Empowering the Foundation Under DAO Sovereignty

I'm Terextiarius. I've been following the temp check and the debate around it closely. Here's my position. I believe in the DAO. I think token voting works. Tokenholders have skin in the game — their tokens are worth what the protocol controls. That alignment is not a flaw to work around. It's the reason ENS has functioned as well as it has. The DAO has been doing its job: approving budgets, funding operations, stewarding the protocol. The working group model evolved because the DAO voted to evolve it. That's not dysfunction — that's a governance system working as designed, adjusting itself over time. ENS is an internet-native organization. That's the whole point. The moment we replace on-chain governance with a traditional corporate foundation, we've stopped being what makes ENS valuable. What I do think is that the Foundation can be useful. There's real work — ICANN engagement, standards bodies, legal counterparty, threat intelligence, trademark stewardship — that benefits from a dedicated entity with staff who do it full time. Formalizing that under an expanded Foundation is good organizational design. I support that. This is a positive-sum change: the Foundation gets operational capacity, the DAO keeps sovereignty. Both sides gain. What I don't support is using the Foundation as a vehicle to move the treasury out of DAO control. The temp check bundles two things that should stay separate: expanding the Foundation's operational capacity, and transferring treasury custody away from the on-chain DAO. The first has broad consensus. The second doesn't. My proposal keeps the first and rejects the second. ### What Needs to Change in the Temp Check The temp check gets the operational diagnosis right but the structural prescription wrong. Here's where I think it needs adjustment. **The board selection needs to be DAO-driven.** The temp check proposes 5 seats: two from ENS Labs and three "independent" directors chosen by the existing Foundation Board with input from Labs leadership. The proposed Executive Director is currently the chief legal officer of the development company he'd be overseeing. Two of the three "independent" directors have deep ties to Aragon, one of the largest ENS integrators with potential service provider interests. This isn't independence. It's an echo chamber where the overseer and the overseen share professional and financial DNA. The temp check defends this by pointing to Mozilla, Signal, and ISRG — all of which had founder-led board formation. That's true. But those organizations gave their communities no recourse if the founding generation chose badly. ENS has something they don't: tokenholder removal authority. The temp check claims to preserve this, but then adds procedural prerequisites — a petition must allege a specific "mission violation supported by documentary evidence," a 30-day cooling-off period, the board evaluates whether evidence meets the threshold. The board becomes the gatekeeper to its own removal. That's not accountability — it's a firewall. **The treasury transfer is a constitutional-level change, not operational reform.** The temp check confirms directly: "Yes, treasury custody will be transferred to the foundation." That's $86.9M in the Endowment plus ~$56.6M in the DAO wallet — about $143M in liquid assets, plus the locked ENS supply. This matters beyond governance. The treasury being on-chain and controlled by the token is part of what makes ENS trade roughly 1:1 with ETH. The token's value is linked to what it controls. If it controls less, it's worth less. If it's worth less, the protocol is cheaper to attack. Decoupling the treasury from the token doesn't just change governance — it changes the security model. The ENS DAO Constitution was not just a symbolic statement. It defined the boundaries of legitimate governance. The DAO was designed to do two things: control the levers of the protocol (which this proposal keeps) and receive and manage the protocol treasury (which this proposal removes). Transferring treasury custody is not operational cleanup — it's removing one of the two primary reasons the DAO exists. That should require a constitutional vote, not a temp check. **The "independent veto" is mathematically misdirected.** The temp check says any Labs allocation above a threshold requires 4 of 5 director votes, giving the three independent directors a "structural veto." But 4 out of 5 means Labs needs to convince only 2 of the 3 independents. A single dissenting independent director is powerless. That's not a veto — it's a majority requirement. The language overstates the accountability mechanism. **The process needs to be legitimate.** Months ago, there was broad consensus around expanding the Foundation with a DAO-elected board. Then months of silence. Then a new proposal appeared: still a self-selected board, now with treasury transfer added — which was not part of the earlier discussion — and 3 million tokens self-delegated to force it through. Regardless of whether anyone has the right to self-delegate, the process pattern is: negotiate in good faith, go silent, come back with a more aggressive version, and outvote everyone. That's not how you build legitimacy for a structural change. Even if the proposal were perfect, the process would undermine it. **The operating team needs to adjust before the governance structure is blamed.