Ethereum Foundation Reallocates 49.200 ETH to DeFi, Vitalik Buterin Details Privacy on Railgun

• Ethereum Foundation Adopts DeFi Interest for Fund Management.
• Railgun offers privacy with source of funds verification.
• Possibility of forking for greater autonomy in privacy.

The Ethereum Foundation (EF) has made a significant move in the cryptocurrency ecosystem by reallocating 49.200 ETH to various DeFi platforms. According to on-chain records, the EF distributed 4.200 ETH to Compound, 10.000 to Aave, and 30.800 to Spark, with an additional 4.200 ETH later added to Compound. This move came about after community suggestions that the EF should leverage DeFi interest to generate funds instead of conducting direct ETH sales.

This decision marks a strategic shift, employing DeFi protocols to earn passive income without compromising the integrity of their assets. Amidst Ethereum’s price volatility, such an approach is seen as an alternative to sustain EF funding without affecting market liquidity.

Ethereum co-founder Vitalik Buterin detailed how Railgun’s privacy mechanism works, highlighting its ability to prevent the handling of illicit funds without the need for invasive surveillance or backdoors. Buterin explained: “Anyone can deposit into Railgun, and after a one-hour detection period, algorithms check for possible links between the deposit and criminal activity.” If the deposit passes the screening, the user can withdraw privately using zero-knowledge proofs (ZKP) after the recommended wait, aiming for greater anonymity.

If verification fails, the user has the option to withdraw the funds only to the source address, keeping them free from freezing or confiscation, but without the anonymity benefits offered by the privacy pool.

Buterin added: “Those who disagree with Railgun’s screening rules can choose to fork and establish their own privacy pool, although anonymity may be compromised without broad public support.”