ENS Reform: The DAO transferred control of the $65 million fund, retaining control over the tokens.
The Ethereum Name Service (ENS) community has completed a historic transition to a new governance model. ENS token holders approved and executed an ambitious reform, transforming the ENS Foundation from a nominal structure into a full-fledged operating company with hired management and staff.
The vote on the "Next Era of ENS DAO" initiative ended with a convincing victory for the reformers: 1.2 million tokens in favor, 480,690 against. The executing transaction was carried out on the morning of August 11. Now the foundation takes on off-chain policy, branding, and operational activities, while ENS Labs will focus exclusively on protocol development, including the upcoming ENSv2 upgrade.
Key changes and control over capital
The most significant aspect of the reform was the transfer of administrative control over ENS's designated capital to the foundation. As of the end of July, the treasury held approximately $65 million in Ethereum and stablecoins from .eth domain registrations. The foundation also gains the right to manage protocol revenues.
At the same time, token holders retain levers of influence: nearly 55% of the supply (about 54.6 million ENS) remains in their hands. They can appoint and remove foundation directors. The first board is composed of Executive Director Alexander Urbelis, ENS founder Nick Johnson, as well as independent directors — Kartik Talwar, Brett Sun, and Anthony Leutenegger.
Technically, control is implemented through the EndowmentTimelock contract with a nine-day delay, which replaced the previous DAO mechanism. Now only the foundation's multisig (threshold three out of five) can queue transactions, while the Security Council has the right to cancel any of them. The latter's authority to block transfers expires on August 7, 2028.
Context and criticism
The reform did not pass without controversy. The governance conflict flared up as early as June 19, when ENS Labs COO Katherine Wu published the first version of the proposal. Project co-founder Alex Van de Sande warned that after the initiative's implementation, the DAO would lose control over the wallet, and spending limits exist only in text, not in code. Curia analysts also noted that the director removal mechanism relies on Cayman Islands legislation and takes months, while a transaction passes in minutes.
Blockful developers confirmed the correctness of the contracts but pointed out an important nuance: the nine-day delay does not apply to two existing modules — the asset manager karpatkey and the MetaGov working group's Allowance Module. Wu countered the criticism, stating that the document had been revised, tokens remained with holders, and transactions involving designated capital received a timelock and an independent cancellation mechanism.
My view: this reform is a natural step in the evolution of DAOs, which face a dilemma between decentralization and operational efficiency. Transferring control to a foundation with a clear structure and hired management increases accountability but sets a precedent where formal decentralization gives way to pragmatic governance. The question is how long token holders can effectively use their levers of influence in conditions where key decisions are made by the board of directors.