[EP8] [Executable] Reimburse True Names for expenses and tax obligations incurred on behalf of the DAO


Proposes to reimburse True Names Limited for expenses incurred on behalf of ENS and the DAO.


Since ENS started allowing registrations using the annual-fee model, revenue from this has accrued to the ENS root multisig, which is controlled by seven individuals drawn from the Ethereum community. In order to shield them from individual tax liability, True Names Limited, the development company responsible for ENS development, historically identified itself as the beneficial owner of these funds, which obliged True Names to pay tax on any income to the multisig.

In past years True Names has covered this tax bill from its own reserves - primarily out of funds that were collected during the Short Name auction - but in 2021 revenue rose to a level that meant that was no longer sustainable. Accordingly, True Names requested funds from the multisig to cover the anticipated tax, and the multisig agreed.

The calculation used to determine the tax owing used the actual income to October 20th, plus a 1/12th buffer to cover the anticipated income between the launch of the DAO and its potential request for control of the funds from the keyholders. This total came to $2,163,921 USDC.

However, this failed to take into account the enormous uptick in interest that the announcement of the DAO produced, and so falls significantly short of True Names’ actual tax obligations for FY 2021. This proposal requests that the DAO sends True Names the remainder of the funds required to cover the multisig’s income during the period that True Names was the beneficial owner.

Further, True Names has incurred the following expenses on behalf of the DAO in January 2022:

We additionally request the DAO reimburse True Names for these expenses in the total of $48,637.


Revenue to the multisig came exclusively from ENS name registrations and renewals, and can be calculated from onchain data using this BigQuery query, producing the following results:

Jan 2021 411.6875 498484.22
Feb 2021 383.5613 643985.05
Mar 2021 453.5619 776834.28
Apr 2021 429.0654 955345.36
May 2021 243.0624 740165.91
Jun 2021 422.2419 993899.95
Jul 2021 384.6863 811202.23
Aug 2021 849.9890 2563121.38
Sep 2021 728.7825 2490699.18
Oct 2021 500.3753 1863125.83
Nov 2021 1699.4660 7643673.03
Total 6506.4793 19980536.41


Singapore’s company tax rate is 17%, meaning that the tax owing on $19,980,536 comes to $3,396,691. After deducting the $2,163,921 USDC already sent by the multisig, this leaves a shortfall of $1,232,770.


We request that the DAO send $1,281,407 USDC to coldwallet.ens.eth.


const ethers = require('ethers');
const abi = [
  'function transfer(address to, uint256 value) public'
const token = new ethers.Contract('0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48', abi);
const recipient = "0x690F0581eCecCf8389c223170778cD9D029606F2";
const tx = await token.populateTransaction.transfer(recipient, '1281407000000');

Is one of those expense line items a tax accountant? Just wondering who determined liability, because obviously it’s a bit of a weird situation where I guess technically that revenue would be considered “profit”, but also you weren’t in possession of it by the end of fiscal because it was technically “gifted,” I suppose. :upside_down_face:

If there was an accountant, I’d imagine those fees should be included in the expenses (if they aren’t already). Overall, obviously supportive of making True Names whole on this!

We had advice from tax accountants and singaporean lawyers when the multisig was first formed that either TNL could identify itself as the “beneficial owner” of the registration/extension fees - even though we couldn’t directly access those funds - or the multisig keyholders would be treated as an unincorporated association and each be responsible for tax on 1/7th of the registration fees in their jurisdiction! Obviously the latter was not practical, so we made ourselves responsible and paid the tax on that income.

After the multisig transferred ownership and control to the DAO, True Names was no longer responsible for that income, and officially gifted the treasury to the DAO - but we still have that ~1mo window to worry about. Unfortunately the gift is not tax-deductible, so we can’t count it against the income expense.

I don’t think we can reasonably ask for our accounting fees to be reimbursed separately, as they cover all of TNL, not just the income from registrations.


The dao should support that for sure , gotta pay them taxes and keep things legit so the great thing that is ens continues to be above board . Wesley Snipes and Johnny depp know how inportant those taxes are after finding out the hard way

1 Like

Cool, thanks for the context!

Thanks for the transparency.

If there’s no strong objections, I’d like to put this forward for a Snapshot vote at the same time as the Working Group budgets are put forward, on Feb 14th.


@nick.eth seems like a no-brainer.

As a DAO we must reimburse obligations incurred by the parent company to fund ongoing operation.

Is it possible to re-route the tax obligations for 2022 to the DAO itself? Or does this not exist yet?

The DAO is responsible for all income after control of it was transferred from True Names to the DAO. Fortunately, there is no income tax in the Cayman Islands.


This has now been executed.