Quick Answer: Ethereum decentralization works in layers: Ethereum’s stability after the EF personnel changes offers evidence of protocol-layer resilience. The chain produced blocks, settled DeFi, and kept L2s running while EF executives left. Full decentralization across every layer remains unproven. The harder tests live in client funding, protocol research, upgrade coordination, credible neutrality, and whether fresh institutions can take over EF-centered functions while staying broadly distributed.

At a glance:

• Ethereum kept running through major EF personnel changes, an important uptime signal.
• DeFi activity continued without EF approval or direct EF operation.
• EF holds only a small fraction of ETH supply (well under 1%), which supports capital decentralization.
• Ethereum still leans on human coordination for upgrades, clients, funding, and research.
• A smaller EF leaves legitimacy, brand, funding, and governance still to be distributed.
• Ethlabs may strengthen research, while its institutional backers raise a fair incentive-alignment question.
• The next decentralization test moves past uptime: can Ethereum keep improving while spreading EF’s functions across many institutions?

The Question After The EF Transition

Part 1 examined how EF’s personnel transition reshapes Ethereum’s operating layer. This article flips the angle: if EF changed and Ethereum kept running, what does the stability reveal about decentralization? The answer arrives in layers. The protocol shows clear resilience, while future development still leans on social coordination, funding, research, and credible institutions.

Part 1 looked at how EF’s personnel transition affects Ethereum’s operating layer: coordination, client funding, and research integration. This second article asks a different question. If EF changed so much inside a single window, yet Ethereum kept producing blocks and settling transactions, how decentralized is the network really?

The honest answer resists a simple yes or no. Ethereum’s protocol appears resilient enough to operate while EF steps back from daily operations. The network’s future development, though, still leans on social coordination, funding decisions, research alignment, and credible public institutions. Those layers decentralize at different speeds.

Related post: Ethereum Foundation Exodus 2026: 4 Key Impacts

Ethereum Versus DeFi: A Useful Test Case, Not A Definition

Ethereum is a Layer 1 settlement and smart-contract platform; DeFi is an application category built on top. DeFi continuing through the EF changes matters, since deployed applications kept settling without EF approval. Yet DeFi alone fails to define Ethereum. The deeper question covers decentralization across layers rather than DeFi versus everything else.

People often judge Ethereum through DeFi, because DeFi ranks among its most visible use cases. Ethereum itself reaches wider. It works as the settlement layer and execution environment where DeFi protocols run, alongside L2s, stablecoins, NFTs, and identity systems.

DeFi uptime offers evidence because deployed applications kept settling while EF stepped back. Smart contracts execute according to their code rather than a Foundation decision. Ethereum decentralization still calls for a wider test than application uptime, since a chain can host thriving apps while its development process stays concentrated, and it can run a clean development process while individual apps stay centralized. Each layer deserves its own assessment.

Layer 1: What Ethereum Has Already Decentralized

Ethereum shows strong evidence of operational decentralization. A leadership transition at EF left mainnet, validators, DeFi, and L2 settlement running. Capital ownership reinforces the picture: EF holds only a small fraction of ETH supply, while liquidity, staking, ETFs, DeFi, and L2 ecosystems sit outside its balance sheet.

Operational continuity offers a strong case for Ethereum’s decentralization. A leadership transition at EF left mainnet live, validators finalizing, DeFi settling, and L2s operating. Nodes verified the rules independently throughout. Ethereum’s daily operation sits outside Foundation staffing.

Capital ownership reinforces the same point. The Ethereum Foundation holds only a small fraction of ETH supply, well under 1% by public on-chain tracking, while market liquidity, staking pools, ETFs, DeFi protocols, and L2 ecosystems sit well outside EF’s balance sheet. Estimates of EF’s exact share vary across trackers and have fallen as the Foundation sold and staked ETH through 2025-2026. Ethereum thus differs from networks where a foundation treasury stays a dominant economic center able to swing governance or price alone.

One nuance deserves a flag here: capital is moving away from EF while gathering in fresh places. Buterin has publicly noted ETF holdings now run into the tens of billions of dollars, and institutions could eventually hold more than a tenth of ETH supply. So “outside EF’s control” and “evenly distributed” mean different things. The concentration question is migrating rather than closing.

