A well known cliche is that committees are the worst way to get something done - “none of us is as bad as all of us” - but that is effectively how we and many other DAOs are attempting to operate. A review of recent threads demonstrates this; while some things end up making good progress, this is usually because one person or a small group “take charge” and go do the work independently, bringing it back for discussion and approval. Other ideas stall because nobody feels they have the authority to lead, and so while many good ideas are offered, none are executed on.
It seems plain that a better solution is needed, and so I would like to propose a significant change in how ENS DAO operations are structured. Rather than letting “the DAO” or even indivdual working groups do the work directly, we should focus on building a clear process for outsourcing work to community members or external contributors via a Request For Proposal (RFP) process.
Here is how it would work at a high level:
<ol>
<li>Someone identifies a need, and proposes an RFP (yes, a request-for-proposal-proposal). At a minimum the RFP needs to specify:
<ul>
<li>the work to be done</li>
<li>the maximum compensation</li>
<li>criteria for acceptance</li>
<li>a working group to administer the proposal</li>
</ul>
</li>
<li>If the consensus is that this is a real need, the working group stewards agree to adopt the proposal. They can either agree to finance it from WG budget, or sponsor it for a DAO-wide social vote if it is too large to pay from the WG budget.</li>
<li>If the RFP requires an onchain vote, it is put forward as an Executable proposal, approving the WG to spend up to the maximum amount of the DAO’s funds specified in the proposal.</li>
<li>Once the RFP is ratified, the WG opens it for proposals. During this period anyone can submit a proposal to do the work.</li>
<li>Once the RFP period is over, the WG stewards select a winner, and that party then starts work. The WG stewards are responsible for evaluating progress and disbursing funds as described in the RFP and the winning proposal.</li>
</ol>
In some cases, it’s possible that the person putting forward the RFP will also submit a proposal of their own; for example, when Element Finance proposed a strategy for managing some of the DAO’s funds, they could have formulated this as an RFP, and when approved, but forward their own bid on it.
At the small scale, this process can be very lightweight, but it scales up to even very large projects. Here are some examples:
<h2>
<a name="dao-docs-1" href="#dao-docs-1"></a>DAO Docs</h2>
Someone identifies that our DAO documentation needs updating; we need more clarity around the proposal and voting process, templates for EPs and RFPs, and flow diagrams that visualise the progress. They put forward a short RFP describing the problem, a suggested maximum compensation of 2 ETH, and suggest the Meta-Governance WG adopt it.
The Meta-Gov WG adopts it at their next meeting, agreeing to pay it out of the WG budget, and several people submit proposals - each just a couple of paragraphs long. The WG selects one as a winner based on price and track record, and the person begins work. A week later they submit a PR with the changes, and the WG pays them in full.
<h2>
<a name="swag-store-2" href="#swag-store-2"></a>Swag Store</h2>
ENS needs someone to run a swag store, including design of the merchandise, fulfillment and shipping, promotion etc. Someone writes up an RFP and the Community WG agrees to adopt it. Because the store will pay for itself out of sales, no funding is necessary, but the proposer and the WG agree on a maximum margin of 25% for the operator.
Several operators bid on the RFP, and the WG selects their preferred one. They begin operating with the official approval of the DAO, and send royalties back to the DAO wallet on a regular basis.
<h2>
<a name="endowment-management-3" href="#endowment-management-3"></a>Endowment management</h2>
The DAO identifies the need for a fund manager to administer the DAO’s endowment fund. Someone writes up an RFP, specifying desired goals, amounts, risk tolerance etc, as well as maximum compensation for the fund manager. Because this affects the whole DAO, but does not require upfront funding, the Meta-Governance WG puts it to a DAO-wide social vote. The RFP is approved in a Snapshot vote.
Several managers put forward proposals, and the Meta-Governance WG selects the most attractive offer. Because the fund manager will require some level of access to funds, a second, executable vote is put to the DAO to approve access to those funds to the fund manager.
<div><div><div><ul><li> Agree</li><li> Disagree</li></ul></div><div>27voters</div><div>Show results</div></div></div>

