EF Lays Off 20% of Staff and ETF Sees Continued Outflows: Is $1,557 the Bottom for ETH or Just a Pause Before Further Decline?

June 23, 2026, the Ethereum Foundation (EF) announced the largest organizational restructuring in its history: 54 layoffs (about 20% of total staff), a 40% budget cut for 2026, and a reorganization into five core operational clusters. This news sparked widespread debate across the crypto industry—supporters see it as a "long-overdue strategic contraction," while skeptics worry about talent loss and weakened governance.

At the same time, Ethereum spot ETFs are experiencing their longest streak of net outflows since launch. As of June 25, Ethereum spot ETFs have seen six consecutive trading days of capital outflows, with a single-day net outflow of $81.86 million on June 25. ETH price is under pressure as well. According to Gate market data, as of June 26, ETH is trading at $1,557.53, down over 15% from the June 16 high of $1,843. Over the past 30 days, ETH has dropped 20.92%, and is down 31.14% compared to a year ago.

The fact that both events occurred within the same month is no coincidence. What is EF’s strategic intent behind this restructuring? What are the responsibilities of the five clusters? Is there a structural link between persistent ETF outflows and price declines? Is $1,557 for ETH a bottom signal or just a pause before further decline? This article analyzes these developments from two perspectives: organizational change and capital flows.

EF Restructuring Overview: 54 Layoffs, 40% Budget Cut, Five New Clusters

Background: Transitioning from "Spending-Based" to "Donation-Based" Model

The driving force behind EF’s restructuring is a fundamental shift in its financial model. Ethereum co-founder Vitalik Buterin revealed in the announcement that EF is moving from a model where it spends about 15% of treasury reserves annually, to a long-term donation-based organization that will spend roughly 5% per year after 2030.

The logic is clear: EF’s treasury is not an unlimited resource, and since the August 2025 ETH price peak, ETH has dropped about 60%, shrinking the treasury’s real purchasing power. Maintaining previous spending rates would quickly deplete reserves. Cutting the 2026 budget by 40% and staff by 20% is essentially extending EF’s "lifespan" from several years to several decades—a proactive contraction for long-term survival.

54 Layoffs: Severance, Transition Support, and Ecosystem Integration

The 54 laid-off employees will receive severance pay based on "one month’s salary for each year of service" or the "local statutory standard," whichever is higher, plus transition support and assistance with ecosystem job placement. EF expects most departing staff will continue contributing to the Ethereum ecosystem in other capacities in the coming weeks.

Notably, these layoffs follow a series of high-level departures—since January, around nine senior managers have left, including two co-executive directors. The ongoing leadership turnover means this restructuring is not just a "slim down," but a deep overhaul of EF’s governance structure.

The Five Clusters: Roles and Focus

EF is now divided into five domain-driven clusters, plus an operations cluster and management support team. Each cluster has its own internal structure and accountability framework.

Protocol Cluster takes on EF’s traditional core mission: ensuring the Ethereum protocol delivers on "self-sovereign scaling." Key focus areas include post-quantum security, zkEVM, L1 privacy, technical breakthroughs, and mitigating harmful MEV, censorship, and capture risks. This cluster explicitly states it will not "make Ethereum more market-friendly" or "easier for intermediaries to control."

Access Cluster focuses on "zero-intermediary" user-chain interactions. The principle is "zero-option"—for every path with intermediaries, there must be a credible, trustless alternative. It covers reading on-chain data, transactions, proofs, delegation, and exits.

User Cluster ensures protocol and access layer decisions are grounded in real user needs and usage data. Its core function is channeling actual user feedback into protocol development decisions.

Community Cluster manages EF’s public positioning and external relations, working to distinguish EF from "zero-sum financial crypto" and "enterprise-compromise crypto." It actively builds partnerships with open-source communities in privacy encryption, civil liberties, and decentralized networks.

Institution Cluster handles EF’s engagement with financial institutions, enterprises, governments, universities, and nonprofits. Its main goal is to maximize retention of core values—fair execution, privacy protection, and exit rights—when driving institutional Ethereum adoption, avoiding Ethereum becoming just a compliance backend.

What’s Being Cut

Budget reductions directly impact certain projects: the privacy and scaling exploration team will be gradually dissolved as an independent unit; the Devcon conference will be downsized and made more cost-effective; funding for large external projects will be reduced; redundant client teams will no longer be maintained, shifting instead to AI-assisted formal verification.

Persistent ETF Outflows: What Are Institutions Withdrawing From?

Six Days of Outflows: Data Overview

As of June 25, Ethereum spot ETFs have seen six straight days of net outflows. On June 25 alone, net outflows totaled $81.86 million, with BlackRock’s ETHA accounting for $62.99 million. June 24 saw $30.24 million in net outflows. June 23 saw $82.40 million.

Zooming out, since mid-May, Ethereum spot ETFs have experienced six consecutive weeks of net outflows. This contrasts with Bitcoin ETFs—which, while also seeing outflows, display a "IBIT outflow, other funds inflow" rotation pattern, rather than uniform withdrawal.