One reading: Ethereum appears less dependent on EF as both an operator and a capital center. The open question: Operational independence leaves coordination, funding, and research dependency unresolved, and fresh capital concentrations such as ETFs raise their own concerns.

Layer 2: What Ethereum Has Yet To Fully Decentralize

Decentralization works in degrees. Ethereum spreads block production widely while leaning on institutions for development. Upgrades draw on the EIP process, All Core Devs coordination, client implementation, security review, public-goods funding, research direction, and social consensus, functions still resting on a fairly small circle of trusted contributors.

A chain can spread enough to run while leaning on concentrated expertise to evolve. Ethereum upgrades pull researchers, client teams, validators, L2s, wallets, exchanges, security reviewers, and public calls into the same narrow window. No single entity can unilaterally force the change, while the result still falls short of automatic decentralization.

The softer layers where dependency lingers cover the EIP process, All Core Devs coordination, client implementation, security review, public-goods funding, research direction, roadmap communication, and social consensus. None of these runs on a validator-style mechanism. They run on trust, reputation, and accumulated context, which happen to be the exact assets in motion when senior contributors transition out.

One reading: Ethereum’s governance stays open, social, and multi-stakeholder rather than corporate. The open question: Repeated coordination still leans on a fairly small circle of trusted contributors and institutions, a softer yet real form of concentration.

Ethereum decentralization by layer, at a glance:

Read down the table and the pattern is clear: Ethereum has decentralized the layers a network needs to run, while the layers it needs to keep evolving stay partly concentrated.

The Subtraction Question: If EF Shrinks, What Replaces It?

EF aims to become a smaller steward rather than Ethereum’s permanent center. Reducing its role can support decentralization, though influence lingers. EF still carries intangible assets: history, legitimacy, brand, Devcon, ethereum.org, grant memory, and coordination memory. The real test asks whether those functions move into credible distributed institutions.

A smaller EF may fit Ethereum’s long-term decentralization thesis. The Foundation frames its own role as stewardship with a gradually narrowing scope. The challenge lives in transition design rather than intent.

Influence lingers even as an org chart shrinks. EF still carries intangible assets resistant to transfer: institutional history, public legitimacy, the Ethereum brand, Devcon, ethereum.org, years of grant-making memory, and deep coordination context. Should EF step back before successors stand ready to hold those functions, the ecosystem may simply hunt for a new center, lowering EF dependency while leaving decentralization roughly where it began.

One reading: A smaller EF can help Ethereum outgrow its original steward, the stated goal. The open question: Legitimacy and coordination decentralize through credible successors, never through one institution shrinking on its own.

Funding Is The Hardest Decentralization Layer

Funding exposes the gap between technical and institutional decentralization. Client teams maintain the software nodes and validators run, while public-goods funding stays difficult because value spreads network-wide. Should the answer to a smaller EF arrive as one more large allocator, Ethereum may solve a funding problem while preserving institutional concentration.

Here the split between technical and institutional decentralization turns concrete. Validators keep finalizing blocks regardless of who pays the bills, while client teams need predictable support to maintain the software those validators depend on.

Public goods stay structurally hard to fund because benefits spread across the whole network. DeFi apps charge fees and L2s earn sequencer revenue, while core client maintenance captures little of the value it secures. In Part 1, former EF contributor Trent Van Epps estimated that sustaining client, research, and coordination teams takes on the order of $30 million annually, an independent figure rather than an EF number, yet a credible read on the scale involved.

The ecosystem keeps searching for durable funding structures. In May 2026, former EF researcher Dankrad Feist publicly floated a separate ETH-aligned organization funded with at least $1 billion, built on permanent staking revenue and aimed at execution and value capture outside EF’s constraints, an idea Ryan Sean Adams backed publicly. Such a vehicle could give Ethereum more capacity and ease pressure on EF. It also raises a structural concern: should major funding shift from one large institution (EF) to another, the funding gap may close while concentration reappears in fresh form.