** Labs gets about 2/3 of current spend. Labs doubled its budget 1.5 years ago to build Namechain, didn't deliver, and hasn't cut funding. Annual revenue is currently about half of what Labs alone receives. The temp check doesn't acknowledge other teams' contributions to the ENS ecosystem. The subtext is "ENS is going poorly because of the DAO" — but nearly all operations are done by Labs, and Labs has had every budget request approved. If ENS is underperforming, the operating team bears more responsibility than the governance structure. The DAO isn't the problem here. **Concentrating treasury and legal exposure in one entity creates regulatory risk.** A decentralized DAO is a diffuse target. A foundation with a public ED, a 5-member board, and total treasury control is an easily targetable legal chokepoint. The proposal lists a massive array of advocacy tasks — acting as legal counterparty, managing OFAC postures, handling court orders. That's important work, but it also creates a jurisdictional hook for regulators that the current structure doesn't have. The Foundation should do policy work, but concentrating the treasury under the same entity that's the legal counterparty is a design failure. If the Foundation gets a subpoena, the treasury is in the same legal house. ### My Proposal I support expanding the Foundation's operational capacity. I reject transferring treasury custody. The guardrails below are simple rules, not complex bureaucracy — they define what the Foundation can do, what the DAO retains, and how the DAO can intervene. Simplicity over complexity. Mission first. **1. DAO-Elected Board** One founder seat, permanent, non-removable except by constitutional vote. Four seats elected by the DAO through Snapshot, staggered two-year terms. The Executive Director is hired by the board but requires DAO ratification via Snapshot. Any board member can be removed by a DAO vote with 10% quorum and simple majority — no "mission violation" evidentiary standard, no cooling-off period, no board gatekeeping. The DAO selects its agents. The founder keeps a seat. Independence is real because the selector is the DAO, not an interested party. This was the consensus position months ago. I'm not proposing anything new — I'm proposing what was already agreed before the process broke down. **2. Treasury Stays On-Chain and DAO-Controlled** The Foundation becomes the operational executor of grants administration, ecosystem coordination, and treasury strategy. But the DAO remains the constitutional principal. - Treasury custody stays in the Governor/Timelock. The Foundation does not get a multisig with the treasury in it. The Foundation proposes; the DAO disposes. - The Foundation proposes an annual budget. The DAO ratifies it via Snapshot. If the DAO rejects the budget, the previous year's budget continues at 80% until a revised proposal passes. - The Foundation cannot unilaterally change the Endowment manager, liquidate Endowment positions, or transfer treasury to new custodial arrangements without a separate DAO vote on each material change. - Material funding decisions — any single allocation above $500K — require explicit DAO ratification, not just board approval. The Foundation can propose strategy. The DAO approves material treasury actions. The DAO retains custody as the constitutional principal. The token still controls the treasury. The security model is preserved. **3. 5% Annual Endowment Withdrawal Cap** The Endowment holds approximately $86.9M. The Foundation may withdraw no more than 5% of the Endowment's value per calendar year, calculated on January 1 based on the prior quarter's average. This cap can only be changed by constitutional amendment. This gives the Foundation meaningful operating capital without the ability to drain the principal in a single cycle. It forces multi-year planning rather than short-term spending. And it makes the Endowment a perpetual resource rather than a one-time transfer. **4. Two-Year Sunset with Mandatory DAO Review** The Foundation's expanded mandate expires automatically 24 months after activation unless the DAO votes to reauthorize. This is not a vote of no confidence. It is a scheduled checkpoint. The Foundation must present: audited financials, a retrospective on grant outcomes, and a forward plan. The DAO votes yes, no, or reauthorize-with-amendments. The temp check is one-way. Once the treasury moves, it doesn't come back. Nobody has adequately answered the reversibility question. This amendment makes the delegation two-way. If the Foundation underperforms, the DAO can narrow the mandate, replace the board, or revert to the current structure. **5. No Foundation Token Voting** The Foundation is barred from voting, delegating, lending, or pledging any ENS tokens it holds on any governance matter. The Foundation is an agent, not a governance participant. This is already in the temp check and should remain. **6. Lean Structure** The Foundation should be small. An Executive Director, a grants coordinator, a financial controller, and contracted specialists as needed. Not a growing bureaucracy that justifies its own budget expansion. The DAO approves the Foundation's headcount budget as part of the annual budget ratification. Any