Major Investment in Aave, Spark, and Compound
The Ethereum Foundation has allocated 45,000 Ether (ETH), worth approximately $120 million, to decentralised finance (DeFi) protocols Aave, Spark, and Compound. This move comes in response to concerns from the Ethereum community regarding the foundation’s reliance on selling ETH to fund its operations.
On 13 February, the foundation’s multisignature wallet deposited 4,200 ETH into Compound, 10,000 ETH into Spark, and 30,800 ETH into Aave. With ETH trading at around $2,600, the total deployment amounted to roughly $120.4 million.
Community and Industry Leaders React
Aave founder and CEO Stani Kulechov described the foundation’s deposit into Aave Prime and Aave Core as its “biggest allocation in DeFi.” Expressing optimism, he declared, “DeFi will win,” highlighting the significance of the investment in strengthening decentralised lending.
The decision was widely celebrated within the Ethereum community. Podcaster Mark Jeffrey called it a “smart” move, emphasising that lending is the backbone of DeFi and describing Aave as “the beating heart of lending.”
An X (formerly Twitter) user encouraged the community, stating their efforts were paying off and urging them to continue their work. Another user commented that if the Ethereum Foundation maintained this strategy, it would be a “positive thing” for the ecosystem.
However, some found it surprising that the foundation had only just started actively engaging with DeFi applications. 0xNessus, the pseudonymous co-founder of lending protocol HyperLend, remarked, “All we had to do was bully them,” implying that community pressure had influenced the decision.
Addressing Criticism Over ETH Sales
The move follows criticism in January, when many community members raised concerns about the Ethereum Foundation selling ETH to cover expenses. Ethereum Improvement Proposal (EIP-1559) co-author Eric Conner had previously remarked that the foundation’s primary use for ETH was “dumping” it.
Similarly, Anthony Sassano, host of The Daily Gwei, had suggested that instead of selling its crypto holdings, the foundation should stake ETH and borrow stablecoins against it using platforms like Aave. Critics argued that consistent ETH sales by the foundation could negatively impact the asset’s price.
Ethereum co-founder Vitalik Buterin had previously addressed concerns about the foundation staking its ETH, citing regulatory uncertainties and the potential implications in the event of an Ethereum hard fork.
Future Plans and Community Engagement
Despite these concerns, the foundation has indicated that this fund deployment will not be its last. In a recent statement, it assured the community that “more to come” and revealed that it is already exploring staking options. Additionally, it has invited community members to provide suggestions on how best to utilise its funds moving forward.
This strategic shift marks a significant step in the Ethereum Foundation’s engagement with the DeFi ecosystem, potentially setting a precedent for how it manages its holdings in the future.
