Funding Ethereum Takes a Village | Peter Vecchiarelli - Protocol Guild

It's just four.

All right. Okay. Next is a very juicy topic on the future of core Ethereum development and funding. And we have Peter here who who runs ops at Protocol Guild taking us through it.

Hey, good morning ETH Denver. Uh I'm Peter Varelli. I'm a member of the operations team at Protocol Guild and we're the leading onchain institution dedicated to funding Ethereum's core development process and today I want to talk to you about our collective responsibility in pursuit of maintaining and upgrading Ethereum uh through R&D and this presentation is titled funding Ethereum takes a village. Uh first I want to take a step back and remind us why we're all here dedicating some portion of our precious time effort and resources toward this network. Ethereum is an audacious technological and economic experiment with worldchanging potential through with or on top of Ethereum.

In its first 10 years, we've seen breakthroughs in technologies across store of value. Ethereum is the first non-s sovereign store of value with credibly hard and neutral monetary policy that also sustains a burgeoning economy built on top of its rails. Prediction markets, a tool for surfacing public goods in the form of information signals, have gone mainstream thanks to Ethereum technology. The concept of self-s sovereign digital identity is no longer theoretical. It's possible and happening today on Ethereum.

Ethereum shows promising progress towards political pro-democracy technology, including voting and public goods funding. DeFi, which is the cornerstone of Ethereum's product market fit, offers global democratization to financial tools meant to improve the quality of life and financial well-being of its users. Stable coins, a subset of DeFi, offer global access to everyday currencies and yield that doesn't inflate or at least inflates at a slower rate than less stable global sovereign currencies. Uh there are promising experiments across consumer and social applications built on Ethereum NL2s, offering an alternative to invasive and incendiary platforms offered by web 2 counterparts. Ethereum also offers a fertile ground for the proliferation of AI and the agentic economy through identity authentication and payment infrastructure.

And while we can take all that progress for granted, there are many things I didn't even mention here like tokenization. I think it's worth interrogating how exactly the foundation of those achievements is produced. So when we think of Ethereum today, we can think of it as a series of resource types. And shout out to Protocol Guild's organizer Trent Vaneps for this image, which neatly categorizes these across the network, which includes things like the chain state, its history, layer 2, and forks. And that's followed by the asset ether, which can come in many different forms, wrapped, staked, bridged, lent, etc.

But the final resource type we call media and this includes the transcripts, specifications, EIPs, research code and which are authored in order to produce and improve the Ethereum network and the asset downstream of them. The process of Ethereum improving the quality of the the network and its resources in pursuit of stronger security and user experience through increased scaling and usability produces an upgrade. Think of the merge, Pectra, Fusaka or the forthcoming Glamsterdam. These upgrades are a series of Ethereum improvement proposals or EIP which are rigorously defined, debated, and iterated on before becoming finalized through a process of rough consensus. You may or may not realize that this process draws participation from a variety of ecosystem actors, including researchers focused on theorizing, proposing, and defining specifications before they're implemented by consensus and execution layer client developers across a broad swath of teams and languages.

And this is due to Ethereum's prioritization of client diversity, uh, which has contributed to its impeccable uptime. And finally, they're pushed to production by teams helping to deliver these upgrades through coordination, testing, and DevOps work. This is where Protocol Guild comes in. At Protocol Guild, we're focused on curating and auditing an on-chain list of the individuals responsible for Ethereum's core development process. Today we stand at 184 members spanning more than 25 teams across 13 plus organizations including large nonprofit entities like the EF commercial commercial organizations like Paradigm and Consensus and small to medium entities like Nethermine, Sigma Prime and Aragon alongside even individuals which all collective collectively contribute to the process known as Ethereum core development.

And here you can see how our membership has grown over the last few years. But why are we doing this? Why are we creating and maintaining this onchain list of Ethereum's core protocol contributors? Well, the unfortunate reality is there's an incomplete value loop between the producers of Ethereum's infrastructure and the financial value that's created and captured on top of it. And because of this, individuals face an incentive imbalance where a lot of capital is available in the broader ecosystem for talented core developers, but not much is actually distributed to to those who are building Ethereum mainet.

In 2025, we conducted the first ever core dev compensation survey. And the results were somewhat troubling. And this isn't necessarily a knock on their employers as they're often cash constrained and producing open source software that the ecosystem relies on. But you can see here that the medium core dev earns roughly 140k in cash salary. And possibly more troubling, they earn zero in annual risk or upside compensation like tokens or equity outside of protocol guild distributions, which we'll talk about a few slides later.

Meanwhile, these individuals are routinely routinely receiving cash offers exceeding 200% of their current cash salaries with even bigger gaps in the risk compensation portion. And here you can see some data from around the ecosystem on the kind of packages that these individuals can expect to receive. Based on data from Dragonfly Capital's employ uh employment compensation survey, 1% plus of tokens is a reasonable benchmark. Coinbase IC5 through8 SWEs earn anywhere from 400K to 1 million in total comp. While many of these individuals that are building Ethereum are valuesdriven, if we as an ecosystem want to have long-term retention of the individuals who who are ultra talented and have strong institutional knowledge and are driving Ethereum's mainet upgrades, we must address this compensation gap.

