I’m going to vote None of the above. As has been the case several votes now, I don’t feel giving an articulated reason for my opinion will change anybody else’s, and my vote is too small to matter anyway. So I guess the only reason I participate in situations like this is for some archivist years in the future to see it and be like “…huh. interesting.”
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To be, or not to be… active in financial management.
The sad events of these days reiterate that the apple never falls far from the tree and we should ask ourselves if by reinventing the tools for finance we risk only shedding the skin of what is the real weak point… human behavior . This should always be a warning in everyone’s mind: Tools alone do not improve the inherently sick way in which finance operates.
On the other hand, DeFi wants to demonstrate that there is a better way to operate and only positive experiences can support such innovation; in addition, a DAO with a treasure has a moral duty to administer it and must undertake the commitment to act for the best and not stand still due to uncertainty. Therefore I think we have an obligation to act but we must preserve freedom of action and accountability, the possibility of changing our minds and correcting our choices, all while reducing the risk of losses. Hard but due! This reflection for now leads us to eliminate the None of the above option.
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I want to emphasise that the goal of the endowment is not to secure a short to medium term runway for ENS - we already have that, and registration revenue continues to exceed our expenses.
The point of the endowment is to ensure ENS’s long term sustainability, even in the face of an extended recession and reduced registration/renewal revenue.
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Stating for the record that this will be the first vote I miss, because I can’t just select “None of the above.” Edit - nevermind.
Stewards View: griff.eth
Wow! I am very torn between Avantgarde and Karpatkey. I will need input from my constituents to vote, but will break it down as I see it.
I’ll start with the two answers I don’t like and why, then talk about what i like about the other 2 options:
None of the above
We are leaving a lot of money on the table by not actively managing our holdings… We should pay a professional group to do it, not just yolo with some community members with other roles and priorities.
Llama
Requiring a DAO vote for every change is a nonstarter, honestly i stopped reading after that… but they were already at a huge deficit because i don’t like their fee structure. I would prefer to share the profits to align risk and rewards. Incentive alignment is a thing I care about.
Karpatkey
Karpatkey is THE leader in this space. They have 100’s of Millions of US dollars under management and I love their reports in Gnosis DAO, honestly, I check them on the reg for alpha :-D. They have a lower performance fee than Avantgarde and are using gnosis safes to manage the funds, which reduces smart contract risk, although zodiac does add some extra risk here, its still much safer than managing these funds with Enzyme’s very complex contracts that have not had the same level of TVL in them for as long, which slightly triggers my PTSDAO. I love that Karpatkey’s strategies are focused 100% on defi and also think they are pretty good strategies. It is also a plus that since they are just using gnosis safe, there is a lower barrier to entry to use other options that exist in the market.
Avantgarde
Avantgarde are the OGs of OGs in this sector. They have been doing it for as long as I can remember and Nick.eth prefers them, and I am sure he has done his research on it so this means a lot. They have much less assets under management than Karpatkey which probably means they will focus more energy on us than Karpatkey would. Also supporting Avantgarde helps diversify this corner of the crypto space which is always a plus. And if we open up the allow list we can let the community also invest in this fund along side of us, and frankly, that is just really cool! They also are taking this beyond a service agreement; it is an offer of a deeper partnership as they have offered us a seat on their board and a fat token swap. This is all very attractive IMO.
Portfolio Summary
I love that both Karpatkey and Avantgarde are taking their fees based on the assets they are working with, so they only get a performance fee on ETH if they get more ETH the price of ETH doesnt matter, and the same for stables (obv).
ETH Strategy
Avantgarde is very conservative with the ETH side of the portfolio, only doing vanilla staking.
Karpatkey does a lot of pools stETH/ETH pools and other more flavorful ETH staking options.
Stable Strategy
Avantgarde is taking more risk using centralized services like Maple and Goldfinch to earn larger returns then what defi can normally give.
Karpatkey is taking a more conservative approach, suggesting to put Aave and Compound interest bearing stables in pools to also earn trading fees along side the interest.
Karpatkey is proposing the better portfolio IMO
Personally, I like Karpatkey’s approach more as I don’t really want to support centralized services with ENS, but this is a minor factor in the overall proposal.