new full-time hire above a compensated threshold requires board approval and public disclosure. What breaks foundations is the same thing every time: the institution starts feeding itself before it feeds the mission. I want the structure lean enough that the DAO can actually see what it's paying for. Simplicity over bureaucracy — the Foundation should have fewer moving parts than the working group model it replaces, not more. **7. Transparent, Auditable, On-Chain Where Possible** The Foundation publishes: quarterly financial reports, grant decisions with rationale, operating expenses, and an annual independent audit. All public. Budget ratification and material funding decisions happen on Snapshot, creating a permanent on-chain record. The DAO can audit the Foundation at any time through a Snapshot vote requiring 5% quorum. Transparency is not a reporting exercise. It is the mechanism by which the DAO retains meaningful oversight without needing to approve every operational decision. If the DAO can see what the Foundation is doing, it can act if the Foundation goes wrong. If it can't see, the backstop is theoretical. The scope of delegated authority must be crisply bounded, the Foundation's strategy must be periodically re-legitimated on-chain, and community representation in oversight structures must be durable — not just front-loaded in the initial slate. **8. Competitive, RFP-Based Grants Process for Public Goods** The grants program continues but shifts to a competitive RFP model. The Foundation publishes grant categories and budgets quarterly. Anyone can apply. Decisions are public with written rationale. Labs funding is one grant among many, not a privileged line item. This replaces the current pattern where Labs funding is treated as a baseline entitlement and everything else is discretionary. Public goods funding is a core function of the ENS ecosystem. The RFP process should explicitly prioritize: core protocol infrastructure, ENS integrations, public goods that benefit the broader Ethereum ecosystem, and community-led initiatives. A competitive process makes the spending record testable rather than rhetorical. If Labs deserves its funding, it wins it in open competition. If other teams can do better, they get the chance. I care about results, not credentials — and a competitive process is how you get results. **9. Protocol Control Stays with Tokenholders** Smart contract upgrades, ENS pricing, fee structures, root key and registry control, and constitutional amendments remain exclusively with tokenholders via on-chain governance. The Foundation has no protocol authority. This is not a concession — it is a boundary. **10. Right to Exit Preserved** The ENS Constitution should explicitly affirm that tokenholders retain the right to fork, exit, or restructure the governance system if the Foundation model fails. No governance change should be one-way. This is not a threat. It is a discipline mechanism. Systems that cannot be exited tend to serve their operators rather than their users. I take the right to exit seriously — it's the ultimate check on any institution that outlives its usefulness. **11. Conflict-of-Interest Policy Before Approval, Not After** The temp check defers the COI policy to the Executive Director's first 90 days. That's not good enough. If the Foundation wants to sit at ICANN's table, it should adopt ICANN's Conflicts of Interest Policy in full, not approximated. And it should be ratified by the DAO, not adopted internally by the body it governs. This is part of the proposal, not a post-passage deliverable. The COI policy must be attached to the proposal before the DAO votes on it. **12. Article I Red Lines** The Foundation as the off-chain legal/compliance/trademark/security layer could pressure wallets, registrars, marketplaces, and infrastructure partners to treat certain valid ENS names differently — without a direct protocol-level seizure. That is how soft power becomes hard power. My proposal includes an explicit red line: the Foundation may not create a discretionary path to suppress, blacklist, burden, or selectively disadvantage valid ENS names without transparent, neutral, DAO-approved rules consistent with the Constitution. Name ownership shall not be infringed — and that principle should not be narrowed to "the smart contract did not seize your NFT." **13. Separate the Treasury Question from the Foundation Question** The temp check bundles two things that should be separate: 1. Expanding the Foundation's operational capacity (broad consensus exists for this) 2. Transferring treasury custody from the DAO to the Foundation (deep disagreement exists for this) My proposal separates them. The Foundation gets operational authority, staff, advocacy mandate, and grants administration — all under DAO-approved budgets. The treasury stays on-chain. If the Foundation proves itself over two years, the DAO can vote to delegate more. But the default is: Foundation executes, DAO controls. ### What This Proposal Does Not Do I'm not rejecting the Foundation model. I'm not preserving the status quo. And I'm not handing the treasury to a self-selected board with no caps, no review, and no reversibility. I support the Foundation. I support giving it real work to do. I don't support giving it the treasury. This is a positive-sum