So, back to the question of why does protocol guild exist? We're attempting to bridge this financial incentive gap for Ethereum's core protocol contributors and we do so by distributing funding we raise from around the ecosystem to our membership list. We use an agorodal for architecture, zerox splits with a timewing formula, and four-year vesting contracts to create an incentive for individuals to stick around. Since since Protocol Guild was enacted on chain in 2022, we've distributed over 37 million to our members. And while we've grown that amount every year, uh, in hitting over 12 million last year or a little over 60,000 for the median member, we've been able to do so due to the generous contributions of our ecosystem partners.

Projects like IGEN, Etherfi, Tao, Puffer, and others have completed the protocol guild pledge where they route 1% of their token supplies to our four-year vesting contract, and this has accounted for a majority of recent funding. Other pret projects like shape l2 and align layer have likewise made a commitment to do so with their forthcoming tokens. We've had gracious individuals and projects including public goods ecosystems like octant, gitcoin and optim optimism rpgf step up and fund protocol guild in an ad hoc manner. And we wouldn't be where we are today without the initial help of our pilot partners including large players like ENS, arbitum, lido, unis swap and others. And we're proud to say that today, based on our survey last year, we're providing roughly one-third of the total compensation package for Ethereum core developers, helping to bridge the incentive gap and make up for some of the risk comp opportunities they're foregoing in uh and doing so through ecosystem tokens.

But we still have a long way to go to adequately bridge the incentive gap and make core protocol work economically rational for members. And what do we risk by undercompensating these individuals? Ethereum is far from done. Oification is a stated goal. However, we have a long way to go to deliver on ambitious roadmaps like ZKevm.

We'll commission new working groups, new client teams, and we'll need to adequately fund them against the scale of Ethereum and the value it is securing less we risk contributor turnover and burnout. So, what do we need? We see this in terms of tanches and believe the minimum viable need uh maps to subsidizing total compensation against just the cash portion of the median employment offer our members receive. This would be 150,000 per member per year in addition to their employer salary and require roughly $30 million a year in funding, well above the 12 million we achieved last year. For us to help our members be compensated near comparable ecosystem employment opportunities, we require $60 million million a year or another $300,000 per member on top of their employer salary.

And for Protocol Guild to fund the entire e uh sorry compensation package indefinitely, including helping to fund the cash currently provided by their client teams or as a subsidy on top of their current salary salary, we'd require $100 million in annual funding. and perhaps ambitious, but for us to provide the medium member with a low sevenf figureure compensation package, we would require 200 million in funding per year. We believe the sweet spot lies somewhere between these first three tranches described. So some anywhere between $30 million a year, 30 to $100 million per year on top of current team funding. So the big question is how do we achieve this level of funding?

Many of these routes are cornerstones of Protocol Guild's current fundraising strategy, but they unfortunately don't have the necessary appetite or addressable market to reach the scale of the funding need. We can look at individual donations uh and projects can help with donate to claim airdrop flows and the like, but the scale is not sufficient. Likewise, we've looked into addressing funding with post TGE postrevenue projects with new vehicles like sponsor core dev, but the total addressable funding remains insufficient. We can look at everyone's favorite citation for where this funding should could or should come from, the Ethereum Foundation, and we'll bundle in other public goods funding mechanisms for good measure. But the reality is core development is much bigger than the EF.

Only 30% of our members are EF employees. Uh their funding is finite and the need will last far longer than their their pile of ETH can sustain without considering that they fund other ecosystem needs as well. Where we've turned over the past few years is the token generation market. Uh unfortunately these events are unpredictable. The valuations are extremely volatile.

As you can see here, we've experienced over hund00 million in inflows. The current value is a small fraction of that. And these are scarce resources that startup teams need to grow and sustain themselves. We can look for solutions like in protocol funding, issuance based options, and the like. And this may be the ultimate outcome.

But these routes include involuntary, one might say tax-like mechanisms and hurt Ethereum's credibly neutral posture and potentially its monetary policy. And while it may seem obvious, we've now come to believe that utilizing the gadgets native to Ethereum like DeFi and staking, yield may actually be the best option for addressing this funding need. Yield confers several unique benefits. While depositors to low-risisk vaults uh that route yield to funding core development would forego some of their income. They would allow for the funding of Ethereum with no capital loss the ability to borrow against their collateral in some instances and this and with sufficient levels of deposits enact a recurring funding engine for Ethereum built on top of Ethereum and we think that's a really beautiful concept.

So at Protocol Guild we're working with teams like Morpho Lido and Octton among others to enact vaults which would achieve this recurring funding status alongside a campaign to do so. tenatively called the infinite endowment. If you have a better or more clever meme to package this, don't hesitate to reach out. This isn't final. Here you can see a dashboard mockup where you users could decide between vaults with different properties, track progress, and leading depositors can be celebrated.

Some of these figures may be daunting, but consider that Ethereum, while not a perfect analog, would be a top 10 to 15 global software asset on the heels of companies like Palanteer and Netflix who deploy large multiples of these figures into R&D expenditures. And consider that open source software tends to drive large multiples of value relative to closed source counterparts. A study from Harvard claimed that the cost to recreate all open source software is 1 to six billion, but it downstream value is 2.5 to 13 trillion. And so what can you do to contribute?

We simply ask that you consider depositing some relatively small percentage of your onchain holdings into a protocol guild vault and that you increase the social andor that you increase the social signal for this solution to Ethereum's R&D funding problem. If you'd like to get involved in a more significant way, you can reach out to me on X alpha lemonade or peterprotocolgild.org uh or follow protocol guild protocol guild. Um let's secure Ethereum's future together and I'll see you on chain.