ENS DAO drama triggers radical dissolution proposal

Christoph Jentzsch, a veteran Ethereum developer with no formal ENS governance role, has proposed shutting down the ENS DAO entirely. The treasury would be better handled if it were in the hands of an outside steward, according to Jentzsch.

This is the third competing idea for how the ENS should be run, with the two other ideas proposed by the ENS Labs’ Chief Operating Officer, Katherine Wu. 

What is Christoph Jentzsch proposing? 

Ethereum Name Service governance reached a new turning point on July 1 as the governance drama has started to attract suggestions even from people without any official role in ENS governance.

One day after Nick Johnson, the co-founder of the ENS DAO, used roughly half of the protocol’s active voting power to block an on-chain vote that would have renewed the DAO’s Security Council, Christoph Jentzsch, a well-known Ethereum developer, proposed that the DAO be shut down entirely, and its treasury given to an outside caretaker. 

The DAO Security Council is a group with the power to cancel governance proposals even after they pass community votes and enter the waiting period before execution, known as a timelock. 

Johnson explained that he had abstained from an earlier “soft” vote on the same issue while saying he supported renewing the council, just not with its current members. When the binding on-chain vote came, he voted against it because, in his words, none of his concerns had been addressed.

Jentzsch spoke to Johnson directly on X, explaining his idea of winding the DAO down over a set period, stripping all administrative powers from its smart contracts, and giving the remaining funds to an outside institution, such as the Ethereum Foundation or the newly formed Eth Labs.

Regarding the DAO’s fees and treasury assets, Jentzsch suggested to either burn the funds to stop people from grabbing up unused domain names, which is known as squatting, or dropping registration fees to zero. Although he admitted that could make squatting worse. 

Part of his suggestions was to appoint a caretaker organization to manage the assets to help ENS grow. 

Jentzsch estimated that the whole process could take 6 to 18 months and asked Johnson whether ENS v2, the next version of the protocol, could be finished in that time.

He later admitted that his plan had some “technical gaps” during his exchange with Johnson, but said the overall idea was still worth exploring. 

Another community member, known online as Ariutokintumi.eth, suggested ENS switch to demand-based pricing for domain names as part of any changes.

Is the ENS DAO treasury at risk now?

Johnson’s vote against renewing the Security Council has caused concerns about the treasury being raided. Lefteris Karapetsas, a longtime Ethereum contributor and the founder of the tool Rotki, said on X that the DAO was now “dead,” arguing that Johnson’s voting power protects a treasury worth around $500 million from any outside checks.

Another delegate, who goes by Spengrah.eth, wrote on X that ENS Labs seemed to be positioning itself as the main controller of both daily operations and the Security Council at the same time, saying the DAO “looks like it has been captured,” with voting power sitting in only a few hands.

Data from DeFiLlama shows the ENS treasury is worth about $350 million in total, or roughly $88 million once you remove the ENS tokens the DAO itself holds. The ENS token was trading at just over $4 as of this week, giving it a circulating market value of around $166 million to $169 million. That price is down more than 95% from its all-time high of $85.69 in November 2021. 

The gap between these figures means that someone could theoretically buy up ENS tokens for less than the treasury is worth, take control of governance votes, and then push through proposals to drain the treasury to themselves — something insiders call an “RFV raid.”

Alongside Jentzsch’s idea, ENS Labs’ Chief Operating Officer, Katherine Wu has written a proposal for a new Security Council. It was posted to the ENS governance forum the same day the renewal vote failed. 

That plan would replace the current council with eight new members that will be chosen in the open. It would also make canceling a locked proposal require 5 out of 8 votes instead of the current 4 of 8. Johnson supports this plan and has even put himself forward as a candidate for the new council. Nominations are set to close by July 3. 

Katherine Wu also shared a restructuring plan on June 19 that would hand day-to-day control, grants, and treasury management to the ENS Foundation. Tokenholders would still get to vote on protocol changes and could remove Foundation directors if needed.

The ENS community has days to pick between the different plans on the table for the protocol.