ENS DAO transferred control over $65 million: a reform that changes the rules of the game
The Ethereum Name Service (ENS) community has made a radical decision that changes the governance architecture of one of the most well-known decentralized projects in the industry. Token holders approved the Next Era of ENS DAO initiative, as a result of which the non-profit structure ENS Foundation is transformed into a full-fledged operating company with a hired CEO, staff, and a five-member board of directors.
The vote concluded with a convincing margin: 1.2 million tokens supported the reform, while only 480,690 voted against. The executing transaction was carried out on the morning of August 11, marking a transition from a purely decentralized model to a hybrid corporate structure.
New distribution of powers
Now the ENS Foundation takes on off-chain matters: branding, operational activities, and external policy. At the same time, ENS Labs will focus exclusively on the technological development of the protocol, including preparation for the long-awaited ENSv2 upgrade.
The key point is that the foundation gains administrative control over the ENS treasury, which as of the end of July amounted to about $65 million in Ethereum and stablecoins. These funds are generated from the registration of .eth domains. Additionally, the DAO allocates 1 million ENS to pay the new team, while nearly 55% of the supply (approximately 54.6 million ENS) remains in the hands of holders.
Control mechanisms and risks
Token owners retain the right to appoint and remove foundation directors. The first board has already been formed: Executive Director Alexander Urbelis, ENS founder Nick Johnson, as well as independent directors — Karthik Talwar, Brett Sun, and Anthony Leutenegger.
Technically, governance moves to a new EndowmentTimelock contract with a nine-day delay. 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 powers to block transfers will remain until August 7, 2028.
Context and criticism
The conflict around the reform had been brewing since June 19, when ENS Labs COO Katherine Wu presented the first version of the proposal. Co-founder of the project Alex Van de Sande expressed concern that after the initiative is implemented, the DAO loses control over the wallet, and spending limits exist only in text, not in code. Analysts at Curia added that the director removal procedure relies on Cayman Islands law and could take months, while the transaction executes in minutes.
Developers at Blockful confirmed the correctness of the contracts but pointed out exceptions: the nine-day delay does not apply to the karpatkey and Allowance Module modules of the MetaGov working group. Wu countered the criticism, emphasizing that the document was revised to account for feedback, tokens remained with holders, and the treasury is protected by a timelock.
My analysis: This is a precedent-setting case for the entire industry. Transferring control over significant capital from a DAO to a corporate structure is a risky step that could undermine trust in decentralized governance models. However, if the ENS Foundation demonstrates efficiency and transparency, it could become a model for other projects facing the inefficiency of pure DAOs. The key question is whether the director removal mechanism can actually work in practice, rather than remain a formality.