RFC: ENS Holiday Awards

[lightwalker.eth]

ENS Holiday Awards: Trial incentive framework for a broader ENS Referral Awards Program.

Introduction

This RFC (request for comment) outlines a trial incentive framework - “ENS Holiday Awards” - designed to issue awards in $ENS for referred .eth name registrations and renewals.

This trial is proposed to run for the duration of December 1-31, 2025 with a fixed award pool of $ENS equivalent to $10,000 USD for qualifying referrers.

This trial is planned and organized by NameHash Labs as part of our efforts to advance a broader ENS Referral Program. These efforts are part of our SPP2 deliverables to the ENS DAO, which include our commitment to ultimately fund $50,000 USD in ENS Referral Program awards throughout the duration of SPP2.

The ENS Holiday Awards are designed as a time and budget constrained trial. This gives an opportunity to test execution and identify opportunities for improvement before follow-up ENS Referral Award Programs are introduced.

The below outlined framework is subject to refinement. Community feedback is welcome and appreciated.

Overview

• Program Period: The duration of December 2025
• Budget: $10,000 USD (funded by NameHash Labs)
• Awards: Distributed in $ENS (converted from USDC at program conclusion)
• Participation: Permissionless (anyone can participate as a referrer)
• Implementation: Led by NameHash Labs

Referral Incentives

• Award Pool 1: Guaranteed Awards

  • $5,000 USD in $ENS distributed proportionally to each Qualified Referrer based on their Referrer Contribution.
  • Award Pool 1 guarantees that each Qualifying Referrer receives an award.

• Award Pool 2: Verifiably Random Lottery

  • 5 awards, each $1,000 USD in $ENS. Each Qualified Referrer has a probability of winning each of the 5 awards in proportion to their Referrer Contribution.
  • Award Pool 2 provides each Qualifying Referrer a chance at a larger award.

Key Exploration: Referral Awards in $ENS

This proposal explores a key question: What if referral awards were distributed in $ENS?

This award mechanism is understood to provide strategic benefits, including:

1. Preserving ENS DAO Revenue: Future referral awards in $ENS tokens could be possible without dilution of ENS DAO revenue. This has benefits vs. awarding as revenue sharing paid in ETH or USDC.

2. Expanding ENS DAO Governance Participation: Awarding ecosystem contributors in $ENS can boost engagement in DAO governance from parties who are invested in the success of ENS.

Program Rules [DRAFT]

“Program Duration”

The “Program Duration” is the duration of December 2025:

Dec 1, 2025 00:00:00 UTC to Dec 31, 23:59:59 UTC.

“Qualifying Referral” and “Referrer”

To be a “Qualifying Referral”, registrations / renewals must satisfy all of the following conditions:

• Registration / renewal of a direct subname of “.eth” made through the new EthRegistrarController activated via EP6.16.

• The referrer param passed to the register / renew call is a 32-byte value, while an Ethereum address is a 20-byte value. Therefore, to qualify for this program, the referrer param must match the following format:

  • First 12-bytes: all zeros.

  • Last 20-bytes: Ethereum mainnet address identifying the “Referrer” and where any Award Distributions the Referrer may earn will be deposited.

3. Successful registration / renewal transaction recorded on Ethereum mainnet within the Program Duration.

To reduce complexity with this initial trial:

• No restrictions will be made for “self-referrals”. However please note the related definition of Qualifying Referrer below.
• Referrers cannot customize where any Award Distributions they may earn will be deposited.

“Qualifying Referral Year”

Each Qualifying Referral is measured in “Qualifying Referral Years”:

• For registrations: equal to the number of years the name was registered for.
• For renewals: equal to the number of years the name was renewed for.

Here we define a year as 31,556,952 seconds.

(60 seconds per minute * 60 minutes per hour * 24 hours per day * 365.2425 days on average per year)

Qualifying Referral Years support measurement in fractional units. Ex: A renewal of 6 months would represent 0.5 Qualifying Referral Years.

“Referrer Point”

1 “Referrer Point” is awarded for each Qualifying Referral Year.

Referrer Points support measurement in fractional units. Ex: 0.5 Qualifying Referral Years award 0.5 Referrer Points.

To reduce complexity with this initial trial, no weight adjustments will be made for short (3-4 character) names or registrations made with a temporary premium price.

“Referrer Score”

A “Referrer Score” is the sum of Referrer Points awarded to a Referrer.

“Qualifying Referrer”

A “Qualifying Referrer” is a Referrer with minimum Referrer Score of 10.

Anyone has the potential to become a Qualifying Referrer. The program is permissionless.

“Referrer Contribution”

Each Qualifying Referrer has a “Referrer Contribution” calculated as their Referrer Score divided by the sum of Referrer Scores from all Qualified Referrers.

