This discussion has surfaced thoughtful commentary from delegates who are deeply invested in seeing the ENS protocol thrive. At the same time, it has highlighted tensions that put the current Endowment manager in an awkward position.
While there’s no question that kpk.eth have been excellent partners from the beginning, the observations raised provide grounds to further re-examine the current arrangement.
Delegates and the endowment manager should consider a fee review and a performance fund pilot.
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Fee Review
The current fee structure deserves closer scrutiny given the conservative, benchmark-like mandate of the Endowment. Delegates have flagged concerns about fee load and alignment, and kpk.eth acknowledged a correction to the reported net APY.
As it stands, the all-in fee is high for a low-risk mandate and introduces material, compounding drag. As @daveeth highlighted, true net APY is ~2.6%—lower than a simple passive allocation in stETH and USDS (~3.15%).
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Addressing the Opportunity Cost
Delegates have noted the lag in yield versus CPI inflation. The IPS mandates three years of runway and envisions funding all DAO operations. Is there a bounded and transparent way to close the APY gap without altering the Endowment’s preservation mandate?
ETH is trading near ATHs and the overall macro sentiment appears conducive to further yield opportunities. It’s worth noting the IPS was drafted in a bear market.
Every major institution balances preservation with performance—universities, corporates, and sovereign funds run a core runway plus a performance sleeve.
ENS can mirror this by seeding a bounded pilot while keeping the IPS runway intact.
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Aligning Delegate and kpk.eth Interests
I want to acknowledge again kpk.eth’s consistency in reporting and responsiveness to Delegate inquiries—they are setting a standard across the DAO ecosystem. At the same time, Delegate concerns are valid.
Moving from $500k to $200k would better align costs with the Endowment’s conservative mandate, reduce guaranteed drag, and better match Delegate expectations on value delivered.
In turn, the DAO could empower @kpk to pursue performance opportunities through a parallel sleeve performance fund, with a portion of their compensation tied directly to those outcomes. With ETH near ATHs and higher recent revenue from premium registrations, this is a conducive environment to test a tightly bounded performance sleeve.
kpk.eth are rebalancing toward stablecoins over the next 1–2 months, positioning the DAO to meet the IPS-mandated 3-year runway. Once that threshold is secured, the DAO could then consider carving out a modest performance sleeve—or funding one gradually from surplus yield.
I have some ideas on this that I could share on an upcoming Meta-Governance call.
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Tl;dr
- There are sufficient grounds to revisit the fee structure; further inquiry should follow.
- There is an opportunity cost the DAO should address, especially in a supportive macro environment.
- Discussion should further focus on aligning Delegate and kpk.eth interests—potentially through co-designing a performance sleeve that only activates once the runway is secured.