Should We Dissolve the ENS Token?

DAO-Wide General Discussion
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Many people are unhappy that the people who control the DAO are not the same as those who actually use the ENS. It seems that there is no need for separate tokens except for the domains themselves. A system of domain age, community endorsement (elections), and total domain registration fees paid would be a better system of weighting governance.

The majority of tokens are held/timelocked by a very small number of people. Besides these insiders, there is very little apparent agreement that the DAO is correctly using funds to grow the project in the interest of users. The ENS token has seemingly had the opposite effect desired after the initial successful airdrop. The price was so high, smart money just sold out in an overbought market.

It is a messy situation of oligarchy now, with the only way forward is for leadership coming from within, or all insiders agreeing to divest and burn all ENS tokens.

Solution of the former (maintain the oligarchy): The ENS needs a CEO who doesn’t engage in politics besides looking after the decentralized freedom of domains. It needs yearly pricing surveys, and prices tied to something other than fiat (which is a different economic discussion to the why). It needs an audit of funds, and a budget.

Solution of the latter (divestment): The ENS should burn all tokens, and revert to governance based on domain holders. Funds in the DAO should be proportionally distributed to token holders. This would allow those who use the ENS to govern, rather than a quasi centralized politburo to rule over them.

Regulation thoughts:

Having a token that might be classed as a security could negatively impact large groups of people. Not having the token limits the surface area of regulation and attack. The token doesn’t really serve as a true governance token as it is tied to fiat valuations and has wide fluctuations in prices. Is it really a governance token as it stands? Probably not in the eyes of a country seeking to regulate it.

Our bias:

We firmly believe in the latter option even though we benefitted from the airdrop initially. Governance has turned into something worse than the existing ICANN system. It benefits nobody except those with lots of tokens looking to sell for a profit. Everything long term is negative when it comes to the token.

We know it will rile up a bit those who brought this project to life a bit to say that the ENS token is a failure, and that the DAO as it stands now is mismanaged and heading to failure. Truth can hurt, and we would love to hear dissenting opinions as to why the ENS token is good, what value it can bring to us, and the long term vision of budgeting, transparency, and accountability of the DAO with a separate governance token.

We also think it is appropriate to salary insiders directly with DAO revenue. The ENS should operate as a non-profit. Time given to the DAO should pay like any other job however, but the idea everyone is going to make it as a billionaire really does not jive well with any altruistic goal of enforcing contract based freedom for the world to fight tyranny. That’s why we got involved in the ENS. Many of us have got wealthy from the pursuit, which is not a bad thing, but here there is a clear line that should be drawn if we want that wealth to be worth living for in an increasingly tumultuous and mean world.

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I think this is a pretty valid post in that $ens does not accurately represent the users of the system. The recent PG votes etc are erm…easily swayed.

I don’t think burning $ens is possible. I would suggest giving some $ens on domain renewal and also a one time airdrop for the past year.

Most .eth are registered in the last 12 months after the airdrop.

For the core ENS team, I think the work they are doing is great and more of the DAO funds should be on Biz Dev or Marketing. We need normies/usage and less speculators. I am sure the Core teams already know this but hmm the team really needs to hire some marketing person for UD or a web2 company.

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Interesting thoughts. Thank you for taking the time to share your opinions on all of those points. This is the kind of discussion I really appreciate to see here, and what I feel this medium is best suited for.

I have a lot to say on this subject, so I’m going to reply to each idea separately. It’s going to be long.

Just note, the opinions I am expressing are mine, and mine alone, and I don’t represent ENS, the DAO, etc. Just me.

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Many people are unhappy that the people who control the DAO are not the same as those who actually use the ENS.

This is a fair thing to say. However it’s worth noting that many people have many different ideas of what “using the ENS” means. Is it .eth domain holders? People that use a .eth to send/rec payments? Is it developers? Twitter users that hype ENS hoping to flip some .eth names?