“Total Award Budget” and “Total Award Pool”

The “Total Award Budget” is $10,000 USD. This will be converted into the “Total Award Pool” measured in $ENS tokens. NameHash Labs will execute this USDC to $ENS conversion in early January at a specific time and method of their choosing.

The Total Award Budget has been defined in USD terms for ease of familiarity.

The Total Award Pool is what will ultimately be distributed to Qualifying Referrers as awards.

“Award Pool 1” and “Award Pool 1 Distributions”

“Award Pool 1” is 50% of the Total Award Pool.

After the Program Duration ends, each Qualifying Referrer will receive an “Award Pool 1 Distribution” calculated as Award Pool 1 * their Referrer Contribution.

In other words, $5,000 USD in $ENS distributed proportionally to each Qualified Referrer based on their Referrer Contribution.

Award Pool 1 guarantees that each Qualifying Referrer receives an award.

“Award Pool 2” and “Award Pool 2 Distributions”

“Award Pool 2” is 50% of the Total Award Pool.

After the Program Duration ends, a total of 5 “Award Pool 2 Distributions” will be made, each 1/5 of Award Pool 2. The recipient of each Award Pool 2 Distribution will be chosen through a verifiably random selection mechanism. Each Qualified Referrer’s probability of being selected for each distribution will be proportional to their Referrer Contribution.

In other words, 5 awards, each $1,000 USD in $ENS. Each Qualified Referrer has a probability of winning each of the 5 awards in proportion to their Referrer Contribution.

Award Pool 2 provides each Qualifying Referrer a chance at a larger award.

“Award Distribution”

NameHash Labs aims to perform “Award Distribution” of all Award Pool 1 Distributions and Award Pool 2 Distributions by no later than Jan 15, 2026.

Publicly auditable records of the Award Distribution will be provided back to the ENS DAO.

Execution Plan

For the coming weeks we will be collecting feedback on this proposal. Based on that feedback a more detailed execution plan will be drafted and shared.

Your feedback is welcome and appreciated.

Acknowledgments

This proposal is inspired and supported by the work and vision of many key contributors to the ENS ecosystem, including:

• @AvsA (avsa.eth): through the Governance Distribution Program advanced last year that distributed $ENS tokens to various categories of ENS ecosystem contributors.
• ENS Labs: for their work on EP6.16 that enables the referral tracking of registrations and renewals in ENSv1.
• @James (james.eth / fireeyesdao.eth) for his recent initiative exploring options to grow the adoption of ENS through distribution of $ENS tokens.
• @slobo.eth, @AvsA, @gregskril and other community members who have contributed to related efforts, including ENSIP-14 / ENS Flock Watcher / and earlier discussions on ENS Referral Programs.
• @netto.eth for his work exploring development of an EthRegistrarControllerV2 that would support tracking referrals.
• The ENS DAO and all the delegates who voted for our SPP2 proposal, which provides the funding for us that makes this possible.
• … and many others who contributed ideas and inspiration!

[taytems]

@lightwalker.eth

This proposal explores a key question: What if referral awards were distributed in $ENS?

If this is the key exploration, it seems as though some assumptions have been made without being justified. The pool distribution + lottery framework reads as gamifying referrals, which would be for p2p/individual referrers. Why was this the chosen demographic/strategy to trial with?

@lightwalker.eth

Future referral awards in $ENS tokens could be possible without dilution of ENS DAO revenue.

Generally a referral system trades a loss of income per transaction for a larger volume of transactions. If it can be demonstrated that revenue can be increased more than the cost of any referral system (i.e. an effective referral system), whether or not that revenue is diluted isn’t really relevant. Is there a plan to trial an ETH/USDC variant of the same framework to determine effectiveness between them?

Additionally, it would be useful to outline how you plan on measuring the success of the proposal.

[lightwalker.eth]

@taytems Thanks for feedback

@taytems

If this is the key exploration, it seems as though some assumptions have been made without being justified. The pool distribution + lottery framework reads as gamifying referrals, which would be for p2p/individual referrers. Why was this the chosen demographic/strategy to trial with?

