[Social] Routine DAO treasury management

This is the justification behind all of the decisions recently on treasury management which scares me.

I’m saying this is the DAO treasury we’re talking about and one of the most important things we can vote on, being purposeful around when votes are happening (like two treasury management proposals at once) and who is involved in them (like the stewards involved in this process being up for re-election in 72 hours) really matter.

Taking months to decide on how to spend tens of millions of dollars seems fine, I’m more worried about these decisions being rushed than analysis paralysis.

But if im ratio’d by the community thats fine.

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I don’t see it this way.

The justification here is that the DAO currently has no treasury management plan. This would establish a policy that ensures a generous runway exists at all times.

Getting this passed before the impending endowment allocation proposal is in the best interest of the DAO because it mandates that the DAO can not commit all of its treasury to an investment strategy.

There could be an argument to have a mix of USDC and ETH or reduce the length of the runway, but at its core, this proposal is not a farfetched or innovative idea.

This implies that the timing is rushed to drive an outcome that would otherwise not happen if there wasn’t an election. This is a rational concern not the reality.

I’d suggest a proposal that limits proposals during the last month of terms, but then you just create a two-month lame duck period each year.

The DAO has been around over a year and we still have no treasury management plan. How much longer should we wait?

In general I’m fine with “this is going too fast”, but it should come with concrete examples of things that we need to slow down to do, or a concrete alternative plan. A vague “feels rushed” with no details is just an invitation to delay without changing the outcome.

Nobody is planning to spend tens of millions of dollars.

You mean like me explicitly outlining I think this vote should wait until after the steward election? Or that the last proposal shouldn’t have used ranked choice voting?

Because currently you quoting single words i’m posting to prove a point:

when clearly we’re talking about converting the treasury from ETH > USDC. Doesn’t achieve anything.

I’m more than happy to make a proposal on treasury management, but it would clearly and only define converting x amount of ETH to USDC. It would not outline a conversion, a ‘sweep’, a pledge to the endowment, etc, etc, etc.

I already responded to your request that it wait until after the elections to ask why you think that is an important criteria. What will the elections change about our need to manage the treasury?

You suggested we were “planning to spend tens of millions of dollars”. That’s not what is happening. I don’t see how pointing that out is unproductive.

You’re welcome to put forward such a proposal. I’m not sure what purpose is addressed by pretending this is a one-time thing, though, rather than addressing the ongoing need to do this on a regular basis.


@ all, above is a simplified treasury management proposal.

Greetings ENS community! I’m Cameron Winklevoss, the Co-Founder of Gemini. We’ve always been big fans of the ENS project. Gemini listed $ENS in Dec 2021 and has featured it on Cryptopedia, our crypto educational resource. It’s great to see the DAO contemplating a more robust treasury management process.

With that said, I would like to put forth a request with respect to the following:

We’d love for the community to consider including the Gemini dollar (GUSD) alongside USDC and DAI as a stablecoin option in its primary timelock account. We believe this increased diversification of centralized stablecoin issuers further reduces counterparty concentration risk for ENS. The Maker Community recently moved $500m into a GUSD PSM for these same reasons (proposal here).

More info on Gemini and GUSD

Gemini Trust Company, LLC, the issuer of GUSD, is a New York trust company regulated by the New York Department of Financial Services (NYDFS). There are no fees to create or redeem GUSD 1:1 USD on the Gemini platform and Gemini covers all gas fees to withdraw on-chain. The underlying dollars of GUSD are held at FDIC-insured banks, in money-market funds, and in US Treasury bills. Attestations related to the underlying dollars are published monthly by an independent registered accounting firm — BPM LLP — and GUSD’s Ethereum smart contract was launched in September 2018 and has been audited by Trail of Bits. ETH/GUSD and ETH/BTC pairs are available for trading on Gemini.



I don’t think there is analysis paralysis going on here. I think enough people have expressed discontent with the amount of money going to one manager at first that it is reasonable to amend that part of the proposal before going to a vote. If it isn’t then what is the kind of threshold you are looking for?