ENS is not a walled garden, and anyone that wants to participate can. I will readily admit that some people have MUCH more say than others, but anyone can at least share their opinions, nevertheless. Like we’re doing now.

It seems that there is no need for separate tokens except for the domains themselves. A system of domain age, community endorsement (elections), and total domain registration fees paid would be a better system of weighting governance.

As I understand it, the DAO was created to decide things that can’t simply be coded into autonomous smart contracts. Specifically things like adjusting prices and allocating funds to keep development and ecosystem moving forward.

This is weighted through both holding tokens AND having votes delegated. One could theoretically hold only one token and have hundreds of thousands of delegated votes. I agree that being able to simply buy more votes is problematic, but there isn’t an obvious solution.

The majority of tokens are held/timelocked by a very small number of people.

This is relative. Decentralization is a spectrum. Small number compared to what? I have thought for many hours about alternate vote distribution systems, even to the extreme of one voter = one vote, but it just isn’t feasible in such a large, uncoordinated, and distributed ecosystem. Delegated, representative democracy seems to be the most effective at the moment, but it isn’t perfect.

Besides these insiders, there is very little apparent agreement that the DAO is correctly using funds to grow the project in the interest of users.

I’m not sure what you’re referring to. Almost all votes have passed with >90% agreement. If you’re referring to disagreement outside of the formal votes, that is actually ideal, in my opinion. It means there is actually much consideration taking place, with differing stances.

The ENS token has seemingly had the opposite effect desired after the initial successful airdrop. The price was so high, smart money just sold out in an overbought market.

The effect desired was to airdrop tokens to the addresses that received them. Anything beyond and after that is free market forces.

It is a messy situation of oligarchy now, with the only way forward is for leadership coming from within, or all insiders agreeing to divest and burn all ENS tokens.

Is your definition of an “insider” someone that holds $ENS token? Because the VAST majority of voters are not even regular participants in any discussions. It is completely unrealistic to think that there could be a coordinated effort to burn ENS tokens. This would just leave everyone that didn’t know about it or want to participate holding the tokens.

Solution of the former (maintain the oligarchy): The ENS needs a CEO who doesn’t engage in politics besides looking after the decentralized freedom of domains. It needs yearly pricing surveys, and prices tied to something other than fiat (which is a different economic discussion to the why). It needs an audit of funds, and a budget.

This is never going to happen. ENS is an open-source application and protocol built on an open-source blockchain. It isn’t a company. CEOs make leadership decisions from the top down. ENS DAO is attempting to operate from the bottom-up.

Solution of the latter (divestment): The ENS should burn all tokens, and revert to governance based on domain holders.

Tokens are held in hundreds of thousands of wallets. The only way they can be burned is if the holders burn them. Governance based on domain holders would simply be changing governance from one group to another. What governance ability would this bestow domain holders, that they couldn’t already have, right now? Are you saying one domain should equal one $ENS token? If so, how would that change anything about the structure of governance?

Funds in the DAO should be proportionally distributed to token holders.

This is completely counter to everything ENS was built upon, and the opposite of what it stands for currently.

The only way this would ever happen is if ENS is infiltrated and completely taken over by people that want to make it happen. I would like to think that could never happen, but… voters make the decisions. They can elect whomever they want.

This would allow those who use the ENS to govern, rather than a quasi centralized politburo to rule over them.

Again, “use the ENS” is a pretty broad generalization. I would argue that the vast majority of the current active, voting participants “use the ENS.”

Regulation thoughts:
Having a token that might be classed as a security could negatively impact large groups of people. Not having the token limits the surface area of regulation and attack.

It was never sold. It was given away for free. That alone means it is not a security.

The token doesn’t really serve as a true governance token as it is tied to fiat valuations and has wide fluctuations in prices. Is it really a governance token as it stands?

Yes, the only thing it is coded to allow is to vote. The fact that people buy and sell it is secondary, and irrelevant.

