ENS DAO Reform: Foundation Gains Control over $65M, and Holders Lose Direct Access to the Treasury
The Ethereum Name Service (ENS) ecosystem is entering a new phase of its existence. The token holder community has approved a radical governance restructuring, transforming the non-profit ENS Foundation into a full-fledged operating company with hired management and a supervisory board. This decision essentially marks a shift from decentralized governance to a more traditional corporate structure.
The vote on the Next Era of ENS DAO initiative ended in a convincing victory for the reformers: 1.2 million ENS tokens were cast in favor, while only 480,690 holders opposed it. The execution transaction was carried out on the morning of August 11, making the reform irreversible.
New governance architecture
The key change is the transfer of administrative control over the ENS Foundation's treasury capital. This involves significant funds: as of the end of July, the treasury held approximately $65 million in Ethereum and stablecoins, accumulated through .eth domain registrations. Now the foundation will not only manage these assets but also oversee all operational revenues of the protocol. At the same time, ENS Labs will retain its focus on technical development, primarily preparing the ENSv2 upgrade.
The control mechanism has also undergone fundamental changes. Instead of direct governance through DAO mechanisms, a new contract, EndowmentTimelock, with a nine-day execution delay, becomes the owner of the wallet. Transactions can now only be initiated by the foundation's multisig (threshold 3 of 5), while the Security Council retains veto power over any operations. However, the Council's authority to block transfers is not permanent—it expires on August 7, 2028.
The price of decentralization
As part of the reform, the DAO transfers 1 million ENS to the foundation to pay employee salaries. Nevertheless, holders retain control over a significant portion of the supply: approximately 54.6 million ENS (nearly 55%) will remain in their hands. Formally, coin holders retain the right to appoint and remove directors, but this process, as critics note, relies on Cayman Islands legislation and could take months, while a transaction executes in minutes.
The foundation's 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.
It is worth noting that the reform did not come without controversy. The governance conflict had been brewing since June 19, when ENS Labs COO Katherine Wu published the initial draft. Project co-founder Alex Van de Sande expressed concerns that the DAO was effectively losing control of the wallet, and that all restrictions existed only in text, not in code. Blockful developers confirmed the correctness of the contracts but pointed out a vulnerability: the nine-day delay does not apply to two existing modules—the asset manager karpatkey and the Allowance Module of the MetaGov working group.
My analysis: This is a classic example of the DAO scaling dilemma. Formally, token holders retain "voting rights," but in practice, they delegate operational control to a professional team. For the protocol, this could be a step forward in efficiency, but the community must recognize that decision-making speed and asset security now depend on a few key figures. In the long term, this could lead to reduced engagement among ordinary holders, undermining the very idea of decentralization. The market will likely watch closely how the new structure manages the $65 million—this will serve as a litmus test for the entire industry.