Ethereum Foundation’s bold $120M DeFi injection: Betting big on passive yield

• Ethereum Foundation invested $120 million in Ether across DeFi protocols like Aave and Compound.
• The move addressed past reliance on ETH sell-offs and aims for sustainable funding strategies.

The Ethereum Foundation has taken a bold step by deploying $120 million worth of Ethereum [ETH] into various DeFi protocols, including Compound, Aave [AAVE], and Spark.

This move comes in response to growing concerns about the foundation’s previous approach of selling ETH to cover operational expenses.

Ethereum Foundation shifts $120 million in ETH to DeFi protocols

On the 13th of February, the Ethereum Foundation made a strategic move by allocating $120 million in Ether to various decentralized finance (DeFi) protocols.

In response to concerns about the foundation’s past reliance on ETH sell-offs for operational funding, a total of 45,000 ETH were deployed across Compound, Aave, and Spark.

The allocation included 4,200 ETH to Compound, 10,000 ETH to Spark, and 30,800 ETH to Aave, with ETH priced at around $2,600 at the time.

This $120.4 million investment marks a significant shift toward more sustainable funding methods for the Ethereum Foundation’s ongoing initiatives.

Community reactions

The Ethereum Foundation’s decision to allocate $120 million worth of Ether into DeFi protocols has sparked excitement and optimism.

Aave founder and CEO Stani Kulechov hailed the move, calling the 30,800 ETH deployed into Aave the foundation’s “biggest allocation in DeFi.”

Kulechov expressed his belief that “DeFi will win,” as the Ethereum Foundation adds substantial liquidity to the Aave ecosystem.

The community also echoed similar sentiments, with many appreciating the shift away from ETH sell-offs to more sustainable funding methods. 0xNessus, the pseudonymous co-founder of HyperLand, quipped:

Kinda crazy that after so many years they just started doing this. All we had to do was bully them.

Others acknowledged the move’s importance, with one comment stating that it is a “solid move,” and another adding,

Took you years to invest in the ecosystem instead of selling. But better late than never.

Ethereum’s DeFi strategy and market outlook

The Ethereum Foundation’s pivot toward DeFi signals a strategic effort to achieve long-term sustainability by leveraging yield-generating protocols.

By reducing reliance on direct ETH sales, this move could create a self-sustaining funding model.

However, the approach isn’t without risks—market volatility and regulatory uncertainties could affect returns and liquidity management.

Source: TradingView

From a price perspective, Ethereum was trading around $2,708, at press time, showing signs of consolidation after recent downward pressure.

The RSI at 39.28 suggests ETH remains in bearish territory, though a rebound could be forming. OBV at 25.79M indicates steady accumulation, hinting at potential upward momentum.

If ETH breaks above $2,800, bullish sentiment may strengthen, but a drop below $2,500 could trigger further sell-offs.