Ethereum Foundation privacy team spins out as for-profit EthSystems to serve institutions with Lubin, Bitmine backing

Ethereum treasury giants Bitmine and SharpLink and Consensys CEO Joe Lubin have backed another Ethereum advocacy organization called EthSystems, a for-profit entity that is focused on building "confidential systems for institutional Ethereum," according to an announcement on Tuesday.

The company was spun out of the non-profit Ethereum Foundation and counts former EF employees Mo Jalil, Oskar Thorén, and Aaryamann Challani as co-founders. Jalil, Thorén and Challani previously worked on the EF’s Institutional Privacy Task Force (IPTF).

EthSystems aims to provide the technology that allows banks, asset managers, and other regulated institutions to conduct large-scale financial activity on Ethereum while preserving necessary confidentiality. 

"The business model is simple: bespoke consulting, focused on solving the hardest blockers for institutional adoption. In practice, this means continuing a lot of the work we have been doing, only charging money for it," the team wrote. "Commercial engagements often require a commercial counterparty."

In addition to building confidential systems that enable institutions to execute transactions without exposing sensitive details like trade information, positions, or client identities to the entire network — likely using zero-knowledge cryptography — the company said it remains committed to continuing open-source contributions and publishing detailed protocol specifications.

EF shakeup continues

The move comes amid a period of significant change within the Ethereum (ETH) community. Last month, the EF laid off 20% of its staff and reorganized around five "clusters." This came after months of attrition of its executive staff, including its two co-executive directors and the three former leads of its Protocol R&D team.

Near simultaneously, Bitmine, Sharplink, and Lubin have begun backing independent organizations, including Ethereum Institutional and EthLabs, that will advocate for and develop Ethereum. EthLabs will take over significant Ethereum protocol research and development duties, acting as a sort of EF sister organization, while Ethereum Institutional will act as "an honest, neutral counterpart" institutions can call when building on Ethereum.

Lubin, who co-founded Ethereum and founded the first Ethereum-focused blockchain incubator, previously told The Block that he expected at least three organizations to spin out of the EF, which has doubled down on developing tech promoting Censorship Resistance, Open Source, Privacy, and Security (CROPS), or the values outlined in the EF’s controversial manifesto earlier this year.

"As EF continues doubling down on cypherpunk fundamentals, especially with a focus on individuals, there’s room for an independent for-profit entity that can make different choices in the trade-off space," EthSystems wrote. 

While part of the EF’s Institutional Privacy Task Force, the EthSystems team said it conducted hundreds of conversations with central banks, regulators and financial institutions while shipping open-source work, including private bonds using ZK proofs, confidential stablecoin transfers, private cross-chain settlements and the Ethereum Privacy Map.

"Our mission: help institutions build confidential systems on public Ethereum without giving up what makes Ethereum worth using," they wrote.