Why The Ethereum Foundation Launched A Client Incentive Program

The non-profit organization that backs Ethereum has announced a new initiative to the benefit of the infrastructure supporting this blockchain. Launched to contribute to the network’s health and decentralization, according to an official post, the Client Incentive Program will promote diversification in the Ethereum ecosystem.

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In that way, the foundation believes Ethereum will become a stronger network capable of dealing with future attacks and issues. In addition, a more diverse network will have more participants deciding over the future development of the underlying blockchain.

The Foundation believes clients are a key part of the Ethereum ecosystem and that he had obstacles to receiving financial support. The organization claimed the following:

(…) more avenues have become available for these teams to build sustainable businesses, but most of those focus on mainnet-adjacent opportunities rather than the main Ethereum network. Additionally, these opportunities generally do not scale proportionally to the amount of value created

Thus, the Ethereum Foundation will offer the teams behind the clients “denominated rewards which unlock over time”. These rewards will be based on the constant development of the clients, their software performance, and security requirements.

In total, the Ethereum Foundation will destine around 4,608 ETH for or 144 validators for each client to operate. The Foundation added:

The size of these grants recognizes both the excellent work performed over the past few years and the many development challenges expected well into the future.

The teams eligible for the program are Go-Ethereum (Geth), Lighthouse, Nethermind, Nimbus, Prysm, Teku, Besu, Erigon, and Lodestar. The latter will receive a 50% stake, according to the Foundation, with all funds’ ownership to be vested across several years.

Contributing With The Ethereum Ecosystem Sustainability

The Client Incentive Program will begin to post the Merge, the event that will combine the Ethereum blockchain with the Beacon Chain, the network supporting Eth 2.0. The teams will be able to operate the funds, but the financial support is aimed at the long term, as the Foundation clarified:

In order to receive this and subsequent tranches of validator withdrawal credentials, teams must continue to maintain their clients, meet performance benchmarks on mainnet, and generally contribute toward delivering the Ethereum community’s roadmap, as it evolves over time.

This program will enable clients to earn rewards via staking or withdrawal, provided they complete the vesting period. However, it will not eliminate EF grants.

Péter Szilágyi, team leader at the Ethereum Foundation, celebrated the initiative and was glad to see Geth included in the list of clients that will receive the funds. This decision was made despite Geth being part of the foundation itself. Szilágyi added:

We’re still figuring out how to utilize the grant but will probably put it towards long term contributor incentives.

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As of press time, ETH trades at $3,774 with a 1.6% profit in the daily chart.

ETH trends to the downside in the 4-hour chart. Source: ETHUSD Tradingview