An ENS enDAOment

[bstemper]

@nick.eth

The long-term goal would be for the endowment to make modest returns such that it can fund ENS operations indefinitely without drawing down on the principle of the fund, and without relying on external income. This is a risk-reducing proposition, not a yield-enhancing one.

This risk profile is quite like that of a traditional pension fund and the way this is achieved in TradFi is by buying downside protection in the form of put options. Unlike selling lots of ETH for stable coins to guarantee a long runway and thereby foregoing the potential ETH upside, this one-sided hedging protects the dollar value of the endowment without giving up on the upside. The option premiums could be cross-financed by selling upside calls – effectively guaranteeing the dollar value of funds stays within certain bounds – but this is not necessary.

My co-founder and I are building a protocol (greyswan.finance) which brings options on-chain with the kind of liquidity needed by DAOs like ENS. I had originally posted this thread:

Buying downward protection on the DAO treasury

Hi all, I’m from https://greyswan.finance/ - my cofounder and I are creating downside protection for treasuries using on-chain derivatives. We’ve seen quite a few orgs struggle to keep up with current dollar commitments - paying staff, contributors, and ecosystem grants - planning forward, and protecting critical collateral ratios at the protocol level. We’d be keen to start a discussion around how much of this sounds familiar to ENS DAO and what can be done to address this, given the recent m…

but was asked to contribute here. We would be curious to hear what the community thinks about this idea?