You’ve been renewing your .eth name for years. Maybe five. Maybe eight. You’ve paid hundreds — or thousands — of dollars in fees to keep your identity on-chain.
Now imagine you decide to move on. You let the name go.
The protocol keeps every cent you ever paid. No settlement. No acknowledgement of your tenure. The outcome is identical to someone who registered last month and never renewed.
That’s the ENS loyalty problem. And I think there’s a clean way to fix it without changing a single price.
The Proposal: A Tiered Loyalty Refund
The core idea is simple. If you hold a .eth name continuously and eventually choose to surrender it back to the protocol, you can recover a portion of your cumulative fees:
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5 years of continuous holding → 50% refund
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10 years of continuous holding → 70% refund
No price changes. No new fees. Same registration, renewal, and auction costs as today. This is purely a settlement option for long-term holders who decide to move on.
The Twist That Makes It Work for the DAO
Here’s where it gets interesting.
The refund only applies if you never sell.
The moment you transfer your name on secondary market, the refund clock resets to zero. The DAO keeps 100% of every fee you ever paid, and the new owner starts from scratch.
This means every speculator, every flipper, every short-term holder funds the protocol in full — with no refund. The mechanism rewards stewardship and punishes speculation (even though i think speculators have their own place in the success of ENS), automatically, without any governance intervention.
The refund essentially pays for itself through churn.
Why This Is Good for the DAO’s Revenue
Some will assume refunds hurt the treasury. The opposite is likely true.
Lets assume, bidding 10 ETH on a premium name is a 10 ETH risk. With a long-term refund floor, the effective downside drops to 3–5 ETH depending on your expected holding period. Lower perceived risk drives more aggressive bidding, which expands the total fee base.
More registrations. More renewals. More revenue — funded by the exact churn the mechanism was designed to reduce.
What About Governance Risk?
The obvious concern: what if the DAO votes to cancel the program after people have held their names in reliance on it?
The answer: financially, you’re no worse off than today. If the program is cancelled, you paid 100% of fees and received 0% back — exactly the same as the current model. There is no additional downside for users, only potential upside.
To make that airtight, the proposal includes a Wind-Down Protection clause: if the DAO ever votes to cancel, a mandatory 24-month notice window applies. You have two full years to decide whether to surrender and claim your accrued refund, or keep your name. No rug.
Wallet Rotations Won’t Cost You Your History
Security-conscious users often need to rotate keys. Under this proposal, a dedicated migrateLoyalty function lets you move your name and its full loyalty history to a new wallet without resetting the clock.
It comes with strict guardrails — destination wallet history checks, a 90-day cooldown, and a lifetime migration cap — to prevent it from being used as a shadow sale mechanism.
Rolling It Out Safely
New registrations are eligible from day one. Existing names are opt-in only — holders enrol explicitly, and their loyalty clock starts from enrolment.
This prevents an immediate liability spike from names already years old, and gives the DAO time to model uptake, stress-test the reserve mechanism, and build confidence before the full system scales.
The DAO should also maintain a minimum ETH reserve equal to ~15% of outstanding refund liabilities, funded in part by yield on the float — the ETH that won’t be claimed for years can be put to work in the meantime.
The Bigger Picture
This mechanism creates something no competitor can fork: a financial switching cost.
If another naming protocol tries to poach ENS users, every person who migrates forfeits years of accrued ETH refund equity. That’s not a reputational moat. It’s a mathematical one.
It also discourages domain squatting structurally — squatters who buy names to sell them reset their refund to zero on every sale, receiving no benefit whatsoever.
The Bottom Line
Long-term ENS holders have been subsidising the protocol for years with no structured acknowledgement of that loyalty. This proposal changes that — without touching prices, without compromising the DAO’s revenue model, and without introducing governance risk for users.
Rent becomes savings. Churn funds the refund. Everyone wins.
I’ve written this up as a full governance-ready proposal covering the treasury model, transfer rules, the technical spec for migrateLoyalty, and a detailed risks and mitigations table. Happy to share — drop a comment.