Ethereum Foundation Allocates $120 Million of ETH to DeFi Protocols

The Ethereum Foundation injected 45,000 ETH (~$120 million) into Aave and Spark on Thursday, February 13, in its largest direct liquidity move to date.

The allocation seeks to generate passive income while reducing reliance on ETH sell-offs for operational funding.

The decision comes amid rising concerns over Ethereum’s inflationary pressures as increased Layer-2 (L2) adoption reduces transaction fees and bypasses ETH’s burn mechanisms.

With ETH issuance now outpacing burns, the foundation’s strategy seeks to mitigate market concerns while capitalizing on yield opportunities.

Ethereum Foundation’s Major Allocation goes to Aave and Spark Amid Ether Inflation and Market Concerns

On February 13, the Ethereum Foundation transferred 30,800 ETH ($81.6 million) to Aave, the largest DeFi lending protocol.

Of this, 20,800 ETH ($55 million) was deposited into Aave’s core market, while 10,000 ETH ($26 million) was allocated to Aave Prime.

An additional 10,000 ETH ($26 million) was supplied to Spark, a MakerDAO-affiliated lending platform, and 4,200 ETH ($11.2 million) was allocated to Compound’s lending pool.

By distributing these assets across DeFi lending platforms, the Ethereum Foundation stands to earn an estimated $1.5 million annually in passive yield, assuming an average 1.5% supply rate.

Community Reactions to the Ethereum Foundation’s DeFi Allocation and Treasury Strategy

Aave founder and CEO Stani Kulechov described the Ethereum Foundation’s move as its “biggest allocation in DeFi,” reinforcing optimism about decentralized finance’s long-term sustainability.

Many in the Ethereum community have welcomed the decision, viewing it as a way to strengthen the foundation’s financial position without putting additional sell pressure on ETH.

The Ethereum Foundation previously reported a treasury worth $970.2 million in November 2024, with 99% of its crypto holdings in ETH.

It has historically maintained a conservative treasury management strategy, periodically converting ETH to fiat during bullish cycles to ensure operational stability.

In 2023, the foundation allocated $32.1 million—30% of its total spending—toward Ethereum’s Layer-1 technology development and research.

Institutional funding followed closely, with $28.6 million (27.1%) directed toward ecosystem-supporting organizations.

Despite this latest liquidity injection, the Ethereum Foundation has hinted at further fund deployments, with potential plans to explore staking opportunities and additional yield-generating strategies based on community input.

Ethereum’s measured pivot from ETH sell-offs to yield capture in established DeFi protocols offers a fresh perspective on managing treasury assets amid inflationary pressures.

With ETH’s dynamics in flux, this move invites investors to reconsider how a balanced approach to income and asset preservation might redefine portfolio resilience.