ENS DAO has approved and begun implementing a governance overhaul that places its off-chain operations under a legally incorporated ENS Foundation while leaving the protocol’s largest on-chain assets, director appointments, and core treasury controls with ENS tokenholders.
The “Next era of ENS DAO” plan, revised after board member Wu posted an earlier version to the ENS governance forum on June 19, is designed to give the Ethereum Name Service a legal vehicle for work that a decentralized autonomous organization cannot easily perform itself. That includes signing contracts, employing staff, managing grant administration, engaging internet governance bodies, and pursuing legal action against phishing or brand impersonation.
The structure splits operational execution from ownership of the DAO’s principal assets. ENS DAO will retain custody of roughly 54.60 million ENS tokens, representing 54.6% of the token’s total supply, rather than transferring those holdings to the foundation. The DAO will also continue to control an operating wallet holding approximately $16 million in ether and stablecoins.
That retention of token and operating-wallet control emerged from revisions to the original proposal. Earlier language would have put the operating wallet under the foundation’s management. The approved version instead leaves it with the DAO, limiting the foundation’s financial authority to a separate endowment and budget process.
Foundation receives a controlled endowment
The ENS Foundation will administer an endowment of about $65 million under a set of governance constraints aimed at preventing the board from operating as an independent treasury manager.
Each endowment transaction will face a nine-day timelock, creating a window for oversight before funds move. The design also includes a mechanism that can veto actions exceeding the foundation’s assigned authority. Before its first annual budget is published, the foundation may access up to $500,000 from the endowment for incorporation and setup expenses.
After that initial period, spending will be governed by a publicly issued annual budget. The foundation must also undergo an annual audit and publish quarterly reports on its disbursements. Those requirements give ENS holders more visibility into off-chain spending than they would have if operational funding were handled through a less formal contributor arrangement.
A separate one-time allocation of 1 million ENS tokens has been reserved for future foundation staff compensation. Those tokens cannot be voted, delegated, or staked before they are granted, preventing the compensation pool from adding to the voting power of the foundation or its employees while it remains unissued.
The arrangement places the foundation in charge of executing a defined mandate, rather than absorbing the DAO’s governance authority. ENS holders retain the power to appoint and remove directors, giving token governance a direct route to intervene if the foundation’s leadership loses community confidence.
Director removal process sets a higher bar
The approved framework establishes a five-seat foundation board. It includes executive director Urbelis and founder Johnson, alongside independent directors Talwar, Sun, and Leutenegger.
Independent directors will receive 40,000 USDC annually. The governance framework also contains a conflict safeguard for grants involving ENS Labs: decisions on those grants require majority approval from the independent directors, while the founder-held seat must be recused.
Director removal follows a structured process rather than an immediate tokenholder vote. A petition must include evidence supporting the request, the board receives time to respond, and a 30-day period must pass between the petition and the removal vote. A director facing removal may publish a written defense.
The procedure slows down attempts to remove directors, which could reduce the risk of sudden governance campaigns while preserving a mechanism for accountability. It also moves ENS closer to the governance model used by organizations that need stable legal representatives for contracts and regulatory discussions but remain answerable to tokenholders.
Legal entity targets domain policy and enforcement
The foundation’s mandate is closely tied to ENS’s role as a naming system that intersects with the conventional internet domain industry.
Among its stated tasks is pursuing recognition of “.ens” as a top-level domain through the Internet Corporation for Assigned Names and Numbers, or ICANN. Such a process would require sustained legal, policy, and technical engagement that an on-chain governance system cannot conduct directly.
The foundation is also expected to lead external enforcement work, including trademark-related actions against phishing and impersonation. ENS names are widely used as blockchain identities and payment addresses, creating incentives for bad actors to imitate recognized names or services. A formal entity could sign with legal counsel, communicate with platforms and registrars, and bring enforcement actions in its own name.
ENS DAO’s decision therefore gives the project a recognized legal counterpart without transferring its central token reserves to a traditional corporate structure. The DAO remains the holder of the assets that underpin its governance, while the foundation becomes the organization capable of dealing with institutions that require a legal entity.
ENS Labs turns attention to ENSv2
The governance shift also comes as ENS Labs narrows its technical focus toward ENSv2 on Ethereum mainnet. The organization dropped plans for an in-house layer-2 network known as Namechain and deployed ENSv2 directly on Ethereum.
According to the ENS proposal materials, the move was associated with a reduction of roughly 99% in registration gas costs. Lower registration costs could make the service more accessible without requiring users to bridge assets or interact with a separate ENS-specific network.
ENS Labs is expected to concentrate on engineering tied to that mainnet-based ENSv2 system, while the foundation handles hiring, grants, legal engagement, and other off-chain work. Separating those roles could give ENS Labs a more defined development mandate and give the DAO clearer reporting lines for operational spending.
ENS traded near $4.23 in the figures cited in the proposal materials, with a reported circulating supply slightly above 41 million tokens. The newly approved structure does not change the DAO’s 54.60 million ENS-token reserve, while the 1 million-token staff allocation remains non-voting and non-stakeable until grants are made.
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