One reading: Fresh funding vehicles can give Ethereum more capacity and lighten reliance on EF’s treasury. The open question: Should public goods come to depend on one large allocator, funding grows less EF-centered while staying short of truly distributed.

Research Is Becoming Multi-Institutional

Ethlabs, launched by five former EF researchers and backed by ETH-aligned capital including SharpLink, BitMine, and Joe Lubin, may grow into an additional independent R&D node. The fair question is whether protocol research stays open, transparent, and broadly aligned as it spreads across institutions.

Ethlabs marks a shift in where Ethereum research may happen: outside EF, with added capacity and new incentive-alignment questions. Independent R&D nodes can specialize more deeply and lighten reliance on any single institution. Five former senior EF researchers launched it as an independent nonprofit, backed by ETH-aligned capital including SharpLink, BitMine, and Consensys CEO Joe Lubin.

The fair question asks how their work enters public Ethereum processes: EIPs, devnets, All Core Devs calls, client implementation, and community review. Corporate backing requires scrutiny rather than automatic rejection, since aligned commercial entities fund much of Ethereum’s ecosystem. What matters: whether research priorities get set in the open, and whether the output stays aligned with Ethereum’s credible neutrality rather than any single backer’s interests.

One reading: Ethereum gains a capable research center outside EF, adding redundancy to a critical function. The open question: Heavier institutional backing pushes Ethereum to protect credible neutrality through transparent public processes rather than closed-door priority-setting.

Technology As A Way To Lighten Human Dependency

Ethereum also leans on better tools to ease reliance on human coordination. Formal verification, increasingly aided by better tooling, can raise confidence in critical code, and privacy-focused wallet frameworks like Kohaku can lighten user reliance on third-party infrastructure. These technical paths stay partial: they lower coordination burden while leaving governance, funding, and social consensus in human hands.

Decentralization reaches past who runs validators. It also covers whether users and developers need trusted intermediaries to interact safely. Ethereum is pursuing technical paths that ease some of that dependency.

Formal verification, increasingly aided by better tooling, can make critical code safer before deployment and lighten the review burden on a small pool of expert humans. On the user side, EF’s Kohaku initiative, a privacy-focused wallet framework and SDK that folds protocols like Railgun and Privacy Pools directly into wallets, aims to lighten user reliance on centralized infrastructure for private transactions. These efforts matter because they shift parts of the trust model from people to verifiable tools.

The limits matter just as much. Formal verification can raise confidence in software, while the choice of which upgrades ship, who funds maintenance, and how the community resolves contested tradeoffs stays human. Better tooling lightens the coordination burden and leaves governance intact.

One reading: Better tools can ease reliance on trusted humans and centralized infrastructure. The open question: Technology lightens the coordination burden while the governance and funding tradeoffs underneath stay open.

Does DeFi Running Prove Ethereum Is Decentralized?

DeFi staying online through the EF changes signals that EF runs none of Ethereum’s applications day to day. Reading too much into it overshoots, since individual DeFi protocols carry their own decentralization questions: governance, multisigs, admin keys, oracle dependencies, frontends, risk councils, and bridge or L2 reliance. The application layer earns a separate test.

DeFi protocols kept operating throughout the EF transition, and smart contracts settled daily transactions without EF approval. That supports application-layer resilience and carries useful significance.

DeFi protocols still hold their own decentralization profiles, and those vary widely. Common dependencies cover governance token concentration, multisig control, admin keys, oracle reliance, frontend hosting, risk councils with discretionary powers, and exposure to bridge and L2 trust assumptions. A protocol can settle on a decentralized base layer while staying fairly centralized in its own administration.

So DeFi staying online through the EF changes signals resilience in Ethereum-as-settlement rather than a verdict on the whole stack. Ethereum can decentralize the settlement layer while individual DeFi protocols stay mixed in their own governance. Each application layer earns separate evaluation.

One reading: DeFi continuity shows EF runs none of Ethereum’s applications day to day. The open question: Each DeFi protocol still earns its own decentralization assessment, since base-layer resilience travels upward only through deliberate design.

Ledger Lynx View: Decentralization Is Moving From Uptime To Institutions

Ledger Lynx covers institutional crypto infrastructure, protocol governance, and long-cycle dynamics, with a focus on the slow variables shaping how a network’s development model holds up over multi-year timeframes.

