[Temp Check] Next Era of ENS DAO: Empowering the ENS Foundation

DAO-Wide Temp Check
42

This proposal looks like greed dressed up as governance reform. To me, it is basically a governance attack on the ENS treasury.

The unwise part is that ENS Labs has already been paid a significant amount of money, and many tokenholders can reasonably question whether the DAO has seen enough visible return on its spending over the years, with Namechain being the clearest example.

The interesting part is that, so far, ENS Labs has not really been accountable to anyone, since only a small fraction of tokens participate in governance. If they had simply said something like, “Let’s increase our annual budget to $50M,” I do not think many people could have argued against it.

That would have been a much smarter way to get what they want than trying to change the governance structure and capture the treasury directly.

It is also strategically reckless to damage a potential decentralized identity layer, along with the value of the ownership layer behind it, for what looks like a short-term attempt to centralize control over the treasury.

In regulated financial markets, actions like this could create serious legal consequences for the parties involved, since it essentially looks like majority power being used to transfer economic control away from the wider ownership base.

But since this is an unregulated and “trustless” world, I guess this is what happens when voting power is enough to replace legitimacy.

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43

I want to push back on this proposal in principle. Not because the DAO is working perfectly today (it isn’t), but because this is the wrong fix, and it’s destructive to what makes ENS worth caring about in the first place.

ENS is not Signal or Mozilla

Imho the Mozilla comparison misses the point. Just like a blockchain, ENS generates revenue by design. Blockchains take transaction fees to safeguard their working, ENS takes registration and renewal fees to keep the protocol usable long term. If either stopped taking fees, they wouldn’t work. That makes ENS entirely distinct from things like Signal or Mozilla, which don’t generate revenue based on their usage. (The Mozilla comparison is especially funny: Firefox held over 30% market share 10 years ago and is now below 3%. Not the model I’d cite for durable internet infrastructure.)

For any revenue-generating protocol you have to figure out where that money goes. When ENS was profitable and all fees went to True Names, that was the biggest valid critique of ENS. To become an internet-level protocol you have to distribute that revenue to the network enabling the protocol’s existence. BTC and ETH distribute it to those who run the network. For ENS that means distributing revenue to those who enable users to interact with it in valuable ways: integrators, application builders, service providers. As avsa put it: “None of that would happen if it was all just money funneling back to a single company.”

This proposal brings us full circle to the True Names days, where one entity runs the entire protocol. For early development, as long as that entity actually builds efficiently, fine. But it nullifies the notion of ENS being internet-scale, independent, and decentralized. The success of ENS becomes capped by how well Labs executes, and how it is perceived as such.

So how can I trust ENS as an internet protocol if this passes? I can’t, and many others will see it the same way. Decentralization storytelling and branding matters. I and many others are excited about ENS as an unowned, internet-level protocol that by design will survive forever. If we’re just paying a single entity (for profit or not), that brand goes away, integrations that would have happened don’t happen, and ENS dies a slow death. Imagine saying “everyone use my blockchain, all fees go to me”. It won’t work. If Ethereum upgraded tomorrow so all burned fees went to the ETH Foundation, I’d be gone tomorrow. Just saying “ENS and ETH will win” regardless of what the protocols actually do is delusional.

“5 people at the foundation vs 5 top delegates is the same” is wrong

I’ve seen the argument that if it’s 5 people at the Foundation vs 5 top delegates deciding DAO ops, it doesn’t really make a difference in principle. That’s a relativist argument, not a principled one. It very much is different in principle. One system is built for public proposals, onchain accountability and participation; the other one isn’t. It’s like arguing that since most shareholders of a company don’t vote and boards are often controlled by insiders anyway, there shouldn’t be shareholder approval on major treasury decisions, because in practice it’s the same small group, so why pretend otherwise.

And on credible neutrality: if the DAO doesn’t control how the money the protocol generates is spent, then no, it’s not credibly neutral. Fee generation is a fundamental design of ENS, and since those fees were designed to fund the protocol’s own development (rather than burning them or giving them to something like Protocol Guild), the protocol had to come up with a mechanism to distribute them in a neutral way to the people and organisations working on it. This reverses a years-long effort to be an internet-native protocol. If it goes through, ENS as an internet protocol is done. A DAO aspires in principle to distributed accountability, a foundation doesn’t.

