[Social] Routine DAO treasury management

| Status | Draft |


Establish basic parameters around the DAO’s working capital / runway and the handling of revenue on an ongoing basis.


Presently the DAO keeps almost all of its treasury funds in ETH, and has not heretofore had a standard process for converting income to stablecoins in order to fund ongoing operations. This EP proposes standard expectations for the DAO to follow, specifying expected balances and actions to be taken on an ongoing basis in order to ensure the DAO continues to be able to execute on its goals effectively.


  1. The DAO shall at all times aim to keep funds equivalent to 24 months expenditures available in a combination of USDC and DAI in its primary timelock account.
  2. This figure will initially be set at $16,000,000 USD. After each term’s working group budgets are approved by the DAO, the Lead Steward shall provide an updated estimate of the DAO’s expenditures for the next 24 months.
  3. On an ongoing basis and at least monthly, the DAO shall ‘sweep’ newly earned revenue collected by the .eth registrar contract. Enough of this will be converted to stablecoins and sent to the DAO’s primary timelock account to restore the balance to the amount specified in (1). If insufficient funds are available, all available funds will be converted and sent.
  4. Any additional funds that remain after topping up the DAO’s primary timelock shall be sent in ETH to the DAO’s endowment fund to be invested according to the rules established for that fund.
  5. Upon passing this proposal, the DAO will vote to implement an executable proposal that:
    1. Converts sufficient ETH to USDC to increase the DAO timelock’s balance to $16,000,000.
    2. Implements a non-custodial system to automate the regular collection, conversion, and transmission of revenue. This may make use of an automated process with limited permissions to conduct these actions without taking custody of the funds.
  6. Upon passing this proposal, the DAO notifies the Lead Steward of their responsiblity to monitor the state of the DAO’s accounts, and regularly update the DAO as to their state, and to make reports to the DAO whenever they judge that action from the DAO may be required.

Do you mean the DAO? Why would the time lock be the owner?

Isn’t that the inverted? The Endowment should work as a damping mechanism for ENS: income goes into the endowment, endowment creates yield, maximum expenditure should be calculated as portion of the yield, and the DAO should then vote on how that budget is distributed. Of course, we will take a few years to get the endowment up and running, but that’s how I see it should work ideally.

Again, ENS Labs is not the owner of these funds nor it should make decisions on expenditure or requests for the Endaoment. Endaoment yield sets how much we can spend, and then the DAO decides on where that budget should go.


Isn’t the timelock owned by the DAO? so any decision made by the DAO is then delayed by the timelock contract. It seems prudent to have the timelock just in case.

Should we codify an upper limit for how much should be given to KarpatKey? If at some point the amount in the endowment far exceeds what we need to sustain the DAO in perpetuity, it might be also nice to keep a healthier runway of say 4 years+ in USD. At the moment the ratio is closer to 30:70 for DAO account to endowment. As income is given to the endowment, this ratio will grow to say 10:90 or 5:95, and at some point it seems prudent to increase the amount we keep in the DAO account. The DAO can then decide whether to use that for a more conservative runway (more years before needing to tap into the endowment) or even start a second endowment fund with different objectives.

The timelock is the DAOs “wallet”. The governor contract controls the timelock. This lets us swap out the governor in the future if we want to, without having to transfer assets.

The timelock is the DAO’s wallet.

In the long-run, yes. For now, with the endowment too small to do that, and out income exceeding our expenses, it makes sense to have a decent runway and put the leftover into building the endowment up.

I’m happy to change this; ENS labs has no power over the funds, but if we’re operating the bot, we’re the ones best place to receive alerts if these conditions happen, and notify the appropriate party. Do you have an alternative formulation you think is more appropriate?

Rather than ‘hardcoding’ a limit now, I think it makes more sense for the DAO to reassess and adjust the rules as the endowment (and our needs) grow.

Ok a few thoughts, firstly what is this Executable proposal outlining? It currently reads as multiple different things, imo this proposal should be broken down into multiple different ones.

Proposes a method by which the DAO can regularly convert revenue to stablecoins; is there a link to a proposal or discussion around this? Has the proportion of revenue been discussed/agreed upon? Has the DAO decided on a ratio of ETH/stable revenue or treasury holdings in general? I’d argue more ETH is better in the current market.

All excess funds are sent to the endowment? Do we know what percentage of the total treasury the endowment managers are going to be holding at launch? Do we have a plan or framework for ongoing distributions from the DAO to the Endowment?

This seems to be the actual ‘executable’ part of the proposal, changing where ENS revenue is sent from the DAO to the DAO-controlled multisig. Makes sense, but is the key part of this proposal that would actually be voted on.

Is this proposal also outlining that ENS Labs, Stewards and the Endowment Manager will be empowered to make decisions about DAO revenue without needing approval from the DAO?

I know this isn’t what your meaning here, it just should be worded more along the lines of ‘ENS Labs/Stewards will be directed by the DAO to make these decisions.’

