Justin Drake Says Ethereum Foundation Offloading ETH Improves Decentralization

Justin Drake, a researcher at the Ethereum Foundation, suggested that the organization’s controversial ETH sales could ultimately prove a positive force for Ether holders.

In a Sept. 4 interview with Colin Wu, a blockchain reporter, Drake said that reducing the share of ETH held by the Ethereum Foundation (EF) improves the asset’s decentralization.

“In the long term, the reduction in ETH held by the Ethereum Foundation is a good thing; EF currently controls 0.23% of the ETH supply, and it would be healthy for this figure to approach 0% over the coming decades as it promotes decentralization in the Ethereum ecosystem,” Drake said.

Drake’s comment came within the context of discussing the millions of dollars worth of unconditional grants the foundation distributes to Ethereum ecosystem projects each year.

The Ethereum Foundation currently holds 273,274 ETH worth nearly $659.5 million — equating to 0.228% of Ether’s market cap, according to Etherscan.

Drake’s remarks come as the Ethereum Foundation is facing pushback over a $94 million ETH transfer made to the Kraken centralized exchange on Aug. 23. The transaction appeared to spook ETH traders just as Ether had partially recovered from the early-August market bloodbath, with Ether changing hands for around $2,700 at the time of the transfer after bottoming out below $2,200 less than three weeks prior.

While the Ethereum Foundation said the funds were intended to sustain its annual budget of roughly $100 million and would not be sold off in one go, the project’s community demanded greater transparency surrounding the organization’s ETH sales moving forward.

The price of ETH last changed hands for $2,403 after gaining 0.1% over the past 24 hours, according to The Defiant’s crypto price feeds.

Ethereum Foundation responsibilities

Drake described the Ethereum Foundation as largely taking a “hands-off approach” to promoting the development of Ethereum’s ecosystem.

He said the foundation’s responsibilities predominantly span maintaining the Geth execution client, roadmap development, coordinating regular calls attended by developers, hosting one Devcon or Devconnect conference each year, providing grants to ecosystem projects, and research initiatives.

On the subject of Ethereum’s future trajectory, Drake said he expects the DeFi sector will enjoy tenfold growth over the next five years, spurred by lending markets such as Aave and Compound, prediction markets like Polymarket, decentralized derivatives exchanges, and stablecoins.

Drake also hopes that decentralized front-ends will become the preferred way of interacting with decentralized applications.