Final Decision (Edited)
- Karpatkey
- Avantgarde
- Llama
- None of the above
Karpatkey gets my nod, it was a real close call, Avantgarde is a great team and did a fantastic job promoting themselves during this process, but in the end, their use of custom smart contracts is a little more risky IMO than using Zodiac + Safe. I like Karpatkey’s investment strategy for ETH better and they have a great history with Gnosis DAO.
I was happy to learn more about Maple and Goldfinch and how Avantgarde works with them, I am less worried about those issues after further research.
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You can select “none” as your first preference, followed by the others in your “least bad” preference order.
I get that, but I don’t understand why I need to rank the others if my choice is “none of the above.” When voting for delegates, you could just select the options you wanted without having to rank every option. Not a big deal though, no need to discuss it any further.
In case you or others care: because it allows you to express a preference amongst the alternatives if “None of the above” cannot win.
I’m not sure why Snapshot requires you to rank all the options, but as far as I know it’s always strictly better (from a “my vote will count” POV) to submit a complete vote.
Thanks to all the Meta Gov Stewards who put time and energy into this. I know there were many hours of complicated coordination and deliberation. 
Overview
My belief is that each of the three proposals describes strategies that are more complex and require more active management than the ENS treasury currently needs. The cynic in me worries that the complexity is a byproduct of a need to justify fees as opposed to complexity being the right answer for the treasury.
Specifics
Avantgarde’s proposal is fairly conservative in strategy, but will use both collateralized and uncollateralized loan protocols, as well Goldfinch and Enzyme vaults.
Karpatkey’s proposal commits to keep the funds all on chain, but still uses a number of different instruments for diversity that introduce contract risk.
Llama’s is the one I partially prefer because it seems closest to the DAOs ethos. It’s simple and it actually leaves the funds in the DAO Treasury. We’re all advocating self-custody in everything as the right stratgey for the space, so having a solution where the DAO retains the keys to the edaowment/treasury wallet is attractive. This would keep us in the “Not your keys, not your crypto” style of bulletproof safety. That said, this proposal comes with the downside of needing DAO votes for investment changes at regular intervals. While it’s not perfect, I don’t see that as a disqualification. It should be pretty painless if done with other budgeting or executable votes. If the voting worries anyone or it seems like it’ll be too much trouble, you’re welcome to delegate your votes to me and I’ll commit to track the proposals and vote for the conservative option each time.
Llama’s desire to become an active economic advisor to DAO structure, strategy and budgeting is also a great value add.
While I like that Llama’s fee structure is flat in this scenario, I do worry that $500k is still high. That could fund two full time employees working 40 hours a week on the ENS endowment, and I think that’s certainly more resources than we’d need.
Makerman made some excellent points in his posts, and he led me to believe that “none of the above” might be the best answer. That said, out of respect to the meta-gov stewards who put tons of work into refining and curating these proposals, I’ll vote the following way:
1. Llama
2. None of the above
3. Avantgarde
4. Karpatkey
To be clear, all three proposals have this property; the others provide limited authorisations for the fund manager to make certain transactions, but custody remains with the DAO.
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Delegate Perspective - slobo.eth
The following are my views and voting rationale as a delegate of the ENS DAO.
My number one concern is the sustained and continued funding of ENS labs which draws $4.2m in funding per year in stables. ENS Labs is critical to the health of Ethereum Name Service.
The treasury has 2.5m in stables, as of Nov 17, 2022 per tally.
This amounts to less than a year worth of runway. Until there is at least 2 years of stables in the treasury I cannot in good conscious put ENS Labs and thus ENS at risk. Therefore, my number one choice is None of the Above.
To reiterate, I consider the continued funding of ENS Labs as an existential risk to the protocol and want minimize risk as much as possible. Having at least two years of runway in stables makes sense.
I realize that recent daily eth revenue exceeds the funding demands.
Eth is volatile.
Revenue is volatile.
Stables are stable.
My second choice is Llama because I perceive it to have the lowest smart contract risk compared to the other two. I lack the requisite skill set to evaluate smart contract risk for the other two companies and thus rely heavily on Nick’s judgment for my number three choice.
My vote:
- None of the Above
- Llama
- Avantgarde
- Karpatkey
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To be clear, voting for any of these proposals is not incompatible with that. All of them will see at least the earned income (~12k eth) sold for USDC, and the DAO can choose to change how the unearned income is handled at any time. We can also choose how much is set aside as non-endowment funds.