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Would it be helpful to break this into a social proposal detailing the general strategy, followed by an executable proposal to implement it?

This is the proposal and discussion around it. I/we are proposing that the DAO keep a runway of 24mo of stablecoins at all times.

I’ve posted an update with estimated distributions in a separate thread.

No, just that they have the responsibility to monitor it and react accordingly.

Edit: I’ve rewritten the proposal as a social proposal establishing expectations and procedures around basic treasury management.

+1 +1

Ok so this proposal is a seperate treasury management proposal from EP 2.2.5? Should we be discussing one rather than the other? Or both in tandem? Because currently having 24 months of runway is ~10%? of the total treasury.

Something we 100% support, but the timing of this proposal with the other treasury management discussion is confusing.

Yes; 2.2.5 established the endowment, but says nothing about how we handle revenue or convert working funds to stablecoins etc.

What is an appropriate window of time between proposals?

Very difficult to comment or to make a financial plan without expense accounting over the operating life of ENS.

Is there such an expense accounting record in existence? If so please(and thank you) point me to it.

I see the following revenue/income dashboard.

And can check the DAO wallet and Cold wallets and Registrar Controller.

ENS Cold Wallet

86.445 ETH 111,140
1,480,003.39 ENS 20,674,539
4,149,984.46 USDC 4,154,134
2,779,037.24 DAI 2,779,037

ENS DAO Wallet

4091.278 ETH 5,260,034
10,061,834.59 ENS 140,556,296.44
2,467,026.38 USDC 2,469,493.41

ENS ETH Registrar Controller 0x283Af0B28c62C092C9727F1Ee09c02CA627EB7F5

34538.2318 ETH 44,345,708

My point with presenting the above is that without a public expense report there is no way to track expenditure growth relative to product sales/support. I think before decisions are made about (1-6 above) such a report should be generated (with monthly bins of information if possible). Most real companies have to report such things quarterly and I would encourage ENS DAO to seek to generate such reports.

Next point is that the above reports like to state ETH revenues converted into $$ but unless these are actually converted into $$ this revenue is effectively left invested in ETH which according to (5) above will be sold to do which

  • satisfy $16M cash equivalents in the treasury OR
  • to add $16M to treasury.

The way (5) is written this is entirely unclear whether this sale will satisfy (1,2) or is now setting a fixed amount of $16M to be raised by the ETH sale and added to the existing treasury.

I first heard that ENS expenses were running 4M/yr and now with the above this looks to be projected to be 8M/yr. To satisfy the 2yr runway in cash wouldn’t it be prudent to actually provide actual expense numbers?

Final points. I think each of the points above (1-6) should be discussed AFTER a financial report is produced including expenses, earned and unearned income and have the DAO decide how many years of runway (or how many millions) to try to provide for based on expenses and ecosystem growth. Given that ENS has actually allowed sales of ENS domains FAR into the future one could look upon these as actual ‘contracts of obligation’. Meaning the ‘unearned income’ actually has ETH slated to pay for operating expenses to satisfy customers with product service FAR into the future. Highly unlikely ENS has set aside sufficient funds to guarantee operations 5 years from now, much less 100yrs, so some consideration as to length of registrations should be thought about in this light of ‘unearned revenues’.

Example: What does this unearned income graph look like over time in ETH based on past registrations so far.

With regards to ETH sales. Provided ETH income holds up it, instead of drop kicking $16M worth of ETH to sell rapidly I would prefer the amount (what 12.8K ETH at $1280/ETH) to be sold 1:1 with monthly revenues. Last month in above ENS dashboard I see ENS earned 1.3K ETH revenue claimed to be 1.7M.

So in this case I would slate the 1.3K ETH income to be sold with 1.3K ETH in the DAO treasury ideally to be done daily over the next month (so 2.6K/30 something like 87ETH/day for about $110K/day cash DCA out). This would translate to about $3M/month provided ETH price holds up) and generally reduce and distribute selling pressure. A real discussion about why ENS can’t wait a few months to clear $16M I think should be had given I see something like 4M USDC and 2M DAI in wallets currently (sufficient for what 8-12 months at 6-8M yearly run). Even at current prices and income levels it would be like 4-5 months before $16M could be raised by selling all ETH revenue with same amount of ETH in treasury steadily.

While the DAO can choose to sell all $16M or 12.8K ETH over a short period and rely on unearned ETH and future earned ETH as the ETH investment base I think a real discussion about what to do with incoming ETH revenues generally is warranted in light of a wholistic approach to proper ENS ‘business’ management (doesn’t matter if you are a profit or non-profit here - every org has to manage finances to pay people, buy stuff and generally manage what they are doing). If you look at the above ENS dashboard on how revenues in ETH came in over the past year you’d see that the highest ETH revenues were closest to the ETH price highs and have been coming down since then. Realize even with same $$ price per ENS domain and ETH price at the highs, ENS was still earning more ETH than when the ETH price was down (for the most part). This says something about ENS revenue models and business flow cyclicality to pay attention to btw.

