Ethereum Name Service (ENS) tokenholders have approved and executed a major governance overhaul that gives the ENS Foundation administrative control of an endowment worth approximately $65 million. The “Next Era of ENS DAO” proposal passed with about 70% support and was executed onchain on Aug. 11.
The restructuring establishes the ENS Foundation as a fully operational organization with a full-time executive director, dedicated staff and a five-member board. It also creates a clearer division of responsibilities between the Foundation, ENS Labs and the ENS DAO.
Key Takeaways
- ENS tokenholders approved a major governance overhaul, giving the ENS Foundation administrative control over a $65 million endowment.
- The ENS Foundation will handle financial, legal and institutional operations, while ENS Labs focuses on protocol development and the upcoming ENSv2 upgrade.
- DAO governance remains in place, with tokenholders retaining control over major decisions and approximately 54.6% of ENS’s total token supply.
- Security and transparency are now major concerns, as the Foundation gains greater financial authority despite questions about smart contract safeguards and Security Council oversight.
ENS Foundation takes control of $65 million endowment
Under the new structure, the ENS Foundation will assume administrative control of the ENS Endowment, which holds approximately $65 million in ETH and stablecoins. The endowment is funded primarily through .eth domain registration and renewal fees.
The assets will remain at their existing address rather than being moved to a new wallet. Transactions from the endowment will generally pass through a nine day timelock, allowing the ENS Security Council to cancel transactions that fall outside the Foundation’s mandate.
The Foundation will also take responsibility for the stewardship of protocol revenue. However, the ENS DAO will retain control of its broader token holdings, representing approximately 54.6% of the total ENS supply. The proposal also authorizes a one time transfer of 1 million ENS tokens to the Foundation for employee compensation under a published framework.
ENS Labs Will Focus On Protocol Development
The restructuring separates ENS Labs’ technical responsibilities from the Foundation’s operational and institutional role. ENS Labs will continue to focus on engineering, integrations and core protocol development, including the upcoming ENSv2 upgrade. The Foundation, meanwhile, will handle off-chain responsibilities such as policy development, grants, legal matters, trademark protection and institutional relationships.
The Foundation will represent ENS in organizations including the Internet Corporation for Assigned Names and Numbers (ICANN), the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). It will also pursue recognition and stewardship of the .ens top level domain. The Foundation and ENS Labs will remain separate legal entities, with neither organization holding governance rights over the other.
Five Member Board to Oversee the Foundation
The new Foundation will be governed by a five member board consisting of Executive Director Alexander Urbelis, ENS founder Nick Johnson and three independent directors. The independent directors are Kartik Talwar, general partner at A.Capital Ventures and ETHGlobal co-founder; Brett Sun, co-founder of Prelude; and Anthony Leutenegger, CEO of Aragon.
The independent directors will serve renewable two year terms, while ENS tokenholders will retain the ability to appoint or remove Foundation directors.
The Foundation will operate through published budgets approved by its board and is expected to provide annual audited financial statements and quarterly grant updates.
Security Council Safeguards Remain in Place
The transfer of administrative control over the endowment has raised questions about how the new safeguards will work in practice. The nine day timelock gives the ENS Security Council an opportunity to cancel certain endowment transactions. However, ENS co-founder Alex Van de Sande raised concerns that some spending limits and protections described in the proposal are contained in its written terms rather than directly enforced by the smart contract code.
Van de Sande also questioned aspects of the Security Council’s long-term oversight. Incoming Foundation Executive Director Alexander Urbelis acknowledged that some contract addresses should have been explicitly identified in the proposal rather than requiring voters to decode transaction data. Despite these concerns, tokenholders approved and executed the proposal.
Governance Dispute Preceded the Vote
The restructuring follows a major governance dispute within ENS in June. Nick Johnson self delegated approximately 3.26 million ENS tokens, representing roughly half of the active voting power at the time, and used the voting power to block the renewal of the existing Security Council. The move drew criticism from several delegates and community members, with some describing it as a governance attack.
A new Security Council was subsequently established with a five-of-eight cancellation threshold. The dispute also intensified debate over whether operational and treasury responsibilities should remain directly under the ENS DAO or move toward a more formal Foundation structure.
What the restructuring means for ENS
The new arrangement does not give the Foundation complete control over ENS. Tokenholders continue to govern major protocol decisions and retain control over the DAO’s ENS holdings, while ENS Labs remains responsible for technical development.
Instead, the restructuring gives the Foundation responsibility for the legal, financial and institutional functions that are difficult for a decentralized autonomous organization to manage directly.
Conclusion
The “Next Era of ENS DAO” marks a significant shift in how ENS is organized, giving the Foundation control over a roughly $65 million endowment while preserving tokenholder control over the broader protocol. The model could make ENS more effective when dealing with regulators, standards organizations and other institutions, but the Foundation’s new financial authority also makes transparency and Security Council oversight increasingly important. How the Foundation manages the endowment and maintains its relationship with tokenholders will determine whether the new structure strengthens ENS governance or creates another source of community conflict.
