Ethereum Foundation: a transaction misunderstood by the community

Recent speculations about a deposit of 30.098 ETH, equivalent to about 56 million dollars, on Sky have generated discussions within the Ethereum community.

Recent speculations about a deposit of 30.098 ETH, roughly equivalent to 56 million dollars, on Sky have sparked discussions within the Ethereum community. Some had initially hypothesized that the transaction was orchestrated by the Ethereum Foundation (EF), but developers and other community members quickly refuted this theory.

However, several experts have since chimed in, debunking the speculation and clarifying that the address involved in the transaction does not belong to the Ethereum Foundation.

Among the first to reject the speculations was Eric Conner, co-author of the Ethereum Improvement Proposal (EIP-1559), who described the Wu Blockchain report as “completely false”.

Saw a few people post this thinking it was true. Sadly, it’s completely false. Reporting on crypto news poorly is nothing new but this is next level. Reporting on EIPs and network upgrades is more important than founders/ventures. Sadly, the news outlet prioritized the latter and made up a whole story. https://t.o/R8bj8

— Eric Conner (@__EricM__) March 11, 2024

Anthony Sassano, known for the podcast The Daily Gwei, also confirmed that the address is not attributable to the Ethereum Foundation.

Subsequently, the same Wu Blockchain corrected its statements, clarifying that, although the address was suspected to belong to the Ethereum Foundation, its transaction history suggests that it might instead be controlled by an early adopter investor of Ethereum.

The address in question received a transaction of 4 million Dai (DAI) from the Ethereum Foundation ETH Sale in May 2022. Additionally, the initial ETH funding for that address is linked to a wallet known as jonny.eth.

The recent deposit of 56 million dollars in ETH into the Sky protocol was motivated by the need to avoid liquidation due to market volatility. On March 10, the price of ETH dropped from a high of 2,138 dollars to 1,813 dollars, marking a decrease of 15%.

To prevent liquidation, the wallet holder deposited funds on Sky, reducing the liquidation price of their loan to $1,127.14, a threshold that is 40.19% lower than the price of ETH at the time of writing, which is $1,896.

Even though this transaction was not conducted by the Ethereum Foundation, the organization has in the past faced criticism for its management of funds. In particular, the community has expressed concerns about the EF’s habit of selling ETH in exchange for stablecoins to fund operational expenses, including team salaries.

In January 2024, some members of the community suggested that the Ethereum Foundation could use ETH as collateral to obtain loans in stablecoin, instead of selling them directly on the market. Anthony Sassano proposed leveraging platforms like Aave to borrow stablecoin by securing the assets in ETH.

Sky offers a similar system, allowing users to deposit ETH and borrow DAI.

Listening to the suggestions of the community, on February 13, 2024, the Ethereum Foundation deposited 45,000 ETH, at the time equivalent to about 120 million dollars, into various DeFi platforms, including Aave, Spark, and Compound.

This choice was positively received by the community, with the founder and CEO of Aave, Stani Kulechov, who commented enthusiastically: “DeFi will win”.

Furthermore, the Ethereum Foundation has announced that there will be additional similar initiatives, indicating a growing willingness to integrate with the DeFi ecosystem.

The initial speculations about a presumed involvement of the Ethereum Foundation in the $56 million ETH deposit on Sky have proven to be unfounded. The responsible address appears to be linked to an early adopter investor of Ethereum, who simply sought to protect their collateral from market volatility.

In the meantime, the Ethereum Foundation continues to explore innovative strategies for managing its funds, demonstrating a growing interest in the use of DeFi protocols.