The amount has already been reduced from what was originally proposed in EP2.2.4, and ratified in EP2.2.5 with the selection of Karpatkey. If people still object, I’d like to hear what they think is a reasonable amount, and what we should do with the rest of the money. I don’t see much point in sitting on funds that we don’t need for the forseeable future and having them do nothing, when we could be building an endowment that ensures the long-term future of ENS.

It seems to me that the DAO “running out of money” or not being able to continue operating without a timely financial plan put into place is presented as a prerequisite fact to any other discussion, but I feel it’s important to first discuss…

  • What are the absolute essential operating costs? Bare minimum to continue operations? The core infrastructure of smart contracts ideally operate autonomously after a certain point, no?
  • What are the costs that aren’t strictly necessary, but are nice to have? Eg - enrich the lives of those that receive the income?
  • What are the costs that most reasonable people would consider superfluous? Completely unnecessary or excessive? An example I can think of off the top of my head would be 5 star lodging and 1st class plane tickets. What was lodging expense last time… half a million dollars?

I guess what I’m getting at is that I would feel way more comfortable discussing future financial security plans if I first had some kind of thorough audit information to show what expenses are actually required to “continue operations.” Because without a doubt it isn’t the huge numbers being passed off as essential currently.

And no, I’m not saying everyone should work for free or some other hyperbole like that. Just that I feel it smarter to clarify the most vital expenses before attempting to make a plan to cover ALL expenses, both necessary and extremely unnecessary.

I think building a a large contingent of stables is part of the ‘long-term future of ENS’. We have a significant revenue coming in, and as that gets larger, I would like to see our appetite for risk reduce rather than increase. The current proposal is, keep a static amount of runway (24 months) that gets topped up by the endowment, and the endowment is dynamic that gets topped up by income from registrations/renewals. I would propose something that is dynamic on both sides that would build a solid endowment, but also build a larger security net. A proposal could look like the following:

  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. The .eth controller funds will be split 50:50 between the timelock and the endowment fund . ~17500 ETH will be sent to the timelock and converted to stables approx USD $21.5 mil giving ~2.5 years runway. ~17500 ETH will be sent to the Endowment fund contract.
  4. Every month 50% of the ETH sweeped from the .eth registrar controller contract will be sent to the timelock and converted to stable coins. 50% will be sent directly in ETH to the Endowment fund contract to be invested according to the rules established for that fund.
  5. If the runway in the DAO timelock contract drops below 2 years of runway (initially set at $16 million), a greater portion of the revenue shall be converted to stables and sent to the timelock.
  6. If the amount of revenue is not enough to top-up the DAO timelock to 2 years of runway, the endowment fund will help to top-up the timelock.
  7. Upon passing this proposal, the DAO will vote to implement an executable proposal that:
    1. Converts sufficient 50% of the ETH from the .eth controller to USDC.
    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.

If the endowment is doing a good job, we would expect the amount inside the endowment to grow and exceed the ratio of DAO wallet to Endowment. If we believe the endowment is stable/performing well/confidence grows/a higher runway in built-up we could lower the ratio sent to the timelock, and increase the ratio sent to the endowment in an additional proposal.


I like this, I would prefer if the DAO held ETH beyond the runway instead of converting it all to stable coins. This gives us an interesting benchmark to compare the endowment to. Can the endowment beat a very simple strategy of holding stable coins and ETH?

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This proposal isn’t concerned with how money is spent, it’s concerned with ensuring that we have funds in a stable currency. How they are then spent is out of scope for this proposal.

Can you elaborate on why you believe it’s advantageous for us to do this? If we don’t need the funds for runway, why are we sitting on them doing nothing when they could be helping ensure ENS’s long-term future?

I disagree. We will already have ample exposure to ETH (>50% of our current treasury) in the form of unearned income. Adding more is adding risk to ENS’s sustainability in the hopes of more return, the opposite of what we ought to be doing.

It certainly ought to, as it’s predicated on low-risk investments of stablecoins and ETH that are risk-neutral with regards to those currencies. The only way it would do worse is due to hacks etc.

