Hi everyone, this is Bojan and I’m from Liquity.
Summary
This post aims to start a discussion around whether the ENS treasury should hold a portion of its stablecoin reserves in DeFi-native, fully on-chain stablecoins, as a complement to its existing stablecoin strategy.
The motivation is to improve stablecoin diversification, reduce reliance on off-chain enforcement and discretionary governance, and better align the ENS treasury with Ethereum’s neutrality and decentralization ethos.
As a concrete example, this post explores BOLD, an Ethereum-native stablecoin issued by Liquity V2, to illustrate what a trust-minimized stablecoin design looks like in practice.
This is intended as an educational and exploratory discussion, not a formal proposal at this stage.
Trustless domains, governed by a trustless DAO, employing trust-minimized financial primitives.
Background
The ENS Endowment currently holds a substantial portion of its assets in stablecoins to manage runway, volatility, and operational continuity. While the current strategy has generated yield and stability, it relies primarily on governance-managed and/or RWA-backed stablecoins, which introduce forms of risk that sit outside Ethereum itself.
These risks include:
-
Dependence on off-chain custodians and legal enforcement
-
Exposure to regulatory or jurisdictional actions
-
Discretionary governance decisions that can materially change risk profiles
Recent stablecoin depeg events across the ecosystem highlight the importance of diversifying stablecoin design risk, not just issuer or venue risk. Two stablecoins with the same peg can fail for entirely different reasons depending on how they are backed, governed, and enforced.
As a core Ethereum public good, ENS is well positioned to explore DeFi-native financial primitives that better align with its long-term values.
Why DeFi-Native Stablecoins?
ENS’s mission is deeply tied to Ethereum’s neutrality, censorship resistance, and minimization of trust assumptions. Applying those principles to treasury management suggests that it may be beneficial for ENS to hold at least some stablecoin exposure in designs that are:
-
Fully on-chain
-
Not dependent on off-chain assets or custodians
-
Not subject to discretionary governance control
-
Enforced purely by immutable smart contracts
Holding DeFi-native stablecoins would not replace existing treasury strategies, but rather complement them with a fundamentally different trust model, improving resilience at the portfolio level.
Example: BOLD (Liquity V2)
To make this discussion concrete, this post uses BOLD as an example of a DeFi-native stablecoin design.
BOLD is a USD-pegged stablecoin issued by Liquity V2 and designed explicitly as an Ethereum-native dollar: https://x.com/LiquityProtocol/status/1945502320659157269
Core Properties
-
Fully crypto-backed by ETH and liquid staking tokens only (ETH, wstETH, rETH)
-
No RWAs, no banks, no custodians, no governance control
-
Immutable smart contracts with no admin keys
-
Always redeemable at $1 worth of collateral directly from the protocol
-
Unfreezable and censorship-resistant
This design materially reduces regulatory, counterparty, and governance risk compared to fiat-backed or admin-controlled stablecoins. There is no dependency on off-chain assets, no reliance on legal enforcement, and no mechanism for discretionary intervention.
Liquity’s original protocol (LUSD) has operated since 2021 with zero bad debt, including through multiple extreme market drawdowns. BOLD builds directly on this proven architecture.
BOLD has also received an A- rating from Bluechip, ranking above USDC and DAI in decentralization and protocol risk assessments: https://bluechip.org/en/coins/bold
On-Chain, Sustainable Yield
One additional property of DeFi-native stablecoins like BOLD is that they can generate organic, on-chain yield without relying on off-chain strategies or discretionary subsidies.
How Yield Is Generated
-
100% of protocol revenue flows back to BOLD holders
-
Revenue comes from on-chain borrowing interest and liquidation fees
-
There is no reliance on token inflation, incentives, or external revenue source
This makes the yield organic, sustainable, and directly tied to real protocol usage.
Yield Paths (Illustrative)
BOLD can earn yield through multiple fully on-chain avenues, including:
-
Stability Pool participation
-
Direct participation earns interest and acquires ETH/LST during liquidations
-
Yield-bearing representations (e.g. sBOLD, yBOLD) auto-compound into more BOLD
-
-
Core liquidity pools
-
On Uniswap or Curve, earning trading fees and PIL incentives
These strategies can be combined or adjusted over time based on risk preferences, liquidity needs, and market conditions.
Strategic Considerations for ENS
Holding a portion of stablecoin exposure in DeFi-native stablecoins could offer:
-
Stablecoin design diversification
-
Reduced reliance on off-chain enforcement and custodial trust
-
Stronger alignment with Ethereum’s long-term values
-
Exposure to sustainable, on-chain yield mechanisms
Any potential allocation would be expected to be conservative, incremental, and subject to further discussion, evaluation, and community feedback.
Next Steps
The intent of this post is to:
-
Gauge community appetite for holding DeFi-native stablecoins in the ENS treasury
-
Educate on how these designs differ from traditional stablecoins
-
Collect feedback and concerns from the DAO
If there is positive sentiment, a natural next step could be:
-
A deeper presentation or discussion (e.g. MetaGov call)
-
Follow-up posts comparing multiple DeFi-native stablecoin designs
-
Only later, if aligned, a formal proposal with specific parameters
Closing
A trustless domain system should be backed by a treasury that minimizes trust wherever possible.
Exploring DeFi-native stablecoins is a logical extension of ENS’s values into treasury management.
BOLD is one concrete example of how this can be achieved.