The DAO’s problems are real, this is still the wrong answer

Labs has been doing a poor job of ecosystem growth for the last few years. There are almost no significant integrations and very few application-level improvements. The main mechanism for valuable integrations and applications is the Service Provider program, which Labs doesn’t like, for obvious reasons: they see other teams as inefficient and bloated. Meanwhile they are bloated themselves. Most of the fees the protocol generates, actually more than it generates, already go to Labs.

Namechain is the clearest example: a budget of close to $10m/year was requested to develop and operate a new L2, and there’s no change to that ask even though the project is canceled. Why should the DAO keep paying Labs the same amounts? Instead of seeing things realistically and downsizing (there is much less to go around), Labs wants to increase its spending and, to stay well funded for a long time, cut others out of the pool. A more honest ask would have been something like “let’s raise our budget to $50m”, rather than restructuring governance to capture the treasury directly.

I respect everyone at Labs. My critique is of the system, not the people.

What would actually fix this

Alternatives exist:

  1. True competition. Everyone should be equal before the DAO. Labs should be a Service Provider like any other, not a permanent privileged budget line.
  2. Retroactive funding. Don’t fund things with no proven value; fund them once the value is demonstrated and there’s actual ecosystem need.
  3. General downsizing. Lower spend across the board, redirect to actual value adds.
  4. Revenue share / referrals. One of the best ideas in the last few years. Applications would be incentivised to implement best-in-class ENS integrations and drive adoption because they’re economically aligned with it happening. Nick’s counter is that this is unnecessary because users can just use the ENS App built by Labs. He’s missing the point: ENS is valuable because of integrations, not because of the ENS app. And there are currently no incentives to build good ones. Without more and better integrations, ENS dies a slow death.
  5. Spend what you earn. ENS as a protocol (the DAO) shouldn’t spend significantly more than it makes. It should only fund true value adds, when the value add is proven and there’s actual ecosystem need for it. The mechanism to decide that should remain the DAO, even if friction is high. That’s the point.

Bottom line

This proposal trades away the thing ENS needs most: the credible neutrality and internet-protocol identity. ENS must not lose its brand as an internet protocol vs a random non-profit open source project that users have to pay to use. It’s like expecting a blockchain to work when all transaction fees go to one entity.

I hope Ethereum has some rich af OG that cares about ENS as infrastructure enough to reverse the intended votes and restores the credible neutrality of ENS.

Cross-posted from public discussion on X: thread 1, thread 2.

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44

Just wanted to share a couple more thoughts on this one,

I know tensions are high, and the recent massive self-delegation has made a lot of people feel like the DAO is under attack or that our treasury is being captured. I hear those concerns, and as a DAO purist myself, I completely share the instinct to protect our decentralized vision.

In many different threads, I’ve argued for meritocracy, proper distribution of voting power, accountability, efficiency, and clear organizational structure. However, it’s important to be pragmatic about those matters - the reality is that paradigm is shifting, and ENS needs to survive in this changing world.

Let’s look at some recent legal precedents - for example Ooki DAO case - the courts are increasingly treating unwrapped DAOs as general partnerships. To put it plainly - everyone is liable now, every single person who participated one way or the other, including everyone in this thread for that matter.

Operating such an ambitious endeavor as ENS as unwrapped DAO is becoming quite heavy liability. It is possible that this move from ENS Labs to empower Foundation can be seen as defensive maneuver to adapt to this new paradigm. Utilizing a legal wrapper like a Foundation isn’t necessarily a retreat from Web3, it adds a layer of corporate veil that protects delegates, contributors, and the protocol itself allowing ENS continue on its mission to reach global mass adoption.

Moreover, if ENS wants to be integrated properly into current internet infrastructure, it needs to interface on legal level with entities like ICANN and others. Foundation would allow to act more robust in that capacity, because it needs to be a formal counterparty. Being purely unchain is a great idea on paper, but we cannot sign agreements, or build domain of intellectual property. If every single other potential counterparty was onchain, then it would be much easier, but we have to deal with old world order here.

That’s not to say that have to give up on decentralization completely, I’m sure there can be some balance struck here - we have some amazing committed delegates, who so far spent countless hours working for free. We would still have body of Stewards, who would act as bridge between those two worlds.

However my point remains, foundation or not - financial and operational reporting would need to be flawless, accessible, and transparent - we can no longer afford to have this scattered disorganized structure, like we operated in the past.

I think there is certain merit to this proposal in the light of shifting legal paradigm, but there needs to be structure and most importantly very strong system of check and balances to say, in order to ensure balance of executive power. If we design it correctly, foundation together with Steward council and strong body of delegates can be this new form of DAO, which addresses emerging challenges.

