Ethereum Federation keeps selling ETH even after promising to stack tokens

The decision ofThe Ethereum Federation (EF)It reopened a heated debate in the cryptocurrency market: the sale of 5,000 ETH (about $10 million at the time) to fund surveys and donations, even after the announcement that it would be stacking 70,000 ETH. The transaction, conducted last Monday through the CoWSwap platform, used the TWAP (Time-Weighted Average Price) mechanism, which distributes sales over time to minimize the impact on the price.

The contradiction that shattered market confidence

EF, the non-profit organization that supports the development of Ethereum, had recently communicated to the market its intention to stack a large amount of ETH as a way to demonstrate confidence in the network and reduce the circulating supply.

According to data fromCryptoSlate, the sale occurred at a time when the price of the ETH was already under pressure with sales from large holders (whales). The operation, which included the conversion of ETHs into stablecoins (USDC and DAI), was justified by EF as necessary to finance "research, scholarships and donations". However, many investors interpreted the move as a sign that the foundation would not be as confident in the future of Ethereum as their ads suggested.

Strike and Sell: The Controversial Strategy

The main issue of the debate is theEthereum Strike, a mechanism that allows currency holders to earn rewards for validating transactions on the network.Shanghai and Capella(April 2023), which allowed the withdrawal of stacked ETH, the number of tokens blocked in the Beacon Chain has grown, reaching over 28 million ETH (about 20% of the total supply) by March 2024.

For Brazil, where interest in staking has increased — especially among those seeking passive income in a high-interest scenario — the EF decision is emblematic.While large players such as the foundation itself sell part of their holdings, small investors may question themselves:Is it worth stacking ETH if even those responsible for the ecosystem are reducing their positions?The sale of 5,000 ETH, although representing only 0.0036% of the total supply, serves as a thermometer for the market mood.

EF argued that selling is a common practice among non-profit organizations to cover operating expenses and long-term projects. However, the lack of clarity about the final destination of tokens — whether they will be repurchased or not — left investors alert. “It is a risky move,” said a DeFi analyst heard by the press. “EF is sending mixed signals: on the one hand, it encourages staking as a way to reduce supply; on the other hand, it sells its own tokens.”

Impact on the DeFi market and for Brazilian investors

This has had an immediate impact on the market.Decentralized Finance (DeFi)Platforms such as Lido, Rocket Pool and Frax Finance, which rely on Ethereum’s security and adoption, have seen theirtokensIn Brazil, where DeFi is still on the rise — but is growing rapidly — EF’s decision may reinforce new users’ distrust of the DeFi platform.Governance islarge entities of the ecosystem.

In addition, the operation reinforces a recurring pattern in the crypto market: aSales by Large Holders (Whales)In high volatility, according to data from theCoinGecko, the sales volume of EF represents less than 0.1% of the daily volume of ETH, but the symbolism of the decision is much greater. "Brazilian investors should be attentive not only to the foundations, but also to the actions of the main actors in the ecosystem," commented an analyst from a local broker.

Another important point is the use ofStablecoinsBy converting ETHs into stable currencies, EF avoids exposure to price fluctuations, a common strategy among foundations and companies that need to manage risks. However, in Brazil, where stablecoins regulation is still being discussed in Congress, this move can generate debates about transparency and the impact of these operations on a still-forming market.

What to expect for the future of Ethereum?

In the short term, EF’s decision may not have a significant impact on the price of the ETH, which has already ranged between $3,000 and $3,500 in recent months. However, in the long term, the credibility of the foundation — and of the Ethereum ecosystem itself — may be affected. If large holders continue to sell their reserves while encouraging staking, the market may face a downturn.Reduced liquidityPressing prices down.

For Brazilian investors interested in DeFi, the lesson is clear:Governance and actions of major players are as important as the technical foundations of the network.As Ethereum advances on its journey of scalability and adoption, the transparency of the organizations that support it will be increasingly charged.EF, in turn, will have to balance its financial needs with the trust it deposits — and inspires — in the holders of the world’s second largest cryptocurrency.

Meanwhile, the market follows closely.If the foundation announces new sales or changes in its staking strategy, the impact may be even greater.For now, one thing is certain: EF’s decision has revived the debate on theWho actually controls Ethereumto whom he owes loyalty.