Transitioning the DAO to an RFP model A well known cliche is that committees are

Transitioning the DAO to an RFP model

I’ve been asked to summarise the role and responsibilities of directors of the ENS Foundation, so people can evaluate how to move forward on proposals to replace Brantly’s position at the Foundation.
The ENS Foundation is a Cayman Islands foundation that exists to serve as a legal entity representing the DAO. More detail on why it exists and what it’s for can be found <a href="https://docs.ens.domains/v/governance/the-ens-foundation">in the governance docs 18</a>.
The Foundation currently has three directors; Myself, Kevin Gaspar, and Brantly Millegan. Directors are responsible for the day-to-day running of the Foundation. In practice, this is very little, at least so far; the Foundation has to make annual filings with the Cayman Islands, which are handled by its lawyers and accountants. It has assorted business expenses; as the Foundation does not have a bank account these are currently paid for by True Names Limited (the nonprofit I direct that funds and organises most ENS development), and requested for reimbursement by the DAO after the fact.
In principle the Foundation’s responsibilities could extend beyond this in time. If the DAO decided it needed, say, a subscription to Google Workplace to give DAO members email addresses etc, the DAO could instruct the Foundation directors to organise and instate this. Likewise, if the DAO wanted to acquire real estate, they would instruct the Directors to carry this out. Foundation directors are free to delegate any of these responsibilities, but it’s their job to make sure it gets done.
The DAO has the exclusive right to appoint and dismiss directors. Directors can also resign - but they can’t be appointed or removed by other directors.
As with all companies, the Foundation provides legal protection to its directors and those acting on its behalf in good faith - the Foundation itself would generally be the target of any legal action in relation to ENS or the directors. I am not a lawyer, but I understand that there are (limited) circumstances under which someone could seek to hold the directors individually responsible for the Foundation’s or the DAO’s actions. The Foundation indemnifies its directors against legal risks arising from their duties as directors, but ultimately the value of this comes down to the ability for the Foundation to fund this - which would come down to the DAO’s willingness to do so. I am also investigating obtaining Directors and Officers Insurance for the Foundation to further protect directors from personal liability. Personally I view this risk as small, but difficult to quantify.
Presently there is no fixed compensation for the role of Director. I’d suggest that the DAO should set some reasonable level of compensation in any proposal that’s put forward to replace or appoint a new director.
The Foundation is only required to have one Director under Cayman Islands law. However, I do not think it’s advisable to have only a single director. Three directors provide for redundancy in the event that one cannot serve, and make tiebreaking on votes easier.
Finally, due to an oddity in NZ tax law, if I am the only director there is the possibility that the NZ tax department would deem the ENS Foundation to be a wholly owned foreign company, and hold me personally liable for the entirety of the income of the ENS protocol. This is not a situation I am keen to explore, and if such was likely, I’d be forced to resign my directorship. This could lead to a situation where the Foundation has no directors; I am not sure what would happen in such a case, and I think it’s also best avoided.
My recommendation here would be to decide on a reasonable level of remuneration for directors, hold a process to accept nominations for the post of director, and hold a DAO-wide Snapshot vote to appoint one.

Role & responsibilities of ENS Foundation Director I’ve been asked to summarise the role and responsibilities

