What is the Ethereum Foundation? The Minds Behind the Second-largest Cryptocurrency

[TL;DR]

What is the Ethereum Foundation? The Ethereum Foundation is the most famous publicly-known crypto organization in the world, which seeks to promote the development and adoption of the Ethereum network.

The Origins of the Ethereum Foundation: The Ethereum Foundation is a not-for-profit organization created in July of 2014 in Switzerland. It was conceived by the two core minds behind the Ethereum blockchain – Gavin Wood and the world-famous Vitalik Buterin. The first goal of the Foundation was to create a central enterprise to manage the funds accumulated in Bitcoin to develop the novel blockchain; at the time, they had crowdfunded more than 18 million dollars, an amount unheard of at the time.

The Philosophy and Past Controversy of the Ethereum Foundation: The main purpose of the foundation is to maximize the real-world value that Ethereum has for people and financial inclusion. Vitalik Buterin has explicitly been an advocate of this philosophy throughout his entire career. Since Ethereum had decentralized principles, people were unsatisfied with its very-centralized organization of core decision-makers. Developers viewed the issue as very reasonable, and came to a decision; the foundation would follow the development model “Bazar” – of open-sourced research and autonomous implementation akin to software like Linux and third-party Android.

Other Initiatives by the Ethereum Foundation: The Foundation’s first initiative related to the Ethereum project was DEVGrants, compensating developers for contributions. Ethereum was also the first to establish a “bug bounty” crypto program. More recently, last year, the Foundation announced a partnership with Reddit – the first of its kind of a crypto organization and a massively-known social media. The idea behind it is that both organization can help each other expand and develop new projects for their respective communities.

Keywords: what is the ethereum foundation, ethereum foundation, second-largest cryptocurrency, ethereum network, ethereum blockchain, ethereum 2.0, ethereum co-founder vitalik buterin, ethereum defi, smart contracts, ethereum development, decentralized autonomous organizations

[Full Article]

There is no debate amongst the crypto community of how massively important the Ethereum network has been for the digital assets ecosystem. Whether it’s through the creation of decentralized financial services with DeFi, unique tokens with NFTs or virtual worlds in the metaverse or just smart contracts as a whole, Ethereum quickly became the central hub for all-things innovation over the past few years.

While we are used to seeing Ethereum as the second main piece of the crypto market, right behind Bitcoin, its history is actually far more recent than it seems – and it all began with the Ethereum Foundation.

In this article, we cover what the Ethereum Foundation is; its origin, the philosophy of the non-profit organization and other projects that the foundation is involved in besides Ethereum.


What is the Ethereum Foundation?

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The Ethereum Foundation is the most famous publicly-known crypto organization in the world, which seeks to promote the development and adoption of the Ethereum network. We label it as the most famous “publicly known” foundation because far more people have heard of the alias name Satoshi Nakatomo – but we don’t know who he, she or they are.

The Ethereum Foundation also promotes the technologies that are being created in the Ethereum ecosystem, whether the foundation had any involvement in them or not. By actively engaging with community members and Layer-2 developers, the organization increases the popularity of ETH and Ethereum across the world. It also seeks investments and cooperation with traditional finance (TradFi) companies to enhance Ethereum’s legitimacy across the world.

In order to accomplish such goals, the Ethereum Foundation based itself on a series of sustainable mechanisms aligned with its growth philosophy that perpetuates its founders and contributors – more on that soon, but first, let’s see how the group came to be.


The Origins of the Ethereum Foundation

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The Ethereum Foundation is a not-for-profit organization created in July of 2014 in Switzerland. It was conceived by the two core minds behind the Ethereum blockchain – Gavin Wood and the world-famous Vitalik Buterin, along with a tight group of great developers that dedicated their craft to the best of their abilities to create something incredible. One of these developers was Charlie Hoskinson, the now founder of Cardano (ADA).

The first goal of the Foundation dated more than a year before its blockchain; it was created as a central enterprise to manage the funds accumulated in Bitcoin to develop the Ethereum Blockchain; at the time, it had crowdfunded more than 18 million dollars. It may not sound like much now, with so many new crypto projects and Initial Coin Offerings (ICO), but in 2014 such an amount was completely unheard of.

Since crypto projects and labs completely lacked regulations at the time, the Foundation had to comply with Swiss policies as a tech research lab in order to avoid falling victim to fines and tax breaches.

Plenty of bureaucratic details and headaches later, the Ethereum Foundation hosted its very first public crowdfunding event. In November of 2014, the foundation hosted Devcon-0, the first major event gathering people from all over the world who were interested in the development of Ethereum. From then on, the project gained new proportions and global support until the launch of the ETH crypto and blockchain in 2015.

Today, the Ethereum Foundation is run mainly by Aya Myaguchi, Executive Director, and Vitalik Buterin.


The Philosophy and Past Controversy of the Ethereum Foundation

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According to several official documents and whitepapers related to the group, the main purpose of the foundation is to maximize the real-world value that Ethereum has for people and financial inclusion. Vitalik Buterin has explicitly been an advocate of this philosophy throughout his entire career. Whenever a new project seems to be gaining hype and traction based solely on financial gain instead of real-world applications, Buterin is quick to criticize the models. His latest criticism surrounded Terra’s LUNA crash and UST stablecoin. While Buterin recognized the value that algorithmic stablecoins can have in the world, he stated that the dollar-pegged crash was merely the result of “unrealistic rewards.”

Despite being the first openly-public crypto organization and related to the second-largest project in the ecosystem, the foundation was host of one major controversy. Basically, the whole point of the Ethereum blockchain and its subsequent technologies is to promote financial services and financial inclusion based on decentralization; without a central entity as middle-point to control the features and developments. But how is that possible when the core of Ethereum itself is centralized by very clear decision-makers (Myahuchi and Buterin)?

Developers viewed the issue as very reasonable, and came to a decision; the foundation would follow the development model “Bazar” – of open-sourced research and autonomous implementation akin to software like Linux and third-party Android. With the “Bazar” model, contributors outside of the foundation were able to suggest upgrades and develop new working models of the blockchain features autonomously. It has worked that way for several years now and became the pillar for decentralized autonomous organizations (DAO).


Other Initiatives by the Ethereum Foundation

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The Foundation’s first initiative related to the Ethereum project was DEVGrants, which surfaced once people had complained about Ethereum’s centralized origins. Through DEVGrants, developers who have solid ideas for updates and new frameworks are compensated in ETH for their contribution – again, one of the foundations for DAOs.

The Ethereum Foundation was also the first crypto organization in the world to create a “bug bounty” program, where white hackers (non-criminals) find errors in a blockchain, notify the official team and then get compensated for it in either ETH or BTC.

In early 2018, Vitalik Buterin announced through an official essay that the Ethereum Foundation was working on two extra projects to further finance the effort of independent developers towards solving the great issue of scalability for the blockchain (which persists to this day) – on the path towards Ethereum 2.0.

Then more recently, last year, the Foundation announced a partnership with Reddit – the first of its kind of a crypto organization and a massively-known social media. The idea behind it is that both organizations can help each other expand and develop new projects for their respective communities.






Author: Gate.io Researcher: Victor Bastos

* This article represents only the views of the researcher and does not constitute any investment suggestions.

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