proposal: the Foundation gains operational capacity, the DAO retains sovereignty, and the token keeps its meaning. ### Why I Think This Works The Foundation gets real operational authority, a full-time Executive Director, control of grants, and stewardship of treasury strategy. It can act. It is not a figurehead. The advocacy mandate, the standards work, the ICANN engagement — all of that happens. The DAO keeps constitutional sovereignty. The board is elected. The Endowment has a cap. There is a sunset clause. Labs funding is no longer privileged. The COI policy is pre-committed. The treasury stays on-chain. The token still controls what it controls. The security model is preserved. ENS remains an internet-native organization — the DAO governs, the Foundation executes, and tokenholders retain ultimate authority. This is positive-sum. The Foundation gains capacity it didn't have. The DAO keeps sovereignty it was designed to have. The token keeps the meaning it was created to have. Nobody loses except those who wanted unilateral control. This amendment respects Article I (name ownership red lines), Article III (treasury income ensures long-term viability), and Article V (material governance changes require high-threshold votes). It does not bypass constitutional process. It operates within it. The trade-off is real: the Foundation gains operational power that the DAO delegates. The guardrails are what make that delegation acceptable. I'm not going to pretend there's no cost — there is. I just think the cost is lower than the temp check's cost, and the upside is the same. ### The Strongest Objection, Answered The strongest objection to this proposal is that a DAO-elected board with a sunset clause and withdrawal caps is too constrained to attract serious talent. The Executive Director role becomes less attractive if the mandate can be pulled in two years and the treasury isn't in the Foundation's custody. That's a real trade-off, not a rhetorical one. But serious talent accepts constrained mandates all the time. Nonprofit executives, university presidents, and foundation directors all operate under board oversight, budget approval, and performance review. The Mozilla ED, the ISRG ED, the Wikimedia ED — all operate inside board-approved constraints. What serious talent does not accept is a mandate that could be revoked unilaterally by one person who controls a disproportionate share of the voting supply. The constraint that makes the role unattractive is not the DAO's oversight. It is the absence of legitimate governance process. This proposal fixes that. If the concern is that the DAO will be too fickle, the 5% cap and the two-year sunset provide stability windows. The Foundation can plan in two-year horizons with known capital. That is more stability than the current DAO budget process provides, and less than a permanent handover. It is the right amount. ### What Would Change My Mind If someone can show me that a self-selected board with no caps and no sunset has historically outperformed an elected board with guardrails in comparable open-source foundations, I will reconsider. I have not seen that evidence. The Mozilla Foundation, the Linux Foundation, and the Wikimedia Foundation all operate with board oversight, not self-selection. The temp check proposes something less accountable than any of them. This proposal brings ENS in line with the proven models while keeping the one thing they lack: tokenholder removal authority. I'll also change my mind if someone can explain why transferring treasury custody to the Foundation — rather than having the Foundation execute under DAO custody — produces better outcomes. The temp check doesn't make this case. It asserts that the Foundation needs treasury custody to do long-term capital planning. But the Foundation can do long-term capital planning and propose it to the DAO. What it needs is the capacity to plan, not the custody to execute unilaterally. Those are different things. ### A Note on Process Even if this proposal is perfect on the merits, it won't matter if the process is broken. Self-delegating 3 million tokens to force the temp check through — regardless of whether that's a right — signals that the DAO's governance is token-weighted theater. If one entity can outvote everyone else, the DAO doesn't function as a DAO. But here's the thing: the process problem doesn't go away because I prefer a different outcome. What fixes the process problem is: (1) the DAO electing the board, (2) the sunset clause requiring reauthorization, and (3) the treasury staying on-chain so that token voting power remains meaningful. This proposal is designed to make the DAO functional enough that token-weighted voting becomes less consequential because the structure itself is more resilient. If the DAO can remove directors by simple majority, if the budget requires annual ratification, if the Endowment has a hard cap, and if the treasury stays on-chain — then it matters less who has the most tokens, because the structure constrains what any single actor can do. That's the point. Not to prevent anyone from voting, but to make the system resilient regardless of how they vote. Skin in the game means the token matters. The token only matters if it controls something real. Keep the treasury on-chain, and the token keeps its meaning.