An ENS enDAOment

Which can and should be accomplished by the DAO for all of the treasury through sustainable development rather than reserving 50% of it for investment under what I presume will be another legal entity?

At nearly $57mil assets I don’t think we’re at such a risk of suffering a downturn that development would suffer. Assuming an annual cost of $500k for development with no registration or renewal income at all we’d have development costs covering 114 years.

I’m not sure what “sustainable development” means. The endowment would be owned by the ENS DAO the same as the funds currently are; it would be managed by a fund manager, preferably onchain.

Most of these assets are in ETH, and we have seen drawdowns of >70% in ETH in bear markets before. TNL’s annual operating budget is on the region of $1.5M, and that’s before accounting for any DAO expenses.

I’ll apologize in advance for over reacting in my original message. Those words were way too harsh.
What I was getting at is that an endowment, from what I understand, would be a separate legal entity and I don’t understand how it will be owned by the DAO or even controlled on-chain by it.

Will it be a board consisting of members from the DAO that are bound by the Endowment to follow an on-chain vote, or how will that actually work?

My principle concern is that this doesn’t end up moving a very large portion of the treasury out to a separate legal entity that’s legally not within the control of the DAO.

My intention was not to suggest establishing a separate entity; just to set aside a portion of the treasury and manage it as an endowment (using an external fund manager, preferably with limited permissions to act onchain). It would likely be in a separate wallet, but still ultimately controlled by the DAO.

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That alleviates my concerns greatly, and I’m not against that.

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It sounds like this endowment proposal attempts to simultaneously meet 2 separate goals:

  • Reduce market downside risk of an “eth heavy” portfolio
  • Make a return on treasury funds

It’s clear why ENS would want to reduce market downside risk on its substantial eth exposure, but it’s not so clear why “making a return” is so important at this time.

  • Any investment that “makes a return” will incur more risk than a similar investment which doesn’t “make a return”.
  • I believe the risks associated with defi are generally understated, and would not be trivial for an actively managed endowment fund.
  • ENS financials are strong and revenue continues to grow. Trying to make additional financial returns seems greedy.

Additionally, ENS is special because it’s one of the few “non-financial” web3 applications out there, and has historically stayed far away from the “financially engineered speculative gambling” use-cases inherent to most defi products. I’m worried that dipping a toe into the world of defi may sacrifice this well-earned moral high ground. Could ENS ask a future endowment manager to ensure that the requested 4%+ gains aren’t coming from the profits of speculation-fueled destructive behavior? Does the source of the returns matter at all?

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Just had a passing thought about this. Maybe a 1% (or some small percentage) creator royalties going to an endowment account would be enough for this type of thing?

This is such an awesome concept and it seems to have really broad support.
It would clearly take a while to execute from a process perspective, but has it been picked up yet by one of the working groups for preliminary investigation?

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