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45

I am writing to clarify my position on this proposal:

First, on the nature of ENS

  • The proposal is rigorous, coherent, and aligned with ENS as de facto public infrastructure. It reads not as a startup attempting to maximize product capture, but as an institution stewarding a public good.
  • It’s clearly written from the premise that ENS should be stewarded as public infrastructure rather than optimized as a conventional venture. Those who view ENS primarily through the latter lens are likely to be the most alienated from the proposal as written.

Second, on the institutional case for the Foundation model

  • I agree that ENS DAO, for the most part, has historically spent too much time negotiating itself rather than building the protocol it is meant to support, save for a few exceptional teams supported through the Service Provider Program — which this proposal intends to absorb.
  • Tokenholder voting, as a system, is poorly suited to evaluating multi-year capital strategy or serving as a credible counterparty to institutional managers.
  • The March 2026 SEC interpretive release may also lend further support to a foundation-led operating model by providing greater clarity around the regulatory treatment of governance tokens, though I would not treat that as the core case for the proposal.

Third, on the tension that still needs to be addressed

  • The exercised founder allocation is an indictment of the governance failure mode, but it also reveals a tension between the proposal’s stated commitment to tokenholder control and the continued institutionalization of exceptional founder power. That tension deserves further clarification.

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From what I can discern, a significant share of the opposition to the Foundation proposal centers on panic around treasury custody, often at the expense of engaging with its broader institutional merits, especially the professionalization of ENS governance.

The content, structure, and institutional logic of the proposal are epistemologically aligned with a mission-driven approach, which is why I believe it is a credible design and am confident in the model, even if some legitimacy questions still need clearer answers.

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47

I strongly agree with jalil’s take, particularly regarding the importance of decentralization storytelling and branding.

Building on that, I believe that in Web3, how many people perceive a project as decentralized matters far more than its practical centralization or decentralization. Looking at the current reactions on social media, it is obvious that this proposal will slap a “centralized” label on ENS, significantly degrading its core brand equity.

Once that narrative shifts, the premium value of the protocol is lost. For this reason, I believe we need to step back and explore alternative approaches rather than pushing this through.

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48

**Hello,
**
I have not been very active here. My name is Otto Mora, and I work as co-chair of the W3C Decentralized Identity Working group. I would like to express my positive response regarding the engagement with W3C. The W3C would benefit enormously from engagement from ENS in the working group. Currently we have 4 months left in our current charter and we need to ship a base version of the DID Resolution spec in Candidate Recommendation status ( Decentralized Identifier Resolution (DID Resolution) v0.3 ). I think engaging with Standards Organizations working in Decentralized Identity would be very positive for the ecosystem.

Also I would like to address the following:

3. There is no accountability layer between the DAO and the entities it funds. When a grant recipient (be it a service provider, a vendor, or Labs itself) underdelivers, there is no formal mechanism to respond.

I think this one of the key problems with the current way that the DAO is structured. There is no formal authority to objectively evaluate if the contributions from the ENS Service Providers are really being useful or not. Shipping code is fine to extend the ENS functionality, but how do we measure if people are actually using these new features? There is a risk that some Service Providers may just ship code in order to get their main work subsided via grants. This is an important governance matter that the current DAO structure is not managing very well.

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49

replace what the operating evidence has shown does not work (token weight based operational management).

Delegate fatigue is real and getting worse.

I think this is the wrong conclusion to draw from the current state of ENS governance.

The delegate model is being criticized and replaced before ENS has seriously tried to build the conditions required for it to work. If the current delegate layer is weak, that does not prove decentralized delegate governance failed. It may simply prove that ENS never properly built a real delegate market.

ENS is probably the best candidate in crypto for this model. It is one of the simplest major protocols, and that simplicity should make decentralized oversight more realistic here than in most other DAOs. If ENS cannot even try to make this work, I do not see which DAO can.

The current delegate layer is being judged as if it were a professional, resourced operating body. In practice, most delegates operate with no direct compensation at all. They spend their own time, money, and attention to contribute to ENS governance, often making participation net negative. Meanwhile, the proposed replacement creates paid Foundation leadership and board roles.

That is not a fair comparison.

If ENS wants professional-level output from delegates, it should first try building a professional-level delegate market. Incentivize tokenholders to delegate, compensate the top active delegates seriously, and resource a real top-20 delegate set like a serious governance body. The DAO’s output would look very different.

