Ethereum Foundation not behind $56M Sky deposit, developer says

An Ethereum developer rejected speculation that the Ethereum Foundation (EF) was behind a recent deposit of more than 30,000 Ether into the decentralized finance (DeFi) protocol Sky, formerly known as MakerDAO.

On March 10, a wallet address deposited 30,098 Ether (ETH), worth about $56 million, into Sky. Crypto intelligence platform Arkham labeled the address “Ethereum Foundation?,” raising speculation that the EF may have moved funds into the lending protocol — a strategy recommended by the community — instead of directly selling ETH to fund its operations. 

However, community members quickly dismissed the claims, clarifying that the wallet in question does not belong to the Ethereum Foundation. Eric Conner, the co-author of Ethereum Improvement Proposal (EIP-1559), called a Wu Blockchain report “completely fake,” implying that the address doesn’t belong to the EF. 

Anthony Sassano, host of The Daily Gwei, also cited the report, saying that the wallet does not belong to the EF. 

Source: Anthony Sassano 

Wu Blockchain later clarified that while the account was suspected of belonging to the Ethereum Foundation, transaction history suggested it was more likely associated with an early Ethereum investor.

The address received a 4 million Dai (DAI) transfer from the EF ETH Sale in May 2022, and initial ETH funding was traced back to a wallet called jonny.eth. 

The address deposited the $56 million into the Sky vault to avoid liquidation as ETH prices tumbled. On March 10, ETH dropped from a high of $2,138 to $1,813, a 15% decline.

The move allowed the wallet to avoid liquidation, lowering its liquidation price to $1,127.14, 40.19% below ETH’s price of $1,896 at the time of writing.

Related: Ethereum Foundation forms external council to uphold core blockchain values

While the recent deposit into Sky was not linked to the Ethereum Foundation, the EF has faced criticism in the past for selling ETH for stablecoins to fund team salaries and operations. In January, community members suggested that the foundation could instead borrow stablecoins against its ETH holdings rather than sell the assets.

At the time, Sassano said that instead of swapping ETH for stablecoins, the foundation should consider using Aave to borrow stablecoins against ETH. Sky allows users to do something similar. By depositing ETH, users can borrow DAI. 

On Feb. 13, the EF listened to the community and deployed 45,000 ETH, about $120 million at the time, to DeFi protocols Aave, Spark and Compound.

Community members celebrated the move, with Aave founder and CEO Stani Kulechov saying, “DeFi will win.” The EF also said there’s “more to come,” suggesting this is not their last foray into DeFi. 

Magazine: MegaETH launch could save Ethereum… but at what cost?