Steward’s View - nick.eth
Having spent a lot of time reviewing the RFP submissions and talking with their teams, each of the three Meta-Governance WG stewards will be posting a short message summarising their personal views on each of the finalists. This is mine. This post represents my personal views and biases, not those of the WG or the DAO.
Avantgarde and Enzyme are headed by a team who have been around as long as ENS, originally going by the name of Melonport. They have a solid track record building the infrastructure for what is now known as Enzyme, and their code has gone through multiple audits. Although their TVL is currently quite low, I personally think that Enzyme’s infrastructure is well tested and carefully thought out.
I invited Enzyme/Avantgarde to participate in the RFP after seeing a talk by Luca Mossini at ETHBarcelona in July, where he described the Enzyme architecture, which seemed like a natural fit for ENS’s needs. Their RFP proposal has borne that out and demonstrates a solid understanding of what we are looking for.
Avantgarde’s proposal shows a cautious approach primarily focused around lending USDC to well-established protocols such as Aave and Compound, and staking ETH via various staking providers.
Using Enzyme to manage the funds means that the DAO will be required to approve accessible trading strategies for the fund managers, after which the managers can make changes to the fund within those parameters. The DAO can at any time withdraw the funds or change the set of allowed strategies.
Enzyme has also proposed a token swap of up to 50k MLN tokens for 75k ENS tokens, which the DAO could choose to accept or reject if Enzyme/Avantgarde are selected as the fund managers.
Avantgarde/Enzyme’s latest updated proposal also includes financial reporting similar to Karpatkey’s (see below).
Karpatkey is a well established player in the industry, and notably manages Gnosis’s treasury. Their proposal describes a cautious approach to earning yield via liquidity provision on low-slippage pools such as cDAI-cUSDC and stETH-ETH.
Karpatkey proposes to use Zodiac, a Gnosis safe plugin that allows a fund manager to be authorised to perform certain actions on a Safe. The DAO would transfer endowment funds to the safe, which can have the DAO itself as sole keyholder, and subsequently approve a set of operations the fund manager is allowed to execute via Zodiac. This is similar in effect to the structure of Enzyme’s vaults.
Notably, Karpatkey was the first to propose including broader financial reporting as part of the package they bring to the DAO, including budgetary forecasting and reports on the financial impact of specific EPs. This is a valuable service that the DAO should consider seriously even if Karpatkey is not selected.
Llama is another well-established player in the industry, managing Aave and Gitcoin’s treasuries. Their proposal provides less detail on proposed investments, choosing instead to leave those as a matter of negotiation post-acceptance, but mentions lending to Aave and Compound, as well as staking ether via stETH and rETH.
Unlike Karpatkey and Avantgarde, Llama plans to manage the endowment directly onchain; all changes to the endowment would require direct execution by way of DAO vote. This minimises smart contract risk, but also places more burden on the DAO for day-to-day management, and limits the ability of the fund managers to react rapidly if needed.
Llama’s fee structure is different to Avantgarde’s and Karpatkey’s, in that it has a higher admin fee but no performance fee, and a minimum annual fee of $500k USD.
At $1300/eth and an initial size of 30k ETH, this is more cost effective than Karpatkey’s proposal if yields exceed 7.8%, and more cost effective than Avantgarde’s if yields exceed 6.3%.
At an eventual size of $80M USD, Llama’s proposal is more cost effective than Karpatkey’s proposal if yields exceed 5%, and more cost effective than Avantgarde’s if yields exceed 4%.
I will be voting for Avantgarde/Enzyme. I believe their track record in the industry distinguishes them as an excellent partner, and the technology they have built is well suited to managing ENS’s endowment. Further, the DAO structure of Enzyme has good value alignment with the ENS DAO.
A reminder to anyone delegating to me that redelegation is currently free; if you do not agree with my vote, consider redelegating to another steward who better represents your interests!