I’ve been intending to open this conversation myself after the vote - about whether we should change how unearned income is accounted for, and move much more of it into stablecoins, giving up some upside for more assurance of ENS’s long-term viability. I think having some kind of treasury management is practically a requirement for enacting that, though.
I believe that management is an integral part of any project with over $1M in holdings and continuous income. It’s clear that the treasury holds well beyond that amount. We should have a management plan. I wholeheartedly agree with that.
As much as we have instilled this sort of a shared new age ideology or proxy business model as a DAO per se, and regardless of any terminology or approach to collective decisions this is easier described as a ‘community ran entity’. When it comes down to the nitty gritty, one of the prominent accolades to be recognized for is self-governed internal financial management as a DAO.
To me – a DAO in web 3 should be their own service provider, developer, social management, media source etc…and a solid team that make strategic decisions about DAO financial positions of their own domain, internally.
Although the output goal is the product, having a strong core of financially focused working group members speaks numbers. I don’t want anyone who is outside of the DAO to manage any of the treasury.
Know finance or no finance. Know when or non win.
It comes with the package in crypto. There are plenty of people who have the best interest in the progress of this project to achieve greater greats. If it takes getting on a voice call or video call from dinner time until sunrise, then so be it. As a DAO putting out a project along with internally managing it’s finances is what would make an even stronger success story to be proud of. I would like to see ENS DAO be creme de la creme of all product initiative DAOs. In my view, financial responsibility should sit on the DAOS shoulders as a mainpiece that coincides with the deliverable product.
I would be totally fine if (some) money was lost on behalf of the strategy decided within. I would be extremely upset if a fund manager outside to the DAO would lose funds or not profit up to the projected expectations.
ENS is unique and has multiple perspectives of business methodology.
- ENS (the product) (income aggregator)
- ENS Labs (a mechanism to specifically fund developers)
- Open-Source (allows contribution of all changes that would enhance deliverable)
- DAO (encapsulates decision processing, organizational function spanning the ecosystem)
Functional layers of ENS. Ecosystem. (ref. fig.1)
- ENS
- The Governance of the DAO as a whole.
- Working groups within the DAO
- Stewards over their respective Working Group
- Onboarded Members
- Projects Building on ENS
- Community Dedication
This presents a linear funding self sufficiency mechanism to perpetuate ENS existence, sustainability and growth by registration income free and clear of outside contributors.
Adding a fund-manager introduces a extremely high level of risk that has potential to compromise the every aspect of this project. (ref. fig. 2)
As. you can see in my ‘encapsulation diagram of inherent risk’
All ENS funded projects extend outward towards the community while the community interaction influences the projects being developed and generally inherits almost zero risk or chance of any monetary loss.
As ENS becomes reliant on the fund manager entity-- both become one in the same in terms of reliancy, so they exist in the same encapsulation.note Except that the fund manager has essentially zero-risk of loss due to poor performance—without the loss of being compensated for the opposite outcome of a high performing yield aggregating successful strategy.
A complete loss of funds would compromise the DAO, Treasury, Stewards, working groups and ultimately the ability to further fund projects developing ENS. The existence of ENS would be less affected as it has become a permanent contract on the Ethereum Blockchain and would continue to exist even without guidance from the DAO or ENS Labs. Adding an external fund management entity is too much of a risk on the project. Loss of funds happens far too often in a myriad of ways. Risk reduction is extremely important. Adding new contracts to the mix isn’t favorable when comparing risk off exploitation vs reward by chance. This isn’t meant to discredit any contract writers in any way.
That basically I have to contribute towards the initiative.
Sustainability, Management, Responsibility until the core of ENS projects is complete needs focus first. We don’t have any data on income with the most anticipated feature of ENS–the subdomains. This must wait or be managed internally or the whole project assumes great risk.
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Hi @Avsa, a few comments:
On the other hand I know, use and know lots of people who use Safe. That already tells me something about the maturity of both codebases.
The infrastructure comparison that is being voted on is “Safe + Zodiac” with “Safe + Enzyme”. Safe + Enzyme has a much more battle tested history than Safe + Zodiac when it comes to trustless asset management. Safe on its own is just a wallet like metamask and does not solve the problem of trustless asset management.
Additionally, and thanks to the graph protocol underpinning our data pipelines, it is easy to automate + query reports at any point and time in history with Enzyme.
I’ve heard about Melon port from the old days, but never personally used and don’t know anyone who uses it so I have no experience.
