Original author: Eric, Foresight News
On August 11, Beijing Time, the ENS DAO officially voted to approve and implement the "Next Era of ENS DAO" proposal. After nearly a decade of operation, this premier domain protocol on Ethereum has finally filled a long-missing piece: a legal entity capable of representing it in the real world.
It all began in June this year. On June 19, Katherine Wu, a board member of the ENS Foundation, posted a proposal on the governance forum, proposing that the day-to-day operations, grant management, and long-term financial strategy of the DAO be entrusted to a formally established ENS Foundation.
The idea immediately sparked outrage in the community. Rotki founder Lefteris Karapetsas bluntly stated on X that the proposal effectively amounts to the DAO dissolving itself and handing over nearly $500 million in treasury funds to the foundation—he even called out founder Nick Johnson for delegating half of his voting power to himself. Meanwhile, a researcher from L2BEAT, furious, went so far as to build an alternative domain solution that is ownerless and rug-proof. As debates intensified, proposal author Katherine Wu posted a lengthy clarification but closed comments—only drawing even more skepticism.
The community’s concerns are not unfounded. When those DAOs were established in 2021, they all believed that token-weighted governance could solve everything, but over the years, issues such as voter fatigue, lack of accountability among grantees, and high coordination costs have plagued ENS just as much. Nick Johnson’s response was candid: he said the DAO cares almost exclusively about how to spend its treasury funds, and the low delegation rate underscores just how difficult it is to maintain DAO security through token-based voting. In other words, this isn’t a question of whether to be decentralized—it’s a question of what kind of organization DAOs are truly suited for.
The final approved version made significant concessions compared to the initial draft in June, which is precisely why this proposal is worth examining closely.
First, the DAO holds approximately 54.6 million ENS tokens, representing 54.6% of the total supply, which will remain untouched and continue to be controlled by token holders through the on-chain mechanism. The only exception is a one-time transfer of 1 million ENS tokens, exclusively reserved for future employee compensation at the foundation, and these tokens may not be voted, delegated, or lent for staking until granted.
Second, the operational wallet containing approximately $16 million in Ethereum and stablecoins remains unchanged and continues to be managed by the DAO. The initial draft’s proposal to entrust the operational wallet to the foundation has been removed.
Third, the approximately $65 million endowment, although managed by the foundation’s board of directors, requires a nine-day time lock on every transaction, during which the Security Council can directly veto any unauthorized transactions. Before announcing its first annual budget, the foundation may withdraw no more than $500,000 from the endowment for setup expenses; thereafter, annual expenditures are capped by the published budget and are subject to annual audits and quarterly disbursement reports.
The final solution splits the keys to the “wallet” into several parts: the foundation holds one, a time lock holds another, 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 clearly defined: petitions must include evidence, the board has a window to respond, there is a 30-day gap between petition submission and voting, and the impeached director may issue a public written defense.
So what exactly should the foundation do? It’s the work that DAOs can’t do and ENS Labs shouldn’t do.
ENS operates on-chain, but the rules of the domain name world are established in the meeting rooms of traditional institutions like ICANN, IETF, and W3C. A DAO has no legal personality—it cannot sign agreements, hire full-time employees, advocate for the formal recognition of the ".ens" top-level domain at ICANN, or pursue trademark enforcement against phishing sites impersonating ENS. Over the past several years, these tasks have either gone unaddressed or been taken on ad hoc by ENS Labs, which is essentially an engineering firm based in Singapore and has never been the institutional representative of the protocol.
The board of the new foundation consists of five seats. Executive Director Alexander Urbelis, who also serves as General Counsel and Chief Information Security Officer at ENS Labs and previously held the role of CISO for the NFL, holds one seat. The founder seat is reserved for Nick Johnson. The three independent director seats are held by 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 salary of 40,000 USDC; if declined, the amount is donated to charitable projects designated by them. Conflict-of-interest provisions are detailed: decisions regarding ENS Labs grants require approval by a majority of independent directors, and the founder seat automatically recuses itself from such votes.
For ENS Labs, this is also a form of liberation. It can now refocus its efforts on product and engineering, dedicating itself fully to advancing ENSv2. In February of this year, Labs made a decisive move to abandon its self-built L2 network, Namechain, and deploy ENSv2 directly on the Ethereum mainnet, citing Ethereum’s own scaling improvements that reduced registration gas costs by approximately 99%.
Only after the governance structure is streamlined does a clear division of roles among the protocol, the foundation, and the development company truly take shape.
The impact of this proposal clearly extends beyond ENS. Over the past few years, the Web3 industry has witnessed too many failures in DAO governance—either paralysis through endless debate or domination by large holders and professional governance actors. ENS’s solution is to recognize the limits of token voting, allowing it to focus on what it does best: safeguarding protocol neutrality, while entrusting operations to a professional entity with budget constraints, audits, and mechanisms for removal. Voting will occur less frequently, but each vote will carry greater weight.
Of course, skepticism will not disappear. Entrusting administrative control of $65 million to a five-member board is essentially trading institutional design for operational efficiency; time locks and the Security Council serve as technical fuses, but the real test lies in the first budget, the initial grants, and the first appearance at an ICANN meeting by the inaugural team. ENS aims to demonstrate that critical internet infrastructure can be both trustlessly neutral and represented by humans at real-world negotiation tables. The outcome of this experiment will serve as a benchmark for the entire DAO industry for years to come.