The DAO makes too many small decisions and too few big ones.

I also disagree with this framing as if it is necessarily a failure. For a decentralized protocol, not needing frequent huge decisions can be a strength. That is part of what sustainability looks like. Bitcoin does not preserve its value by constantly making large governance changes. It preserves it partly by being hard to change.

This is not only about who can operate the protocol most efficiently. Crypto’s value proposition is not only operational efficiency. Ethereum is not valuable because it is the fastest or most centralized execution machine. It is valuable because of decentralization, neutrality, transparency, and long-term resilience. Solana may be operationally more efficient than Ethereum in several ways, but that does not mean Ethereum’s governance and social structure are less valuable. The same logic applies here.

ENS should not abandon decentralized governance before actually building the delegate market structure required for it to function.

50

Regardless of the aforementioned possible COIs, “not working in Labs” ≠ “being independent.” You’re effectively nominating people for a position (and a paid one at that), meaning they’re not independent. There’s no such thing as appointed opposition.

The predictable end state is a board that degenerates into context-free ratification of whatever Labs proposes – the exact failure mode (low-context, rubber-stamp voting) this proposal claims to be curing in the DAO.

Netto’s proposal addresses this issue.

I’d like Labs to take the points made by Avsa, Netto, Jalil, and others seriously and come back with a new, more balanced version. Let’s come to a proposal that will be ok for everyone, even if it takes many iterations.

If the proposal goes to a vote in its current form, I won’t simply vote “no” or abstain – I won’t vote at all, so as not to lend it legitimacy.

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51

Thanks @ottomorac.eth. Welcome to the ENS community from the W3C. You were savvy to hit on the exact issue here: accountability.

That’s also the key issue with the proposal in this thread. It installs a board that is exclusively selected by ENS Labs to oversee ENS Labs. The ENS DAO theoretically has power over the board, but the ENS DAO is now just ENS Labs. Do you see the problem here? How is this not total power with zero accountability?

Many people love ENS and have worked hard to see it succeed. However all the key metrics for ENS are failing for years. The DAO has it’s problems, but it’s a total mischaracterization to put the primary blame there. The DAO has approved over $50 million in funding requests, but the results are not being delivered.

The solution ENS needs is true accountability to outcomes. With that, all can be turned around. This solution is delivered through the counterproposal with broad community support. The key difference in this counterproposal is to elect a truly independent board of directors tasked to fairly apply universal standards of accountability on all funded teams.

I wonder why ENS Labs is so vigorously against an independent board that would fairly apply standards of accountability for outcomes? That’s an interesting question. Maybe someone could help me understand.

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52

@nick.eth @katherine.eth Could you please help the ENS community understand why you are so vigorously opposed to the ENS Foundation having a board of directors that is truly independent of ENS Labs?

Why are you so opposed to real accountability for ENS Labs that you’re taking all these power moves that are irreparably harming the ENS brand, ecosystem, and community?

And no, a board of directors that is exclusively selected by ENS Labs is not independent of ENS Labs. A board of directors who theoretically has some check on power from the ENS DAO, but where the DAO is clearly now just ENS Labs is not independent of ENS Labs.

The NameHash team has already proven we (and surely others) can source highly accomplished industry veterans for the ENS Foundation board who would be truly independent. Why not slow down, diffuse the situation, and work to find some common ground solutions?

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53

The rules are clear. Nick didn’t violate them in any way.
If you really care about ENS, you should still have voting power. If you have no votes left because you sold them, then don’t pretend to speak for the community. Stop whining, Talking is cheap and hold no weight, stop voting with your mouth. Real support comes from holding $ENS and voting. Just rule of the game.

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I never made a claim that Nick violated the rules. Your post is a distraction from the real debate.

Does might make right?

According to your logic, ENS is best served if its governance is determined by “might makes right” of a single person / company so long as that “might” was fairly achieved (it has been). By your logic, it’s ok to break with ENS’s historical soul, branding, and narratives of decentralized / independent governance because this total power was fairly achieved and now the outcome is what it is.

What’s best for ENS?

ENS is best served if its governance continues to be decentralized / independent. This doesn’t have to mean status quo. There’s already community consensus for key reforms, including to form a new accountability layer for ENS through a truly independent board of directors staffed exclusively by highly-accomplished industry leaders who support the vision of ENS as foundational internet infrastructure.

The question is, why is @nick.eth and @katherine.eth so ferociously opposed to ENS Labs having real accountability? It would be helpful if they could explain.

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