As to:

I absolutely think some idea of how much value to allow a single manager to manage IS an important discussion. It is better to spread your risk and return profiles over many investments (and hence investment managers) both from a risk and return diversification perspective. I see no reductions in fees or any changes in the cost profiles from these ‘managers’ based on the amount managed so there is no real cost incentive not to diversify funds with different investment managers.

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We do not have expense reports, but we do have working group budgets and the ENS Labs grant, which give us a good approximation of our run rate. The idea is that this would be adjusted over time, but it’s obviously not a good idea to wait and do nothing for now.

I’m sorry, I don’t understand what you’re asking here.

ENS Labs has a $4.2M/yr grant, and the working groups have an estimated run rate of a further $3.8M/yr.

The DAO presently has about $2.5M in USDC as its only stablecoin exposure; about 3 months worth at our projected run rate. It’s not rational to do nothing while we wait for more information to be available; instead we should act based on our best understanding, which can be refined and adjusted as more information is available.

That is what the unearned income is - the ETH paid for registrations in the future - and that is why it’s treated as not able to be spent.

Point (5) is unclear relative to points 1 and 2. Are you asking to sell ETH to raise and additional $16M or to get to a goal of $16M which with 2.5M in treasury would mean ETH sales to raise 13.5M. It also looks like you guys want to do this ‘instantly’ vs. over any reasonable time period (1 month, 3 months, 6 months).

Again. How are these expenses changing? I am pretty sure others have been asking similar questions. You guys are running an org with > 20M/yr revenues and at least 8M/yr expenses AT SOME POINT you have to do a report on this to the DAO don’t you think? Particularly true if those working here are looking to invest funds into a treasury manager. It is not clear to me that this 8M doesn’t rapidly become 12M or higher.

Am I hearing this right that ENS/DAO only has what 3-4 months of cash at current burn?!

My point with the above is that there should be data collected showing month by month into the future how much unearned income exists for those months. My other point is that you shouldn’t be selling services into the future if you can’t guarantee operations during that time period. This is why a lot of domain registrars only allow registrations to happen for so many years (1) they can’t guarantee operations beyond this point (2) they can’t guarantee that the price paid for service will match the cost to give it.

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Good point, I’ve edited it to clarify that it intends to top it up to $16M.

This is a good question, but not a prerequisite for establishing basic treasury management and ensuring we have a solid runway in stablecoins.

No; the DAO has over $22M, but almost all of it is in ETH. Our expenses at present are a mix of ETH and USDC, but heavily shaded towards USDC.

We already have this data.

The services that were paid for are entirely served by automated smart contracts; they will continue functioning regardless of what state the DAO is in.

Wait…you don’t have expense reports ??


So the rumours of ENS having a slush fund to fund/promote certain categories/people on ENS could be true then ?

That’s not what I said, and I don’t think you’re engaging in good faith here, so I’m going to disengage.

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If what have been hearing is true, you have successfully killed ENS

give yourself a pat on the back, well done

Important to secure working capital first. In favor of this plan!

on expense reports - this is so simple, why is it causing any commotion at all

I’ve put general structure already here - ENS DAO Financial management v001

your total expense report = spending of WG1 + spending of WG2 + … + spending of WGN

the reason it’s not put together, is that there was noone with formal role to do it, there were no clear users of that information, and there was no framework where it should be plugged into. Framework would define the form of that information - how it structured sliced and diced

The substance is available - check the forum, you can see that there are budgets being proposed and approved

ENS core team spending is black box, because salaries are confidential, so it’s treated as lump sum of money

in fact these guys over here did the exercise to certain extent, I really don’t understand why is it causing difficulties

EDIT: Like so


You can extend this logic and present it in anyway which is applicable


If a multisig is to be used with a Zodiac Roles Modifier, it would be good to think about possible scenarios where alternative attributes to the preset are required in addition to those needed to carry out the usual operation of exchanging ETH for USDC and DAI.

For example, as part of the usual operation, the Manager Role preset will grant permission to:

  • Withdraw from the Controller of Record contract.
  • Wrap/unwrap ETH.
  • Exchange ETH for DAI or USDC via Cowswap (or any other DEX).
  • Send ETH, DAI or USDC to the DAO Timelock contract or the Endowment multisig.

It would be useful to contemplate additional functions in case of an ugly market scenario. For example:

  • If DAI loses its peg, it would be useful to be able to exchange DAI for USDC or other stablecoins immediately.
  • If USDC is exposed to any sort of attack, having the ability to switch to DAI or other stablecoins (or even back to ETH), would be convenient.

On the other hand, since these scenarios often occur without warning, it would be good to have an emergency protocol in place to be able to act promptly. Coordinating efforts is difficult and even more so within a DAO, so predefining roles and actions would also be a plus.


I was looking at zodiac modules and was trying to understand, all those potential functionalities can they be implemented by working with “standard” zodiac modules or would that require some additional customisations