Role & responsibilities of ENS Foundation Director

| Status | Draft |
<h1>
<a name="abstract-1" href="#abstract-1"></a>Abstract</h1>
Establish basic parameters around the DAO’s working capital / runway and the handling of revenue on an ongoing basis.
<h1>
<a name="justification-2" href="#justification-2"></a>Justification</h1>
Presently the DAO keeps almost all of its treasury funds in ETH, and has not heretofore had a standard process for converting income to stablecoins in order to fund ongoing operations. This EP proposes standard expectations for the DAO to follow, specifying expected balances and actions to be taken on an ongoing basis in order to ensure the DAO continues to be able to execute on its goals effectively.
<h1>
<a name="specification-3" href="#specification-3"></a>Specification</h1>
<ol>
<li>The DAO shall at all times aim to keep funds equivalent to 24 months expenditures available in a combination of USDC and DAI in its primary timelock account.</li>
<li>This figure will initially be set at $16,000,000 USD. After each term’s working group budgets are approved by the DAO, the Lead Steward shall provide an updated estimate of the DAO’s expenditures for the next 24 months.</li>
<li>On an ongoing basis and at least monthly, the DAO shall ‘sweep’ newly earned revenue collected by the .eth registrar contract. Enough of this will be converted to stablecoins and sent to the DAO’s primary timelock account to restore the balance to the amount specified in (1). If insufficient funds are available, all available funds will be converted and sent.</li>
<li>Any additional funds that remain after topping up the DAO’s primary timelock shall be sent in ETH to the DAO’s endowment fund to be invested according to the rules established for that fund.</li>
<li>Upon passing this proposal, the DAO will vote to implement an executable proposal that:
<ol>
<li>Converts sufficient ETH to USDC to increase the DAO timelock’s balance to $16,000,000.</li>
<li>Implements a non-custodial system to automate the regular collection, conversion, and transmission of revenue. This may make use of an automated process with limited permissions to conduct these actions without taking custody of the funds.</li>
</ol>
</li>
<li>Upon passing this proposal, the DAO notifies the Lead Steward of their responsiblity to monitor the state of the DAO’s accounts, and regularly update the DAO as to their state, and to make reports to the DAO whenever they judge that action from the DAO may be required.</li>
</ol>

[Social] Routine DAO treasury management |  Status  | Draft  | 
 
  Abstract 
 Establish basic parameters around the DAO’s working

[Social] Routine DAO treasury management

I’ve been thinking a lot lately about how we can ensure the long-term sustainability of ENS, and I’d like to outline a possible proposal, which is this: the DAO should set aside a substantial proportion of the treasury, and of incoming revenue (perhaps 50% of each) towards building an endowment that can sustain ENS development indefinitely. These funds should be invested with a mind to the long-term, while minimising the risk of substantial short-term losses.
Ideally, the funds should be managed onchain via an approval mechanism, which allows the fund manager to make trades with approved DEXes, routes, and assets, without giving them direct control over the funds, but I appreciate that this may be impractical at least at first, as well as limiting the options available to a fund manager.
If we assume a desired annual operating budget of $2M USD, and a conservative drawdown rate of 4% of the endowment each year, we would need an endowment of $50M USD.
Today, ENS’s accounts stand as follows:
<ul>
<li>ETH assets: 14,373 ($48,379,000)</li>
<li>USDC (after pending proposals): $8,618,000</li>
<li>
Total assets: $56,997,000</li>
<li>Unearned Income (ETH): -8,554 ($28,792,000)</li>
<li>
Net assets: $28,205,000</li>
</ul>
Additionally, extrapolating from the past 3 months, revenue is approximately $3.7M/mo and income is approximately $1.9M/mo.
Given that the principle in an endowment is not touched, I believe it’d be legitimate to use unearned income as a component of it, though doing so would require either retaining exposure to ETH or changing how we account for unearned income. Presently it’s accounted for in ETH, meaning that if it were invested in an asset which went down relative to ETH, the DAO could end up with more liabilities than assets.
If the endowment were built from 100% of unearned income and 50% of remaining assets, and funded from 50% of revenue, it’d start at approx. $42.9M and reach the target amount after only 2 months.
If it were built from 50% of net assets and funded from 50% of income, it’d start at approx. $14.1M and take approx 19 months to reach the target amount.
Once the endowment reached its target level, the DAO could redirect income to efforts not covered by the endowment (such as broader grants), continue to grow the endowment to support a larger long-term operating budget, or a combination of both.
All of these numbers are purely illustrative, to give an idea of the scale of the proposal. I believe the basic idea, of doing what we can to guarantee ENS’s long-term viability independent of market conditions, is a worthwhile one, however.
Thoughts?

