Ethereum Foundation Implements Conflict of Interest Policy Following EigenLayer Disclosures
In response to a growing controversy surrounding potential conflicts of interest, Aya Miyaguchi, the Executive Director of the Ethereum Foundation, announced on May 24 that they are expediting the development of a formal policy to address these concerns.
The purpose of this policy is to strengthen governance within the foundation, moving away from relying solely on culture and individual judgment, which has proven to be inadequate. Previously, the foundation relied on this approach to prevent conflicts of interest, but Miyaguchi acknowledged that it was not sufficient. As a result, the foundation has been working on a formal policy to tackle these issues and will speed up its completion, with updates to be shared in the near future.
The controversy arose on May 18 when a well-known cryptocurrency trader named Cobie publicly questioned Ethereum co-founder Vitalik Buterin about the ethical implications of Ethereum Foundation developers accepting significant financial incentives from projects built on the Ethereum network. Cobie specifically mentioned EigenLayer as a potential conflict of interest, questioning the appropriateness of Ethereum Foundation developers becoming advisors to such projects due to conflicting incentives.
Following Cobie’s remarks, Justin Drake, a researcher at the Ethereum Foundation, revealed on May 19 that he held an advisory role at EigenLayer and had received a substantial incentive in Eigen tokens, valued at millions of dollars over a three-year vesting period. This disclosure raised concerns about transparency and potential conflicts of interest between EigenLayer and the Ethereum Foundation. Drake clarified that this information had been public since May 3 and that the timing of his disclosure coincided with Cobie’s tweet by coincidence.
On May 21, another Ethereum Foundation researcher named Dankrad Feist also disclosed his advisory role at EigenLayer, admitting to receiving a significant number of EIGEN tokens. Despite his involvement, Feist assured the community that his professional judgments and positions on the development of EigenLayer or related Ethereum projects would not be affected.
These disclosures have increased scrutiny over potential conflicts of interest, particularly regarding the systemic risks that EigenLayer may pose to Ethereum. EigenLayer is a platform that allows users to deposit and “re-stake” Ether from various liquid staking tokens to secure third-party networks or validated services.
As an Ethereum layer-2 restaking protocol, EigenLayer enables Ethereum node operators and validators to earn fees by restaking liquid Ether received in exchange for staking. These assets can then be used on EVM platforms like Lido or to validate and secure other networks, including sidechains or non-EVM blockchains, effectively staking the same assets twice. Many blockchain experts have expressed concerns about potential centralization and the additional burden placed on stakers by running restaking services.
In light of these concerns, both Drake and Feist have taken steps to address any perceived conflicts. Drake has committed to reinvesting or donating all proceeds from his advisory role to beneficial projects within the Ethereum ecosystem and pledged to sever ties with EigenLayer if conflicts with Ethereum’s broader interests arise.
Feist emphasized that his advisory position was personal and independent of his responsibilities at the Ethereum Foundation. He pledged to prioritize decentralization and risk management, urging the community to hold him accountable to ensure that his advisory role does not compromise his work on Ethereum’s core protocol.
The introduction of a conflict of interest policy by the Ethereum Foundation is a strategic move to rebuild trust and ensure ethical governance within the community. Miyaguchi has committed to finalizing and implementing this policy swiftly, promising further updates to enhance transparency and accountability as the blockchain and cryptocurrency landscape continues to evolve. This initiative is a crucial step towards aligning the foundation’s internal practices with its public responsibilities and the expectations of its global stakeholders.