Oh so this whole discussion is only about earned income? We are not discussing sending 70% of all of our ETH to the endowment?

If the goal is “having enough for ENS to continue development long term” we need to make sure we have capital available no matter the circumstances. I think this gives us an advantage in the short to medium term where we aren’t at any contract risk (barring the timelock/governor) in any DeFi protocols. ~2 years runway is a good start, but doesn’t seem enough get us through a significant bear market + black swan event. E.g. if something happens with a significant portion of the endowment + revenue goes to 0 then we will be up against the wall. If the endowment is there to create a long term future for ENS, the DAO timelock treasury is there to ensure the short-medium term future of ENS.

I think runway is something that flexes over time, so in the current proposal, we are relying on the lead steward to update estimate expenditure to make sure we have enough, but if we codify growth into the stable timelock treasury, we could avoid a situation where the expenditure grows significantly in a short period of time, but funds are already allocated in something inside the fund that if sold immediately could cause things like slippage. Or if the black swan hits us during a period we thought we had 24 months of expenditure but actually short-term growth means we have much less.

So to me the advantages are:

  1. A larger stable treasury to fall back on incase of a black swan
  2. Gives the DAO more breathing room (with more runway) to know much we really need in the short-medium term. With more time for decisions, since DAO decision often take longer than normal companies.
  3. Codifying growth into the runway without needing as much input from the lead steward
  4. Allowing a period in which the DAO can get comfortable with how the endowment works with optionality to change the ratio as we review the performance of the fund.
  5. Keeps a greater ratio out of DeFi contracts that have greater contract risk than holding the coins themselves.

Even if we started with 16 million USD instead of 50% of the current treasury, I’d be in support of building the short to medium term treasury of ENS independent of the lead steward having to manually increase expenditure (that is based on estimations that could change significantly over the course of those 24 months)

The unearned income would go to the endowment to be managed while retaining exposure to ETH. That’s not the subject of this proposal, though.

I agree - but I think enough runway to hold us for 24 months with zero revenue is more than enough; going to zero revenue and losing the endowment is more than a black swan, it’s the world telling you to knock it off.

At some point we end up committing so many resources to trying to insulate against extremely unlikely scenarios that we fail to insulate against much more likely ones. In my mind having the endowment is better security against a long-term threat to ENS’s income than having a large amount of cash sitting around.

I see an argument for “24 months isn’t enough” - though I disagree with it - but I don’t really see the argument for having it just grow and grow unbounded. We should have a firm idea of how much we think we need to set aside, and the rest should be doing something useful.

Right so I think there is value in the DAO holding some ETH that is not under the management of the endowment, and also naturally not part of the runway since it’s in ETH.

I echo a sentiment that the DAO retain a large portion of any ETH exposure that would be intended to remain as ETH, (if applicable) to avoid any unnecessary management fees, on possible upside performance medium-to-long term. And to reduce any third party risk.

I don’t agree with this. Often these things can spiral together. If a blackswan event happened on the endowment, it’s likely this would have spirally effects on the confidence of ENS surviving. The naming landscape could be much more competitive at that time and funds for registering/renewing names could flow elsewhere.

I agree with this. I just don’t think it’s mutually exclusive.

I don’t necessarily think 24 months wouldn’t be enough if we could know exactly how we will grow in the future. It definitely restricts us to budgeting very tightly and for much larger expenses we’d need to really go through very long discussions on how/when to liquidate part of the endowment to fund something unforeseen - more than likely we wouldn’t be nimble enough to do this.

I wouldn’t be against binding it to an upper limit. It could be 24 months as a lower limit, 48 months as an upper.

Can you elaborate on why you think that?

Even if revenue was 1/4 what it is today, we would still be bringing in more than we spend. If it was 1/8th, our 2 year runway would be more than 4 years.

This seems like an argument for a longer runway - but not one for letting it grow unbounded. What purpose is there in holding more liquid funds than we could foreseeably need?

It is insofar as every dollar we hold in cash is a dollar we don’t have in the endowment.

Can you elaborate on this? What sort of expense would require us to dip into the endowment that shouldn’t involve long debate?