Two of the largest insurance protocols use Enzyme to manage their assets trustlessly:
- Nexus mutual with > 15000 ETH
- Unslashed finance with > 17000 ETH
We’ve provided these and more references to the stewards.
That already tells me something about the maturity of both codebases.
Again, I’d like to see you comparing like for like here (Zodiac’s trustless asset management contracts,with Enzyme’s).
- Audit report history here.
- The Enzyme Council is composed of smart contract auditors. Happy to connect you with any of the auditors or council members if you would like to dig deeper into anything technical.
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My 7 tweet summary and request for more opinions:
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This is claberus, Karpatkey’s cofounder.
I noticed the discussion revolves around the safest smart contract infrastructure for non-custodial fund management. This is the wrong problem to focus on, as this has been resolved a long time ago with open-source tooling like Enzyme and Zodiac. It’s natural though, because as engineers we tend to focus on tools and not on Finance.
I wish the discussion were focused on the experience and rationale of decision-making for the investments and the processes, protocols and infrastructure for risk management. The success or failure of the enDAOment will probably be determined by these factors.
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Avantguarde is taking more risk using centralized services like Maple and Goldfinch to earn larger returns then what defi can normally give.
Slight clarification here. Asset Management is all about understanding risk/rewards and allocating accordingly. This is why we allocate to AAVE and Compound in large size, whilst keeping Maple/Goldfinch sizings appropriate for the risk they represent to the portfolio as a whole. We believe that we understand those risks better than most because of the diligence we put into the protocols as part of a) our investment process and b) when our engineering team integrates protocols like Maple/Goldfinch into Enzyme.
Karpetkey have made several references to discredit protocols like Maple and Goldfinch as being too risky for ENS in threads like this.
We totally disagree with their arguments. Our response is summarised here.
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I just can’t help myself but wonder why allocate any amount to any other protocol than AAVE or Compound? In case of ENS the priority is low risk conservative strategy. I appreciate the argument that as “most efficient” managers you would want to capture that “long tail of returns” to smooth out that risk/rewards curve. I’m thinking that additional rewards in this case would be so marginal, so allocating to Maple/Goldfinch almost feels like a disproportionate cost to the whole project, if you assume that “ENS social perception” is also a cost.
EDIT: I did read the Twit thread with summarised response
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Hi, this is Antoine from Cryptio.
Although it wasn’t part of the original RFP, we noticed that Llama and Karpetkey included broader DAO reporting services that extend beyond just the treasury being managed.
We’ve been working with Avantgarde on combining and automating this functionality and we’d love to complement the Avantgarde proposal by partnering with them to provide this reporting functionality.
Here’s the proposal of how Cryptio would work for ENS.
I have also recorded a short video going through the solution:
https://www.youtube.com/watch?v=xhpzWlkNZbQ
What does this mean:
- We’ll sign ENS up to Cryptio and ensure that all DAO transactions are being correctly tagged
- We’ll give the community access to the Cryptio account so that they can transparently view transactions going in and out with the correct tagging
- We’ll generate oversight reports backed by on-chain data for the DAO with full transparency to the community
Our Edge:
- Enterprise-grade accuracy & completeness brought to ENS DAO: Our data is more reliable and accurate than chain explorers. This is because we have developed proprietary indexers specifically for accounting and reporting. We conduct daily sanity checks to ensure the data is complete and accurate. Nothing is more important than being able to trust the transaction records.
- Track record with 250+ crypto enterprises & DAOs: We are working with the likes of Metamask, Aave, 1inch, DeFiSaver and IndexCoop, and 250 other crypto enterprises & DAOs.
- Dedicated team & expertise: ENS will have a seamless onboarding process with our dedicated team, and community members will have access to the platform. During the implementation, we would work with the team to customize the dashboard and reports for the needs of the DAO. We also have 30+ years of combined accounting experience to help advise on best practices for reporting.
Our industry needs this and we’re delighted to support Avantgarde and ENS with this as part of our own product roadmap development.
Who Is Cryptio?
For those of you who don’t know Cryptio, we’ve been in the crypto accounting industry for five years and are powering the reporting for 250+ Crypto projects and businesses such as Metamask, Aave, IndexCoop, and 1inch.
We’ve been building out proprietary on-chain data infrastructure to guarantee the completeness and accuracy of data. Our indexers have been battle-tested over the last 5 years with top crypto enterprises.
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