Probably not in the eyes of a country seeking to regulate it.

There is currently no precedent under which a country would seek to regulate it in its current form and function. If, hypothetically, there was one day a mechanism to stake the token for a revenue share from sales, that could potentially be considered a security.

Our bias:
We firmly believe in the latter option even though we benefitted from the airdrop initially. Governance has turned into something worse than the existing ICANN system. It benefits nobody except those with lots of tokens looking to sell for a profit. Everything long term is negative when it comes to the token.

The token has no economic fundamentals and should not be considered an investment vehicle. If one chooses to do this, it is based ENTIRELY on speculation, ie - gambling.

We know it will rile up a bit those who brought this project to life a bit to say that the ENS token is a failure

The ENS token does exactly what it is supposed to. I assume you mean an economic failure? Again, the token is not a financial instrument, and there has never been any suggestion that it is.

and that the DAO as it stands now is mismanaged and heading to failure.

Again, I’m very curious how you define failure in your hypothetical prophecy. Please elaborate, if you want to.

Truth can hurt, and we would love to hear dissenting opinions as to why the ENS token is good, what value it can bring to us, and the long term vision of budgeting, transparency, and accountability of the DAO with a separate governance token.

Happy to oblige. It is good to use to vote. Not to hold in hopes of it’s implied monetary value going up. You know, a GOVERNANCE token for GOVERNANCE.

We also think it is appropriate to salary insiders directly with DAO revenue.

If you are saying contributors should be paid for their time and contributions, sure, I agree. I don’t think I’ve seen anyone that thinks they shouldn’t.

The ENS should operate as a non-profit.

It does.

Time given to the DAO should pay like any other job however, but the idea everyone is going to make it as a billionaire really does not jive well with any altruistic goal of enforcing contract based freedom for the world to fight tyranny.

I have no idea where you got the idea that everyone is “going to make is as a billionaire,” but I’m really curious to find out, if you’d like to share.

That’s why we got involved in the ENS. Many of us have got wealthy from the pursuit, which is not a bad thing, but here there is a clear line that should be drawn if we want that wealth to be worth living for in an increasingly tumultuous and mean world.

What clear line is that, exactly?

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Thanks for taking the time to share your thoughts.

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Well said @daylon.eth. Hopefully your response may help align perspectives of the ENS vision.

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It’s used as one. That’s all that matters. Token holders decide what happens with the money and project. It’s a security in most of the world.

It’s a governance failure. Most people made a lot of money from the airdrop who are OGs, but OGs mostly don’t have interest in buying it for governance reasons.

Maybe you should’ve read the contract before offering an opinion on something so strongly. :-/

function sweep(address dest) external onlyOwner {
        require(block.timestamp > claimPeriodEnds, "ENS: Claim period not yet ended");
        _transfer(address(this), dest, balanceOf(address(this)));
    }

Even if that function were not abused, all insiders can burn, remaining tokens can be deprecated in governance to remove value. Alternatively, you can burn and remove insiders, and allow legacy holders the ability to vote.

And it so far has failed because of the structure. To deny the many failures is a weird position to take in light of current sentiment that is freely available, but fine.

This is the most illogical position you have taken. High support margins and uniparty states are inversely correlated with functioning democracy. Almost every vote besides the Brantly one has been apathetic, without much discussion. The only real discussions have been on normalization (no vote), and voting systems (mostly irrelevant since doesn’t address the structural issues).

Edit: Apathetic not pathetic, but that one might be Freudian.

This is an actual definition to what defines a security in more than one country. A distributed vehicle of investment where chance determines the outcome. It also meets the SEC definition in a few different ways, but the US is not the only country in the world, and the ENS has very little interest there, if any, besides soliciting investors. The US of course is a common law country, so precendent matters a great deal. Just because something is grey now, doesn’t mean it can’t be black tomorrow and ensnare people.

