Ethereum Foundation Considers Formal Conflict of Interest Policy After Community Backlash

The Ethereum Foundation (EF) is considering implementing a formal conflicts of interest policy following backlash over two prominent developers joining EigenLayer as advisors.

Executive Director Aya Miyaguchi addressed the issue in a social media post, emphasizing the importance of maintaining credible neutrality within the organization. She said the foundation shares the community’s concerns and is committed to maintaining trust.

Miyaguchi said:

“It’s clear that relying on culture and individual judgment is not enough, and we have been working on a formal policy to address this issue for some time.” We will accelerate this work and will share an update soon.

Controversial

The controversy began on May 18 when prominent crypto trader Jordan Fish, known as Cobie, publicly questioned Ethereum co-founder Vitalik Buterin about the ethics of EF developers receiving large financial incentives for projects built on the network.

Cobie’s tweet specifically used EigenLayer as an example and sparked widespread discussion on social media about potential conflicts of interest. He wrote:

“What do you think about lead developers or researchers at the Ethereum Foundation taking life-changing packages from projects built on Ethereum to become “advisors”, when these projects may have conflicting incentives with Ethereum, now or in the future ? For example – purely theoretical, of course – let’s say EigenLayer.

Following Cobie’s tweet, Justin Drake, a researcher at the Ethereum Foundation, revealed his advisory role at EigenLayer on May 19. Drake revealed that he received a substantial incentive in Eigen tokens, estimated at millions of dollars over a three-year vesting period.

The disclosure has increased concerns about transparency and potential conflicts of interest between EigenLayer and the Ethereum Foundation. Drake also said that the information had been public since May 3 and that the timing of the disclosure with Cobie’s tweet was a coincidence.

On May 21, another Ethereum Foundation researcher, Dankrad Feist, also revealed his advisory role at EigenLayer. Feist, known for his work on danksharding, confirmed that he had also received a significant allocation of EIGEN tokens and assured the community that his advisory role would not influence his positions on the development of EigenLayer.

Conflict of interest concerns

The disclosures have raised questions about potential conflicts of interest, especially given the systemic risks EigenLayer could 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.

Many blockchain experts have expressed concerns about potential centralization and the additional burden placed on stakeholders by running recovery services.

Drake assured the community that he would reinvest or donate all profits into worthy projects within the Ethereum ecosystem and pledged to terminate the board if EigenLayer’s leadership conflicted with the interests of Ethereum.

Feist, in his disclosure, emphasized that he would take contrarian views on EigenLayer to focus on risks and decentralization. He wrote:

“I take this position personally, without representing the Ethereum Foundation, and focusing on risks and decentralization. I receive a significant amount of tokens from this position. I don’t believe they will change or influence my positions on how the core protocol should be developed, but I do believe the community should be aware so they can hold me accountable.

The Ethereum Foundation’s decision to formalize a conflict of interest policy marks an important step in addressing community concerns and maintaining trust within the ecosystem. The foundation is expected to provide further updates on the policy soon.