Several thoughts:

1. Creating a Qualifying Referral requires correctly setting the referrer param when making onchain registration / renew transactions. This requires customization of a .eth name registrar app, such as the official ENS Manager App or Rainbow Wallet, or Vision, etc. This capability is out of reach for most individuals unless they’re a capable developer and ready to invest time.
   1. Note also how becoming a Qualifying Referrer in this trial framework requires a minimum of 10-years of referred .eth name registrations and renewals. So for an individual to qualify for awards they would need to cross this minimum threshold. “refer a single friend” who just registers a .eth name for 1-year therefore wouldn’t work in this initial trial framework. This design is motivated by a “soft” defense against self-referrals.
2. It’s nice if pathways exist for individuals who have a meaningful audience (ex: on social media) but don’t operate their own .eth name registrar app to be able to participate in ENS Referral Award Programs. This would require a .eth name registrar app to support extracting a referrer address from the url in links to that registrar app. The .eth name registrar app could then provide attribution to the provided referrer address in onchain registration / renew transactions for that browser session. We are reaching out to the operators of existing .eth name registrar apps with the hope they would create this feature.
3. The above mechanism would not only support individuals who have a meaningful audience, but also apps / websites with a meaningful audience but who don’t want to build .eth name registration or renewal features of their own. For example: Consider if Etherscan, Coinbase Wallet, Metamask Wallet, Brave Browser, Uniswap, etc… gave referral links to the ENS Manager App. This would be exciting not only for ENS growth, but also for the only form of ENS growth that contributes to sustained DAO revenue: .eth name registrations and renewals.
4. ENS Holiday Awards are a trial incentive framework. We’re approaching the question of the ultimate long term incentive framework with an open mind. This is one experiment. Other future experiments will come. It’s fair to assume that a lottery framework would appeal more to individual referrers than large corporations. There’s good research on how variable rewards are proven to outperform in many contexts. We believe this context has some relevance to that research and therefore variable rewards are a deliberate part of our strategy for this initial trial.
5. In the bigger long-term picture: large corporate referrers such as Metamask, Brave Browser, etc… seem likely to be the main opportunity as they have the largest audiences. But let’s be real: the $10,000 USD budget for this initial trial program is not going to be financially compelling to large corporations. We’ll still reach out to a number of them anyway as part of this initial trial. Why not. But all big things start small. It’s ok to start small.

@taytems

Generally a referral system trades a loss of income per transaction for a larger volume of transactions. If it can be demonstrated that revenue can be increased more than the cost of any referral system (i.e. an effective referral system), whether or not that revenue is diluted isn’t really relevant. Is there a plan to trial an ETH/USDC variant of the same framework to determine effectiveness between them?

What you described is true for the general case. Here we’re making a constrained exploration of something more unique. No tradeoff in revenue, but instead providing awards in $ENS which offers the possibility of taking nothing from ENS DAO revenue while also encouraging more participation in ENS DAO governance.

Revenue dilution is relevant as it’s important for the ENS DAO to protect its revenue streams which have been under significant downward pressure. Check the financial reports over the last 2 years.

An analogy could be a company distributing incentives in the form of equity rather than cash. This analogy isn’t perfect for the situation here, but the general concept has relevance.

We’re approaching the details of award incentive frameworks with an open mind. We’re open to exploring ETH/USDC variants in the future. Let’s see. It’s premature to commit to any specific path now. Let’s experiment and learn first.

@taytems

Additionally, it would be useful to outline how you plan on measuring the success of the proposal.

For this initial trial we will measure its success on the basis of gaining experience with operating the first ever cycle of an ENS Referral Awards Program. In other words, for this initial trial the more participation the better, but our participation expectations are very humble. The budget is only $10,000. The key goal is building up and rehearsing the software and operational frameworks for executing a referral rewards program at all. Let’s prepare this foundation before we take the next steps.

[taytems]

@lightwalker.eth

The above mechanism would not only support individuals who have a meaningful audience, but also apps / websites with a meaningful audience but who don’t want to build .eth name registration or renewal features of their own.

@lightwalker.eth

ENS Holiday Awards are a trial incentive framework. We’re approaching the question of the ultimate long term incentive framework with an open mind. This is one experiment. Other future experiments will come. It’s fair to assume that a lottery framework would appeal more to individual referrers than large corporations.

@lightwalker.eth

In the bigger long-term picture: large corporate referrers such as Metamask, Brave Browser, etc… seem likely to be the main opportunity as they have the largest audiences. But let’s be real: the $10,000 USD budget for this initial trial program is not going to be financially compelling to large corporations.

I understand the dilemma, and it’s true that large orgs wouldn’t be swayed by this. However, the trial seems to be designed explicitly against these interests. Corporate referrers would prefer USDC/ETH payouts, fixed payouts per registration/spend, and no random chance draws. Corporate referrers are also generally not interested in participating in DAO voting.

From your comments, it looks like we agree that this trial in current form is targeting individuals. What I’m trying to get at though, is why you’re targeting individuals at all.

@lightwalker.eth

Here we’re making a constrained exploration of something more unique. No tradeoff in revenue, but instead providing awards in $ENS which offers the possibility of taking nothing from ENS DAO revenue while also encouraging more participation in ENS DAO governance.

@lightwalker.eth

For this initial trial we will measure its success on the basis of gaining experience with operating the first ever cycle of an ENS Referral Awards Program.