An ENS enDAOment I’ve been thinking a lot lately about how we can ensure the

An ENS enDAOment

<a href="https://snapshot.org/#/ens.eth/proposal/0x4a1aedbd9d22295f358dc4028b5a3f0a602bb5f1089dabdc2b63bf2bcce45834">The vote 86</a> on EP2.2.4, the ENS Endaoment RFP is now live. This is the first time an RFP has been put to a DAO-wide vote, so a brief explainer is warranted.
<hr />
<h1>
<a name="what-is-an-rfp-1" href="#what-is-an-rfp-1"></a>What is an RFP?</h1>
RFP stands for Request For Proposals. It’s a request by the DAO for interested parties to propose a solution to a problem the DAO has. Anyone can submit a proposal during the submission period, and the RFP manager named in the RFP then decides on the winner during the approval period.
<h1>
<a name="what-is-the-ens-endaoment-rfp-2" href="#what-is-the-ens-endaoment-rfp-2"></a>What is the ENS Endaoment RFP?</h1>
This is an RFP to find a fund manager who can manage the bulk of ENS’s treasury going forward, with a goal of creating a sustainable fund that can pay for ongoing development needs without depending on revenue from registrations and renewals. It’s a crucial part of securing the long-term future of the DAO and of ENS, whatever the broader economic conditions.
<h1>
<a name="what-am-i-being-asked-to-vote-on-3" href="#what-am-i-being-asked-to-vote-on-3"></a>What am I being asked to vote on?</h1>
You’re voting to approve the issuance of the RFP. If you vote yes, the RFP will be active, and the RFP manager - in this case the Meta-Governance Working Group stewards - will be empowered to choose a winner from any submissions that were made without a further DAO vote. Their choice will be considered a decision by the DAO as a whole.
For this specific RFP, there are likely to be subsequent DAO votes required to execute the winning fund manager’s strategy onchain, but these will come after the Meta-Governance Working Group stewards have decided on a fund manager.
You can go vote <a href="https://snapshot.org/#/ens.eth/proposal/0x4a1aedbd9d22295f358dc4028b5a3f0a602bb5f1089dabdc2b63bf2bcce45834">here 86</a>.

EP2.2.4 ENS Endaoment - voting explainer  The vote  86   on EP2.2.4, the ENS Endaoment RFP is

