Original author: Eric, Foresight News
At 8:00 PM Beijing time on August 11th, the ENS DAO formally voted to pass and execute the "Next Era of ENS DAO" proposal. After nearly a decade of operation, this most important domain name protocol on Ethereum has finally filled in a long-missing piece of the puzzle: a legal entity capable of representing it in the real world.
The story begins in June of this year. On June 19th, ENS Foundation Director Katherine Wu published a proposal on the governance forum, with the core idea being to delegate the DAO's daily operations, grant management, and long-term treasury strategy to a tangible, operational ENS Foundation.
This idea immediately ignited a firestorm within the community. Rotki founder Lefteris Karapetsas bluntly stated on X that this proposal essentially equated to the DAO dissolving itself and handing over a treasury worth nearly $500 million to the Foundation, even criticizing founder Nick Johnson for delegating half of his voting power to himself. An L2BEAT researcher, in anger, even started building an alternative domain name solution with no owner and no possibility of being rugged. At the peak of the debate, proposal author Katherine Wu posted a lengthy clarification but closed the comments section, which only attracted more skepticism.
The community's concerns were not unfounded. When that wave of DAOs was established in 2021, they all believed token-weighted governance could solve everything. However, after several years, problems such as voter fatigue, lack of accountability for grant recipients, and high coordination costs have plagued ENS just the same. Nick Johnson's response was frank: he stated that the DAO almost solely cared about how to spend the money in the treasury, and the low delegation rate precisely illustrated how difficult it is to maintain DAO security using token voting. In other words, this wasn't a question of whether to be decentralized, but rather what form of governance, like a DAO, is actually suitable for what tasks.
The final passed version showed significant concessions compared to the initial draft in June, which is precisely what makes this proposal worth examining in detail.
First, the approximately 54.6 million ENS tokens held by the DAO, representing 54.6% of the total supply, remain untouched, continuing to be controlled by token holders through on-chain mechanisms. The sole exception is a one-time transfer of 1 million ENS tokens, designated specifically for future employee compensation at the Foundation, which cannot participate in voting, be delegated, or lent/staked until they are vested.
Second, the operational wallet containing approximately $16 million in Ethereum and stablecoins also stays put, remaining under DAO control. The initial idea to also delegate the operational wallet to the Foundation was scrapped.
Third, although the roughly $65 million endowment fund is placed under the management of the Foundation's Board of Directors, every transaction is subject to a 9-day timelock, during which the Security Council can directly veto any unauthorized transaction. Before publishing its first annual budget, the Foundation can withdraw a maximum of $500,000 from the endowment fund for setup costs. Thereafter, annual expenditures are capped by the published budget and are subject to annual audits and quarterly grant reports.
In essence, the final solution splits the "keys to the treasury" into several parts: the Foundation holds one, the timelock holds one, the Security Council holds one, and DAO token holders always retain the master key, including the power to appoint and remove Directors. The removal process is also clearly defined: submitting a petition requires supporting evidence, the Board has a response window, there is a 30-day period between petition and vote, and impeached Directors can publicly present a written defense.
So what exactly will the Foundation do? The answer: things the DAO cannot do, and ENS Labs should not do.
ENS operates on-chain, but the rules of the domain name world are formulated in the meeting rooms of traditional institutions like ICANN, IETF, and W3C. A DAO lacks legal personhood; it cannot sign agreements, hire full-time employees, push for formal recognition of the ".ens" top-level domain at ICANN, nor initiate trademark enforcement against phishing websites impersonating ENS. Over the years, this work was either left undone or shouldered incidentally by ENS Labs, which is essentially an engineering company in Singapore, never intended to be the protocol's institutional representative.
The new Foundation's Board will have five seats. The Executive Director is Alexander Urbelis, who is also the General Counsel and Chief Information Security Officer at ENS Labs and previously served as CISO for the NFL. The Founder seat belongs to Nick Johnson. The three independent directors are: Kartik Talwar, Partner at A.Capital and co-founder of ETHGlobal; Brett Sun, co-founder of Prelude; and Anthony Leutenegger, CEO of Aragon. Independent directors receive an annual compensation of 40,000 USDC, which, if declined, is donated to a non-profit project of their designation. Conflict of interest clauses are detailed; decisions involving grants to ENS Labs require majority approval from independent directors, with the Founder seat automatically recusing itself from such votes.
For ENS Labs, this is also a form of unbinding. It can refocus its energy on product and engineering, concentrating on advancing ENSv2. In February this year, Labs made a rather decisive move by abandoning the plan to build its own L2 network, Namechain, and instead deploying ENSv2 directly on the Ethereum mainnet, citing Ethereum's own scaling having reduced registration gas costs by about 99%.
With the governance structure clarified, the true trinity of protocol, foundation, and development company, each fulfilling its distinct role, can finally take shape.
The impact of this proposal clearly extends beyond ENS. Over the past few years, the Web3 industry has witnessed numerous failures in DAO governance—either endless deliberation without decisions or domination by whales and professional governance players. The answer provided by ENS is to acknowledge the boundaries of token voting, letting it return to what it does best—guarding the protocol's neutrality—while delegating operations to a professional entity with budget constraints, audits, and a removal mechanism. The number of votes may decrease, but the weight of each vote will be heavier.
Of course, skepticism will not vanish. Handing administrative control of $65 million to a five-person board is, in essence, trading some design complexity for execution efficiency. The timelock and Security Council are technical fuses, but the real test lies in the first budget, the first grants, and the first appearance at an ICANN meeting after the inaugural board takes office. ENS aims to prove that critical internet infrastructure can be both credibly neutral and have someone to represent it at real-world negotiation tables. The outcome of this experiment will serve as a reference point for the entire DAO industry in the coming years.
