The ENS DAO transferred control over $65 million to a new structure: what has changed in governance
The Ethereum Name Service (ENS) community has completed a landmark stage in its evolution by approving a radical governance reform. The initiative, called "Next Era of ENS DAO," received support from the majority of token holders: 1.2 million votes "for" versus 480,690 "against." The executing transaction was carried out on the morning of August 11, effectively cementing the new governance framework.
The essence of the transformation is a shift from a purely decentralized model to a hybrid one. Now, the ENS Foundation, previously existing as a non-profit organization, becomes a full-fledged operating company with a hired executive director, a staff of employees, and a five-person board. The Foundation will take on off-chain policy, branding, and operational activities, while ENS Labs will focus on the technical development of the protocol, including preparations for the long-awaited ENSv2 upgrade.
The key point — control over capital
The most significant change concerns finances. The ENS Foundation gains administrative control over the ENS endowment, which stood at approximately $65 million in Ethereum and stablecoins at the end of July. These funds are generated from revenue from .eth domain registrations. At the same time, token holders retain nearly 55% of the supply (approximately 54.6 million ENS), while the foundation is allocated 1 million ENS to pay employee salaries.
The control mechanism has also undergone changes. The EndowmentTimelock contract with a nine-day delay has become the new owner of the wallet, replacing the previous DAO structure. Now, only the foundation's multisig with a threshold of three out of five can initiate transactions, and the Security Council retains the right to veto any operations. However, its authority to block transfers expires on August 7, 2028 — this creates a temporary window for potential risks.
Context and criticism
The conflict surrounding this reform had been brewing since June 19, when ENS Labs COO Katherine Wu presented the first version of the proposal. Some delegates voiced sharp criticism. Co-founder of the project Alex Van de Sande emphasized that after the initiative is implemented, the DAO effectively loses direct control over the wallet, and spending limits exist only in text, not in code. Analysts at Curia added that the procedure for removing directors, relying on Cayman Islands legislation, could take months — while an unwanted transaction executes in minutes.
Developers at Blockful confirmed the correctness of the contracts but identified an important nuance: the nine-day delay does not apply to two existing modules — the asset manager karpatkey and the Allowance Module of the MetaGov working group. This means that some operations can be executed without a timelock, which somewhat reduces the level of protection.
My view: This step is a pragmatic acknowledgment that pure decentralization is not always effective for managing large assets and operational activities. However, the transition to a model with hired management and limited DAO control is a double-edged sword. On the one hand, operational efficiency increases. On the other hand, the community places itself in dependence on the integrity of five directors. In conditions where the timelock does not cover all modules and the removal mechanism is slow, trust in the board becomes a critical factor. This is a precedent worth watching for other DAOs considering similar reforms.