ENS DAO proposes expanding Foundation powers in governance overhaul

The Ethereum Name Service DAO, otherwise known as the ENS DAO, published a temp check proposal on June 19 to restructure how the organization operates.

The proposal, authored by katherine.eth and posted on the ENS governance forum, states that the DAO’s current structure forces token voters into operational decisions they sometimes have no business making.

That’s why this motion is being considered to delegate protocol-level control to token holders, while the ENS Foundation itself handles day-to-day management. Under the new proposed structure, registration revenue, treasury management, grant distribution, and coordination across working groups would move under the Foundation.

“The root of the current dysfunction within the ENS DAO comes from the gap between what the DAO was meant to do (steward credibly neutral infrastructure) and what it actually does day to day (act as a budget committee for an organization),” the proposal states on the ENS governance forum.

What are the five problems the ENS DAO proposal identified?

The proposal identifies five structural failures in the current ENS DAO setup.

• The first is delegate fatigue. Stewards and delegates face a growing queue of votes on topics they cannot evaluate well, and the cognitive cost is pushing experienced participants out.
• The DAO also spends its scarce voting bandwidth on routine operational questions while larger strategic decisions suffer neglect.
• The third problem is the absence of a formal accountability layer between the DAO and entities it funds.
• The fourth problem the katherine.eth proposal flags is the slow pace of coordination across working groups and the service provider program.
• The fifth problem, which only became an issue in this version of the proposal, is the amount of treasury assets, endowment, and token reserves that ENS holds. These assets require multi-year capital planning, and while token voting can approve decisions about these assets, it cannot execute a sustained strategy. That work demands continuity, professional execution, and the ability to act as a counterparty to institutional managers.

What will the ENS Foundation handle now?

Under the proposed structure, the Foundation would gain authority over operations, grants, and long-term capital stewardship.

Tokenholders would retain two powers the proposal calls non-negotiable. The powers are control over the ENS protocol itself and the ability to remove Foundation directors.

The ENS DAO announced the temp check on X on June 19, stating that it was a proposal to “evolve the ENS DAO by expanding the Foundation’s role in operations, grants, and long-term capital stewardship.”

The previous iteration tried to solve coordination problems by adding a budget-allocating board on top of the existing DAO structure.

This version sees layering new bodies onto a broken foundation as insufficient. It calls for substantively resourcing and empowering the Foundation itself.

Is there a growing trend of DAO restructuring in the crypto industry?

Several protocols that launched DAOs around the same period as ENS have already moved away from the structure, with some of them consolidating authority. Some have converted tokens back to equity or folded DAO legal entities into their labs teams.

ENS differs from most of those cases because ENS Labs is largely self-sustaining and not venture-backed. An initial $1 million grant from the Ethereum Foundation and ongoing revenue from .eth domain registrations have kept the organization funded without venture capital.

The independence ENS enjoys also means that it cannot follow the same governance playbook that was designed for venture-backed protocols. However, it also gives the organization room to design something different.

The ENS token traded at $4.79 as of June 20, down more than 94% from its all-time high of $85.69 set in November 2021, according to CoinMarketCap data. The token has a circulating supply of 40.4 million out of a total supply of 100 million.

The smartest crypto minds already read our newsletter. Want in? Join them.