Ethereum passed an important uptime test, and EF’s limited treasury share supports a stronger capital-decentralization case than many foundation-heavy Layer 1 ecosystems. Both results deserve a careful statement.

The harder test now sits in the institutional layer. Funding, research, public legitimacy, Devcon, ethereum.org, client teams, and upgrade coordination all call for credible distributed structures. If those functions spread across transparent and accountable institutions, Ethereum’s development model becomes more resilient than when EF carried them alone. If they reconcentrate around a fresh funding body or a corporate-backed research node, Ethereum grows less EF-dependent while staying short of meaningfully more decentralized.

That distinction deserves a firm grip: lowering dependency on EF and raising decentralization run as related goals, yet they stay separate goals. Ethereum’s next chapter turns on whether the ecosystem can tell them apart in practice.

What To Watch Next

Five indicators will show whether Ethereum’s decentralization deepens or merely shifts: Glamsterdam execution, client funding, Ethlabs integration, EF’s role after subtraction, and DeFi and L2 decentralization.

Watchpoint 1: Glamsterdam And Upgrade Execution

Track devnet and testnet progress, multi-client readiness, scope discipline, and whether coordination stays smooth under fresh leads. Clean delivery would offer evidence that upgrades can proceed without relying on any single coordinator.

Watchpoint 2: Client Funding

Watch for a CIP successor, Protocol Guild expansion, EF grants, corporate ETH-holder funding, or a fresh public-goods mechanism, and whether the design spreads support or gathers it inside one allocator.

Watchpoint 3: Ethlabs Integration

Track open research output, EIP participation, devnet involvement, client-team adoption, and visible coordination with public Ethereum processes. Integration is what turns an independent lab into a durable research node.

Watchpoint 4: EF’s Role After Subtraction

Watch how EF frames its smaller steward role across Devcon, ethereum.org, grants, and roadmap communication, and whether those functions land with credible distributed institutions.

Watchpoint 5: DeFi And L2 Decentralization

Track sequencer decentralization, governance minimization, oracle diversity, bridge security, frontend resilience, and admin-key reduction. The application layer carries its own decentralization roadmap.

Conclusion

Ethereum’s stability through the EF personnel changes carries meaningful evidence. The network keeps running while its original steward steps back from daily operations, which supports the case for protocol-layer decentralization.

Ethereum’s decentralization story still has chapters ahead. Its next test asks whether funding, research, upgrade coordination, public legitimacy, and DeFi infrastructure can spread wider while execution quality holds. A smaller EF may move toward that future and still fall short of finishing it.

The answer stays layered: Ethereum appears decentralized enough to run. Now it needs to show it can stay distributed enough to keep evolving.

Source List

• Ethereum Foundation Treasury Policy - https://blog.ethereum.org/2025/06/04/ef-treasury-policy
• The Promise of Ethereum: Introducing the EF Mandate - https://blog.ethereum.org/2026/03/13/ef-mandate
• Ethereum Foundation stakes $93M of ether, reaching its 70,000 ETH target - https://www.coindesk.com/markets/2026/04/03/ethereum-foundation-stakes-another-usd93-million-ether-reaching-its-70-000-eth-target
• Ether’s biggest corporate holders back new Ethereum research hub- https://www.coindesk.com/business/2026/06/22/ethers-biggest-corporate-holders-back-new-ethereum-research-hub
• Ethereum Foundation’s Kohaku releases SDK for wallet-level privacy integration- https://thedefiant.io/news/blockchains/ethereum-foundation-kohaku-sdk-privacy-wallet-integration-bb4t52
• Ethereum Foundation’s interim ED lays out execution plan: MEV elimination, default privacy, ETH pay - https://thedefiant.io/news/blockchains/ethereum-foundation-csa-execution-plan-mev-privacy-eth-pay
• Ethereum doubles down on privacy with new ‘Kohaku’ wallet ahead of Devcon- https://cryptoslate.com/ethereum-doubles-down-on-privacy-with-new-kohaku-wallet-ahead-of-devcon/