Woofun AI reports that the Ethereum Foundation has officially dissolved its protocol support team, a move that signals a profound structural realignment within the organization. This dissolution, confirmed by Wenser in a report for Planet Daily, is not an isolated administrative adjustment but rather the culmination of a broader organizational decline characterized by talent exodus and strategic fragmentation. The termination of this specific unit represents the final phase of a restructuring effort that has fundamentally altered the operational landscape of the Ethereum ecosystem’s primary steward. The decision underscores a shift away from centralized protocol coordination toward a more distributed model, where traditional functions are being absorbed or replaced by emerging independent entities.

The internal hemorrhage of personnel has been severe and sustained throughout the current year. Wang Xiaowei, who served as co-executive director and was widely regarded as a central figure in the organization’s reform efforts, officially resigned from his position. His departure is part of a larger trend of attrition among leadership; to date, at least 8 senior members of the Ethereum Foundation have left the organization this year. This mass exodus of key stakeholders has eroded the institutional memory and strategic continuity of the foundation, creating a vacuum that new entities are rapidly moving to fill. The loss of such high-level talent suggests that the internal culture and strategic direction of the foundation are no longer aligned with the expectations of its most experienced members.

In the wake of these departures, non-profit independent organizations have emerged to assume functions previously held by the Ethereum Foundation. ETHLabs and Ethereum Institutional are the two most prominent examples of this trend, gradually taking over responsibilities related to protocol development, institutional adoption, and ecosystem coordination. These entities operate with greater agility and specialized focus, allowing them to address specific market needs that the broader foundation struggled to manage. The rise of these organizations indicates a fragmentation of the Ethereum governance model, where influence is increasingly distributed among multiple independent bodies rather than concentrated within a single foundation. This decentralization of organizational power may enhance resilience but also introduces complexity in coordinating ecosystem-wide initiatives.

Technological advancements are also reshaping the operational capabilities of the remaining teams within the foundation. The security team has begun deploying AI agents for red-team testing of the ETH network, a move designed to identify real vulnerabilities in cryptographic systems, protocol code, and smart contracts. This integration of artificial intelligence into security protocols represents a significant shift in how the foundation approaches risk management and code integrity. By leveraging AI for automated reconnaissance and vulnerability detection, the team can cover a much broader range of potential attack vectors than manual review alone.

However, this technological shift also raises questions about the future role of human researchers in an increasingly automated security landscape.

Community sentiment toward the Ethereum Foundation has grown increasingly critical, reflecting broader dissatisfaction with its governance structure. David Hoffman, founder of Bankless, publicly expressed his frustration by selling off his remaining ETH holdings, a symbolic act that highlighted his disillusionment with the foundation’s rigid structure and decision-making processes. Hoffman criticized the organization for being controlled by a few individuals and failing to adapt to the evolving needs of the ecosystem. His actions and statements resonate with a growing segment of the community that views the foundation as an obstacle to innovation rather than a facilitator. This erosion of trust has further complicated the foundation’s ability to lead and coordinate ecosystem development.

Woofun AI data shows that the catalyst for these changes was the announcement of the 'New EF Architecture' on June 23, which outlined a comprehensive restructuring of the organization. This document divided the new structure into five distinct layers: protocol layer, access layer, user layer, community layer, and institutional layer. The restructuring resulted in the layoff of 54 people, accounting for 20% of EF’s total membership. The announcement explicitly stated that the goal was to obtain the structure, activities, and personnel needed for critical tasks ahead, implying that the laid-off departments were deemed obsolete. This cold, efficiency-driven approach marked a stark departure from the foundation’s previous identity as a research-oriented and academically inclined leader. The dissolution of the protocol support department, which was responsible for infrastructure development and coordinating protocol upgrades, was a key component of this overhaul, with its functions now incorporated into the protocol layer.

On the same day the new architecture was announced, EthLabs was officially launched. This non-profit research and development laboratory was founded by five former EF researchers and aims to promote Ethereum as the settlement layer for the global economy. EthLabs has garnered support from a diverse array of entities, including Ethereum co-founder Joe Lubin, who is chairman of Sharplink and founder of Consensys. Other supporters include ETH treasury company BitMine, owned by Tom Lee, Sharplink, cryptocurrency investment firm SNZ, and other Ethereum ecosystem projects and individual members of the Ethereum Foundation ecosystem projects and individual members of the Ethereum Foundation. The launch of EthLabs signifies a concerted effort by former foundation insiders to create a more focused and effective vehicle for advancing Ethereum’s technical and economic goals.

Following the launch of EthLabs, Ethereum Institutional was introduced on July 1. Founded by former EF members David Walsh, Marius Smith, and Matthew Dawson, this organization focuses on financial institution applications for Ethereum. Its mission is to promote the institutionalization and large-scale use of Ethereum, its secondary nodes, applications, and the entire ecosystem. Ethereum Institutional emphasizes collaboration with EthLabs, Ethereumalize, and the Enterprise Ethereum Alliance to address institutional needs and explain Ethereum’s value proposition to banks. While EthLabs focuses on transforming these needs into technical products, Ethereum Institutional provides free consulting services related to Ethereum applications for banks and asset management companies. The organization has begun hiring for its core team, seeking professionals in institutional business development (Institutional GTM), marketing, community management, solution architecture, and technical project leadership.

The integration of AI into security testing has yielded tangible results, demonstrating the potential of this technology to enhance network safety. Researchers from the protocol security team deployed AI agents to test software dependent on the Ethereum ecosystem, identifying a remotely triggerable panic issue in the libp2p gossipsub layer used by Ethereum’s consensus clients. This vulnerability, disclosed on Github as CVE-2026-34219, has since been fixed. The AI agents were organized into specialized roles, including reconnaissance, search, patching, and verification, allowing them to identify potential attack vectors, reproduce failures, and confirm their applicability to production code. With the recent launch of the GPT 5.6 model, the future maintenance of Ethereum protocol security may increasingly rely on the joint efforts of AI models and EF’s security researchers. Although the foundation claims that AI does not replace researchers, the continued evolution of AI models may lead to further reductions in the size of the security team and the organization as a whole.

Vitalik’s stance on the foundation’s role has shifted significantly over the past year. In January, he aggressively pushed for organizational changes, but by May, he acknowledged that the Ethereum Foundation should not become the center of the ETH ecosystem and would instead adopt a smaller, long-term approach. This evolution in perspective reflects the reality that ETH has grown into an asset with a market cap of hundreds of billions, making it difficult for an organization established nearly 10 years ago to maintain its central role. As Ansgar Dietrichs, a former EF researcher and member of EthLabs, noted in a podcast earlier this month, 'After failing to break through $5,000 for five years, ETH still lacks a clear value narrative.' Given these challenges, it appears unlikely that the Ethereum Foundation will be able to revitalize the ecosystem or drive up ETH prices. Instead, large-scale adoption and institutional investment may increasingly rely on organizations such as ETHLabs, Ethereum Institutional, and Ethereumalize. The foundation may ultimately settle into the role of an 'ecosystem mascot,' preserving its legacy while ceding operational leadership to more agile and specialized entities.