Ethereum Foundation Shifts Strategy Amid Growing Network Challenges

The Ethereum Foundation has announced major changes to its funding approach and technical roadmap. These updates come as the network faces mounting pressure from competitors and internal fragmentation issues.

The organization temporarily paused its Ecosystem Support Program’s open grant applications in August 2025. This decision follows overwhelming demand that left the foundation with limited capacity.

In 2024 alone, ESP awarded nearly $3 million across 105 projects. The first quarter of 2025 saw an even larger distribution of $32.6 million in total grants.

1/ ESP is growing into its next chapter 🚀

To support this evolution, open grant applications are temporarily paused starting today.

🧵 Here’s what to know:https://t.co/VIDUkfjjAs

— EF Ecosystem Support Program (@EF_ESP) August 29, 2025

The foundation plans to shift from reactive funding to a more strategic, curated model. Details about this new approach will emerge in the fourth quarter of 2025. This change aims to better align funding with ecosystem priorities and reduce administrative burden.

New Technical Focus on Interoperability for Ethereum Foundation

The Ethereum Foundation has identified interoperability as its top near-term priority. The network currently suffers from fragmentation across multiple Layer 2 solutions. While these scaling solutions extend functionality, they create user experience challenges.

The foundation outlined a three-stream development approach:

• The “Initialization” stream focuses on intent-based architecture and cross-chain standards. This includes an Open Intents Framework that lets users specify desired outcomes without handling low-level transactions.
• The “Acceleration” stream targets speed improvements. The goal is achieving confirmations in 15-30 seconds, down from current wait times. Developers also plan to halve slot times from 12 to 6 seconds by early 2026.
• The “Finalization” stream explores advanced cryptography using zero-knowledge proofs. This could enable real-time proving and faster Layer 1 finality.

Market Position Under Pressure

Despite leading decentralized finance with $91.5 billion in total value locked, Ethereum faces serious competition. Networks like Solana, Avalanche, and BNB Smart Chain market themselves as faster and cheaper alternatives.

Monthly on-chain volume recently hit $320 billion, marking a four-year high. However, high transaction costs and slow settlement times continue pushing users toward alternative networks.

These strategic shifts reflect the foundation’s recognition that technical excellence alone isn’t enough.

User experience must improve dramatically to maintain Ethereum’s position as the dominant smart contract platform. Success will depend on execution speed and developer adoption of these new standards.