Outflow Logic: More Than Just Price

ETF outflows aren’t simply the result of "price drops triggering redemptions"—the causality may be reversed. Persistent institutional withdrawal itself creates downward price pressure. The deeper issue is that institutional investors are reassessing their investment thesis for Ethereum.

Ethereum ETF demand has always been more volatile than Bitcoin ETFs. The main reason is Ethereum’s investment narrative is more complex—staking yields, network revenue, Layer 2 activity, tokenization progress, regulatory treatment, and other variables make ETH’s valuation framework far less clear than Bitcoin’s. When market risk appetite declines, assets with "high narrative complexity" tend to be hit first.

Structural Pressure on ETH Price: Has It Bottomed Out?

Price Snapshot

As of June 26, 2026, ETH trades at $1,557.53, down 5.49% in 24 hours, 7.38% in 7 days, 20.92% in 30 days, and 31.14% year-over-year. The 24-hour trading range is $1,512.11 to $1,660.42, with a market cap of approximately $187.968 billion and neutral market sentiment.

For comparison, Solana closed at $67.21 on June 26, up 2.97% on the day. The competitive landscape between the two chains is shifting from "ETH dominant, SOL catching up" to a more balanced rivalry—Solana captured over 30% of spot DEX trading volume in Q1 2026, processing about 1.67 million daily active addresses, while Ethereum mainnet saw about 496,000 daily active addresses in the same period.

Three Layers of Structural Pressure

First Layer: Capital Flows. Six weeks of ETF net outflows show institutions are reducing their ETH allocations. Unless this trend clearly reverses, ETH faces ongoing sell pressure.

Second Layer: Fundamentals. While some interpret EF’s restructuring as a "bullish signal" (Solana co-founder Anatoly Yakovenko commented "bullish, fr" on X), short-term uncertainty can’t be ignored—layoffs and executive departures mean temporarily weakened execution, and the new five clusters need time to integrate.

Third Layer: Macro and Competition. The crypto market is broadly in a downward channel, with Bitcoin nearing the $60,000 mark. Meanwhile, competitive chains like Solana continue to pressure Ethereum’s market share with their speed and cost advantages.

Bottom Signal vs. Further Decline

From a valuation perspective, ETH is down about 60% from its August 2025 peak, approaching the typical drawdown range seen in past bear markets. EF’s "soft streamlining and completion" strategy—prioritizing security fixes and stability over feature expansion—could, if executed well, enhance Ethereum’s reliability as a settlement layer in the long term.

However, short-term catalysts remain unclear. ETF outflows have not reversed, the actual impact of EF’s restructuring will take several quarters to validate, and macro liquidity conditions are still uncertain. Whether $1,557 is a solid bottom depends on meaningful relief from at least one of these three pressures.

Conclusion

The Ethereum Foundation’s restructuring is fundamentally a shift from an "expansionary R&D institution" to a "long-term protocol steward." Layoffs of 54 staff, a 40% budget cut, and the formation of five new clusters all point to EF choosing to protect Ethereum’s core values with a smaller scale, tighter focus, and longer horizon.

Meanwhile, ETH is facing dual challenges in price and capital flows. Six weeks of consecutive ETF outflows and a 60% drop from peak prices indicate the market is undergoing a short-term narrative reassessment for Ethereum.

The long-term significance of EF’s restructuring stands in stark contrast to the short-term price pressures. Whether EF’s "slimming down" can lay a more solid foundation for Ethereum’s next decade depends on the efficient operation of the five clusters and whether CROPS attributes (censorship resistance, open source, privacy, security) can be consistently delivered in practice. For investors, whether $1,557 ETH is an opportunity or a trap may not be found in on-chain data, but in the next turning point for macro liquidity and institutional confidence.

FAQ

Q: Why did the Ethereum Foundation lay off 20% of its staff?

The core driver is a shift in EF’s financial model. The foundation is moving from spending about 15% of treasury funds annually to a long-term donation-based model spending about 5% per year after 2030. With ETH prices continuing to decline, cutting 40% of the budget and 20% of staff is aimed at extending EF’s "lifespan" and ensuring it can fulfill its protocol stewardship role over the long term.

Q: What are EF’s five clusters?

The five clusters are: Protocol Cluster (core protocol development and censorship resistance), Access Cluster (ensuring users can interact with the chain without trusted intermediaries), User Cluster (grounding protocol decisions in real user needs), Community Cluster (managing EF’s public positioning and external partnerships), and Institution Cluster (driving institutional adoption while preserving Ethereum’s core values).

Q: Why are Ethereum ETFs seeing persistent outflows?

As of June 25, Ethereum spot ETFs have seen six straight days of net outflows. Main reasons include institutions reassessing their investment thesis (staking yields, L2 competition, regulatory uncertainty, etc.), declining overall market risk appetite, and redemption pressure triggered by ETH price drops.

Q: Is $1,557 ETH the bottom?

There’s no clear short-term bottom signal yet. ETF outflows haven’t reversed, EF’s restructuring impact needs time to play out, and the macro environment remains uncertain. However, ETH is down about 60% from its peak, putting its valuation in a historically low range. Whether it has bottomed depends on meaningful improvement in at least one of institutional capital flows, EF execution, or macro liquidity.