Brantly Millegan leaves ENS and winds down ethid.org amid governance upheaval

Brantly Millegan, Director of Operations at ENS Labs, announced on July 4 that he has decided to leave the Ethereum Name Service (ENS) ecosystem as well as to close down ethid.org, the identity services company that he operated as a service provider to the ENS decentralized autonomous organization (DAO).

His departure removes one of the most significant ecosystem talents from ENS at a time when they are considering the largest governance reform since they created the DAO. This raises new questions about how to manage one of crypto’s largest DAO treasuries.

Millegan wrote on X that, “given recent events and other reasons,” he had decided to leave ENS and begin shutting down ethid.org. He added that members of his team are available for new opportunities elsewhere.

ethid. org shutdown removes active ecosystem infrastructure

The closure of the ethid.org entity as a service provider for the ENS DAO has greater implications than just one person’s resignation. Many of the projects that have been supported by ethid.org, including GrailsMarket, ENSMarketBot, and Ethereum Follow Protocol (EFP), have been built using the infrastructure to support the growing use of ENS, with many of them being used to expand adoption of the ENS beyond domain registration to use cases such as identity management, reputation, and social networking.

While both EFP and ethid.org will be disconnecting from the ENS ecosystem as projects start to be shut down in the coming weeks, EFP had measurable success in establishing decentralization, as shown by its use of Dune Analytics to track the number of unique list minters (over 36,000), the number of lists created (over 55,000), and the total number of list operations executed (over 1,000,000).

These on-chain metrics provide evidence that there is a high level of adoption within the ENS community for the various decentralized social graph functionalities associated with the projects supported by ethid.org, demonstrating that this infrastructure provided by ethid.org facilitated the continued adoption of the ENS project within the ENS ecosystem.

The shutdown therefore removes an ecosystem contributor that helped extend ENS beyond decentralized domain registration into on-chain identity, reputation, and social networking applications.

Governance crisis preceded the departure

Millegan’s departure coincides with a wider debate around the governance of ENS and its future as a DAO.

The debate escalated after co-founder of ENS Nick Johnson used a significant amount of delegated voting power to prevent the Security Council from renewing its term which sparked the suggestion from a community member, Christoph Jentzsch, to dissolve the ENS DAO and have the treasury managed independently. The argument has since changed into a larger debate about whether DAO’s current method of governance is still viable.

In addition to this, the Public Goods Working Group, which was operating for 4 1/2 years under the ENS DAO, has also ended. The working group, in its last funding round, gave away $450,000 USDC and 72.5 ETH to 12 different projects, including strategic grants totaling $375,000 that were co-funded by the Ethereum Foundation. The former lead of the working group, Simona Pop, states the end of this working group represented an opportunity missed for the ENS to achieve what Ethereum co-founder Vitalik Buterin, refers to as “ecosystem hero”.

On June 19, the ENS Governance Forum released a temperature check proposal aimed at beginning the next era of the ENS DAO by empowering the ENS Foundation through transferring responsibility for management of treasury, grants and long-term allocation of capital to the Foundation; all whilst ensuring that holders of ENS tokens remain accountable for protocol upgrades, pricing decisions, changes to the constitution and appointments to the board of directors of the Foundation.

This transfer of responsibility would give the Foundation the responsibility of managing around $86.9M dollars of the endowment fund, plus an additional $56.6M of liquid assets. Although this transfer would place the Foundation in a position to have stewardship over $143.5M in total, the Foundation will not be permitted to vote to delegate any ENS tokens over which they have stewardship.

According to supporters of this proposal, the transition will improve the Foundation’s ability to operate more effectively and efficiently while still allowing the governance of the protocol across decentralised platforms.

Katherine Wu, COO of ENS has publicly stated that she is supportive of restructuring, as the token-weighted governance model that was created in 2021 worked well at the time for making decisions concerning the protocol, but is not as well-suited for making operational decisions on a day-to-day basis or for long-term capital allocation.

Millegan has made his opposition to portions of the proposals public; thus, his departure will become one of the more visible examples of an exit during the ongoing governance debate.

Market reflects broader uncertainty

Governance challenges have appeared amidst a persistent decline in the value of the ENS token. In early July, ENS traded around $4.25, as reported by CoinMarketCap, after experiencing a significant drop in price over the past few months, even whilst other parts of the digital asset market have performed quite well.

The governance dispute has very high financial stakes because the value of assets discussed is quite large compared to the market value of the token. This presents a recurring issue for DAOs, where small groups of tokenholders can control large amounts of treasury assets (greater than $100M).

As a result, the outcome of this restructuring proposal has the potential to extend beyond ENS itself. If passed, this would be one of the first instances of a major DAO transferring operational responsibility from tokenholder governance to a professional foundation, while still retaining decentralised ownership of the protocol.

On the contrary, should there be strong opposition from the community, this would strengthen the argument that large amounts of crypto treasury assets should remain directly accountable to tokenholders, regardless of the issues involved in providing operational accountability.

In the weeks ahead, the focus will be whether or not the Foundation proposal receives sufficient support from the community, whether the loss of ethid.org slows development of identity-related products within the ENS ecosystem, and if ENS can find governance stability without continuing to lose contributors and developer momentum.

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