereum itself, even if it creates new coordination challenges.

Key facts at a glance

• The Ethereum Foundation underwent leadership departures, layoffs, and a new CROPS mandate.
• EthLabs, Ethereum Systems, and Ethereum Institutional were spun out to decentralize the foundation's role.
• The Fusaka upgrade rolled out, continuing Ethereum's technical development.
• U.S. spot Ethereum ETFs exceeded $11.23 billion in cumulative inflows.
• BlackRock, JPMorgan, and other major financial institutions deepened their involvement with Ethereum.

Technical progress: the Fusaka upgrade

While the foundation's restructuring dominated internal conversations, Ethereum's development pipeline continued to advance. The network rolled out the Fusaka upgrade, the latest in a long sequence of improvements that began with the transition from proof-of-work to proof-of-stake in the Merge and continued through Dencun and other network upgrades. Fusaka was designed to improve scalability and efficiency, reducing costs and latency for users and applications. The upgrade reflected the community's ongoing focus on making Ethereum capable of supporting global-scale adoption without compromising decentralization.

The technical roadmap also includes ongoing work on rollups, data availability, and other second-generation scaling techniques. The broader Ethereum layer-2 ecosystem, which has grown rapidly over the past several years, benefits directly from these improvements. By making layer-2 execution cheaper and more secure, the base layer can continue to serve as a settlement layer for billions of transactions processed by rollups and other off-chain execution environments.

The Fusaka upgrade was also a reminder that Ethereum's development process remains fundamentally open. While the foundation has historically coordinated much of the work, the actual decisions still emerge from a decentralized process of research, prototyping, review, and debate. That process was tested this year as the foundation changed its own role, but it continued to produce meaningful improvements to the network.

Wall Street adopts Ethereum

The most striking institutional development of the past year was the rapid acceleration of Wall Street adoption. Ethereum has moved from the proving ground of crypto-native applications to a central piece of the traditional financial infrastructure. BlackRock, the world's largest asset manager, expanded its Ethereum-related offerings, while JPMorgan continued to build permissioned versions of blockchain technology that rely on Ethereum standards. The involvement of these financial giants has reshaped the narrative around Ethereum, framing it not as a speculative oddity but as a foundational layer for the future of finance.

Tokenized assets, including tokenized money-market funds, private credit, and other real-world assets, saw enormous growth. As more assets take the form of on-chain tokens, Ethereum's role as the primary settlement layer for tokenization becomes more entrenched. The combined value of tokenized assets on Ethereum climbed over the year, and traditional intermediaries began to treat tokenization as a genuine efficiency opportunity rather than an experiment.

Record ETF flows solidify Ethereum as an asset class

U.S. spot Ethereum exchange-traded funds were another major driver of adoption. After the initial wave of launches, the products matured into a core market for institutions seeking exposure to ETH. Cumulative inflows into U.S. spot Ethereum ETFs surpassed $11.23 billion, a striking figure that reflects both steady demand from registered investment advisers and the decision by many allocators to treat ETH as a distinct asset class alongside bitcoin. The ETF market also expanded the investor base, giving pension funds, endowments, and corporate treasuries a regulated and familiar way to access Ethereum.

The inflows were not without volatility. ETH's price moved with the broader cryptocurrency market, and outflows occurred during periods of risk aversion. But the overall trajectory was one of accumulation and growing mainstream acceptance.

Ethereum's evolving role in the crypto ecosystem

Beyond the foundation and the financial markets, Ethereum remains the anchor of the crypto economy. The vast majority of decentralized finance activity, from lending protocols to decentralized exchanges, continues to settle on Ethereum or on networks built on top of it. Non-fungible tokens, despite their ups and downs, are still dominated by Ethereum-based standards. Even as competing blockchains have launched with faster or cheaper execution, Ethereum has maintained its status as the network that other platforms measure themselves against.

The expansion of institutional participation has brought its own tensions. Some community members worry that the push for compliance and institutional convenience could dilute the permissionless, censorship-resistant values that defined Ethereum's early ethos. Others argue that the foundation's restructuring and the introduction of purpose-built entities like Ethereum Institutional are practical attempts to manage that tension. The result may be a more complex Ethereum: one that is simultaneously an open protocol, a settlement layer for regulated finance, and a platform for experimentation that no single institution can control.

Ethereum's second decade has begun amid an unusual combination of internal restructuring and external validation. The foundation that shepherded the network through its first decade is deliberately making itself smaller, while the network itself expands into the highest reaches of global finance. As the spinout organizations begin their work and the next wave of technical upgrades takes shape, all eyes remain on how a decentralized ecosystem that was never designed to be governed will continue to make its own rules in a world that increasingly wants to join it.

Source: Coindesk News