These statements seem contradictory. If there are no objective success metrics, how can you measurably understand the consequence of using $ENS for rewards? Additionally, if the point of the trial is in operational understanding, why not create a framework closer to that of meeting the needs of the “main opportunity” (being large corporate referrers)? ETH or USDC payouts, flat rate up to $10,000 used, or something similar that’s more simple. Sure, it might not incentivise as many individuals, but as you’re saying here you don’t expect to incentivise many individuals, and you’re not measuring it.

[lightwalker.eth]

Thanks @taytems, appreciate your engagement and feedback

@taytems

Corporate referrers would prefer USDC/ETH payouts, fixed payouts per registration/spend, and no random chance draws. Corporate referrers are also generally not interested in participating in DAO voting.

Agreed that a majority of corporate referrers would likely share those preferences.

There’s another dimension though that I think is at the top of such corporate referrer’s priority list: What’s my estimated total ROI for having our team invest effort to build and maintain .eth registration / renewal functionality into our app (vs. all the other opportunities we have available)?

For simplicity, let’s say the average registration produces $5.00 USD in revenue for the DAO. What % of that “total revenue pie” sets the right balance between incentivizing corporates with large audiences to grow .eth registrations / renewals through referrals (opportunity) vs. diverting too much revenue share to referrals (cost) such that referrals become a net loss due for the DAO due to paying out too much in revenue share.

If the revenue share is too low: the opportunity won’t be compelling enough. Engagement in the referral program from corporates with large audiences won’t come and we’ll miss the target.

If the revenue share is too high: the DAO will experience a net loss from referrals and we’ll miss the target.

What revenue share % achieves the optimal balance? It’s a tricky squeeze. It’s also possible (hopefully not!) that there is no revenue share % that can mutually achieve both compelling opportunity for corporates and net gain for the DAO. This is a much longer story, but I can imagine a net positive opportunity for the DAO to increase the price of .eth names by 2x to 4x. Especially as there are lots of other low cost or free options for getting an ENS name that isn’t a direct subname of .eth. Eth2LD therefore are a luxury product for social value signaling. Equivalent technical benefits can be achieved with other ENS name options. If the “total revenue pie” grows so does the opportunity space to find a balance between the goals described above.

The above is quite a tangent. Let’s get back to the immediate question and put aside the possibility of changing .eth fees.

Another possible strategy for growing the total opportunity space for finding a balance between the goals described above is to explore incentives in $ENS. Here’s a hypothetical example. Let’s define the “total value pie” as the “total revenue pie” of $5 + something in $ENS. Therefore, that allows us to define the “total value pie” as more than the “total revenue pie” which gives more total value to distribute between the DAO and referrers. This grows the opportunity space for finding a win-win balance.

Above is part of the theories we’re exploring. There’s uncertainties to navigate / validate. All feedback is welcome.

Putting aside the purely financial dimension, there’s also valuable cases to make for distributing awards in $ENS: promoting engagement in DAO governance. Sure, a lot of people might sell any $ENS awards they receive, but I believe (hope) many will retain some / all of the $ENS they receive and become more engaged with DAO governance. And who better to grow DAO engagement with than people who have demonstrated an ability to execute (via referrals) and believe in ENS?

@taytems

From your comments, it looks like we agree that this trial in current form is targeting individuals. What I’m trying to get at though, is why you’re targeting individuals at all.

Thanks for asking. While I believe the largest opportunity exists with corporate referrers, individuals in aggregate are worthy of engagement as well.

@taytems

These statements seem contradictory. If there are no objective success metrics, how can you measurably understand the consequence of using $ENS for rewards? Additionally, if the point of the trial is in operational understanding, why not create a framework closer to that of meeting the needs of the “main opportunity” (being large corporate referrers)? ETH or USDC payouts, flat rate up to $10,000 used, or something similar that’s more simple. Sure, it might not incentivise as many individuals, but as you’re saying here you don’t expect to incentivise many individuals, and you’re not measuring it.

There’s no contradiction. The objective success metric for ENS Holiday Awards is simply: “make it happen”. When in a creative process as we are at this stage I believe it’s best to give the “baby” some space to grow before we start demanding explicit KPI targets. Let’s collect some experience first.

We will be measuring a number of things. This is a distinct idea from publicly setting explicit KPI targets upfront. That would be premature at this stage.

One of the things to be measured: what will recipients do with the $ENS they receive?

Let’s collect some experience and learn more for future referral awards program cycles.

I like your idea to simplify this initial program cycle. A change we’re exploring to ENS Holiday Awards is removal of the random chance draws and to put 100% of the “Total Award Pool” into “Award Pool 1”. Maybe we’ll explore the random chance draw concept in a future cycle.