We think collectively it is being used as a security, even if that was not the original intent. We are users of the ENS and former holders of the token. This post is evidence to this belief among actual users as well in case anyone reads this in the future. We believe it is on this day intended to be used as a means to adjudicate revenue distribution in the future.

It would be nice for others to chime in. You aren’t getting any support on Twitter, polls consistently show a majority, maybe super-majority in favor of dissolving the DAO, discontent with management, and unhappiness with the insiders and founding members.

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I don’t think that dissolving the $ENS token is the solution.

But what is urgent that just like:

— the separation of the church from the state,
— the cryptocurrencies from the money of the banks,

…the governance of the DAO must be separated from those who have the power of influence through voting, because the DAO is in danger of becoming a cult.

I believe that the structure of the system of government should be modified in accordance with the principles of The ENS Constitution and should not be put to a vote; otherwise, the small group that has the most $ENS would vote against it because they do not want to lose power, the evidence can be verified.

Power must be equitable and not in the hands of a few. An effective mechanism for this must be created and implemented, and this mechanism must be based on verifiable evidence, not on social consensus.

If X is suitable for the DAO and is demonstrable, but most want to do Z and can’t be proven to be suitable for the DAO, X must be done!

The interests of the DAO must be above personal interests.

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Burning the token is only one of the solutions. You can weight each owner of ENS to balance things. Cap votes, or just have 1 vote for each address with a minimum level of ENS, and require that ENS to be on an active address to stop insiders from splitting things up in an automated way. Maybe we need a bot check contract or oracle for this too to parse what is active.

A lot of new users want an airdrop of new tokens, but this doesn’t work without insiders divesting their power. When you become head of state or in government, most countries make you divest your financial interests to be a part of the government.

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If the token isn’t needed in your proposal, then it makes sense to delete it.

I like this solution, it would avoid the formation of power groups.

I have already read some “plans” on governance on Twitter that, the way they are written, trigger alerts.

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To be clear, this doesn’t allow ENS DAO to burn tokens. The “owner” of that contract is the original ENS Airdrop contract, and it does not include the ability to burn arbitrary tokens, even though that function exists in the token contract itself.

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Please don’t distort this for non-technical people, it’s a problem. The owner of the ENS token contract has roles, and the ENS token contract has a transferOwnership function.

It’s only going to take the arrest of one person to lock the tokens and a threatened wrench to their skull. The problem is then how does the DAO recover from that since votes are tied to this token? Again, another reason domain holders should be part of the vote process, if not the only votes.

Edit: Perhaps it’s reasoned to clarify the other contracts also have similar risks. This is censorship resistance, not censorship proof. That is the only counterargument here. It is wise to make the DAO as resistant as possible. We already need a v3 and then v4 contract. The registrar contract is not a lifetime thing. It has bugs and limitations. The DAO is supposed to be the failsafe of a complicated system that has an unknown end goal in development. The way people use things determines the future contract upgrades, but something like a token contract should be locked down much more to discourage attacks.

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So just checked again, the “owner” of the contract is in fact the DAO wallet, as it turns out, but the token contract does not have the ability to burn tokens. The sweep function you pointed out does this: “Allows the owner to sweep unclaimed tokens after the claim period ends.”.

Key word is unclaimed.

edited: previous statement was incorrect

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That’s not correct. The require statement only requires the claim time to have ended - there is no check on tokens being unclaimed. It can sweep anyone and everyone since that period has ended in theory.

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No… it is transferring tokens that belong to the contract itself (address(this)), which after the claim timer has ended, by definition, are unclaimed tokens.

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I suggest testing both ideas of how the contract will actually function on a testnet. I think that will be the only way to settle differing opinions.

@carlosdp @Ronald

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It’s not an opinion, it’s an objective fact that anyone with beginner-level knowledge of Solidity can ascertain just by looking at it :laughing:

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Then I suggest showing @Ronald through example rather than making objective 'beginner-level" condescending statements.

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