The Ethereum Foundation (EF) today allocated $120 million in ETH tokens to DeFi lending protocols: Aave, Spark, and Compound.
The Foundation has been in a sustained leadership crisis caused by token sales to pay overhead costs. The EF has shown a willingness to respond to the community, but it still faces tough challenges ahead.
Ethereum Foundation Banks on DeFi Lending
The Ethereum Foundation (EF) has been going through a leadership crisis lately. Specifically, it has been selling ETH tokens to pay overhead costs, and an outraged user base has demanded alternate solutions.
Today, the EF found one, transferring tokens worth $120 million into a few DeFi lending protocols.
“We’re grateful for the entire Ethereum security community that has worked diligently to make Ethereum DeFi secure and usable! More to come, including exploring staking. If you have suggestions or ideas for future deployments, reply in the comments below and let us know!” the Ethereum Foundation claimed on social media.
The EF picked three DeFi lending protocols for this allocation, putting 10,000 ETH into Spark and 4,200 into Compound. The rest went to Aave: 10,000 to Aave Prime and 20,800 to Aave Core.
Aave is a popular lending protocol that has been particularly entangled with Ethereum. In the past, it has surged dramatically in response to ETH price moves.
By using these DeFi lending protocols, the EF will be able to reap substantial rewards passively. Based on a 1.5% supply rate, these tokens will earn around $1.5 million annually. The community has responded positively to these changes, and Vitalik Buterin warmly welcomed them on social media.
In some ways, this turn to DeFi is a prime example of the EF actually responding to community pressure. However, the Foundation is still facing a lot of other challenges that will truly put it to the test.
When it comes to specific demands, Buterin has been willing to adapt to community pressure, but he has resolutely refused challenges to his leadership.
Meanwhile, Ethereum’s price has seen a continued decline lately. The market still shows a strong confidence that it will return: ETH ETFs are soaring because traders are buying the dip. Nonetheless, this won’t be enough to create bullish new momentum by itself.
Ultimately, these DeFi lending protocols might make a real difference in changing the EF’s fortunes. By changing tactics here, Ethereum’s leadership has demonstrated a willingness to respond to the community.
Between a show of good faith and strong investor confidence, another small push might start to turn things around for ETH’s market performance.
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