EP2.2.4 ENS Endaoment - voting explainer

With <a href="https://discuss.ens.domains/t/social-ep2-2-5-selection-of-an-ens-endowment-fund-manager/15188">EP2.2.5 6</a> up for voting at the moment using ranked-choice voting, this seems like a good time to provide a primer on how ranked-choice voting works, and some insight into how your vote can affect the outcome.
<h1>
<a name="what-is-ranked-choice-voting-1" href="#what-is-ranked-choice-voting-1"></a>What is ranked-choice voting?</h1>
Ranked-choice (RC) is a class of voting systems where rather than simply voting for the outcome you want to win, you instead rank the options from best to worst. In some systems, such as the one Snapshot uses, it is mandatory to rank all the choices, while in others you only have choose at least one.
<h1>
<a name="why-not-use-simple-voting-2" href="#why-not-use-simple-voting-2"></a>Why not use simple voting?</h1>
First-past-the-post (FPTP) voting, where each voter selects only a single option, has some surprising failure modes, particularly when it’s possible to see outcomes during the voting period.
Suppose we are trying to select a mascot for the DAO. The options are:
<ol>
<li>Woodpecker</li>
<li>Manatee</li>
<li>Capybara</li>
</ol>
You would like to see Woodpecker win - but you’d do anything to stop Manatee winning. You have 10 votes, and on voting day you see the current standing is:
<ul>
<li>
Woodpecker: 5 votes</li>
<li>
Manatee: 20 votes</li>
<li>
Capybara: 12 votes</li>
</ul>
If you vote for Woodpecker, it will still be in second place to Manatee. Unacceptable! So instead, you vote for Capybara, pushing it over the top to 22 votes. Because of the limitations of FPTP, you voted for an option that wasn’t your first choice, because you didn’t want to risk ‘wasting’ your vote and getting an outcome that was worse for you. There’s no way to tell how many other people are using the same strategy - so maybe nobody really wanted Capybara, they just voted strategically and that was the result.
<h1>
<a name="how-does-ranked-choice-voting-help-3" href="#how-does-ranked-choice-voting-help-3"></a>How does ranked-choice voting help?</h1>
Ranked Choice voting allows voters to express their preferences more granularly. In the situation above, you could rank the choices in the order 1. Woodpecker, 2. Capybara, 3. Manatee. Your vote will be first counted towards Woodpecker, and only if Woodpecker cannot win will the other preferences be taken into account.
Under ranked choice voting, the strategic way to vote is also the obvious way to vote: simply rank your preferences in order.
<h1>
<a name="how-does-ranked-choice-voting-work-4" href="#how-does-ranked-choice-voting-work-4"></a>How does ranked choice voting work?</h1>
Ranked Choice works by successively eliminating options that cannot win until one option has more than 50% of votes. Suppose we have the following voters:
<ul>
<li>Alice: 5 votes, voting for 1. Woodpecker, 2. Manatee, 3. Capybara
</li>
<li>Bob: 20 votes, voting for 1. Manatee, 2. Woodpecker, 4. Capybara
</li>
<li>Charlie: 12 votes, voting for 1. Capybara, 2. Woodpecker, 3. Manatee
</li>
<li>Dave: 2 votes, voting for 1. Capybara, 2. Manatee, 3. Woodpecker
</li>
</ul>
In the first round of voting, everyone’s first choices are totalled up, yielding:
<ul>
<li>
Woodpecker: 5 votes from Alice</li>
<li>
Manatee: 20 votes from Bob</li>
<li>
Capybara: 12 votes from Charlie + 2 votes from Dave = 14 votes</li>
</ul>
Nobody yet has the majority, so we eliminate the least popular, Woodpecker, and reassign Alice’s votes, yielding:
<ul>
<li>
Woodpecker: Eliminated (0 votes)</li>
<li>
Manatee: 25 votes from Alice (2nd choice) and Bob (1st choice)</li>
<li>
Capybara 12 votes from Charlie (1st choice) + 2 votes from Dave = 14 votes</li>
</ul>
Manatee now has more than 50% of the votes, so it is declared the winner. Notice also how Woodpecker appears to have 0 votes, even though it was Alice’s first choice. This is because it was eliminated in a previous round. This is how Snapshot presently shows voting totals in ranked choice voting; only the results of the last round are shown.
We can visualise the process of a ranked choice vote using a Sankey diagram. Each horizontal step represents a round, and the flows show how votes are reassigned between choices. Here’s the scenario above:
<div><a href="https://discuss.ens.domains/uploads/db9688/original/2X/f/f232cdde92a8f74d907bd407cbeecd29162e2da5.png"><div>
sankeymatic_20221119_140406_600x600600×600 19.5 KB
</div></a></div>
Now assume you submit your vote as above: 1. Woodpecker, 2. Capybara, 3. Manatee. The effect is dramatic. Round 1 is now:
<ul>
<li>
Woodpecker: 5 votes from Alice + 10 votes from you = 15 votes</li>
<li>
Manatee: 20 votes from Bob</li>
<li>
Capybara: 12 votes from Charlie + 2 votes from Dave = 14 votes</li>
</ul>
This time, Capybara has the fewest votes, and is eliminated; Charlie’s and Dave’s votes are reallocated to their second choices, yielding:
<ul>
<li>
Woodpecker: 5 votes from Alice + 10 votes from you + 12 votes from Charlie = 27 votes</li>
<li>
Manatee: 20 votes from Bob + 2 votes from Dave = 22 votes</li>
<li>
Capybara: Eliminated (0 votes)</li>
</ul>
Woodpecker now has more than 50% of the votes, and wins, despite appearing to be an obvious loser before you placed your vote; your vote was enough to save it from elimination, causing it to win. Here’s the result in visual form:
<div><a href="https://discuss.ens.domains/uploads/db9688/original/2X/a/a8d59f923151c169ae21fd395feab058f2542f45.png"><div>
sankeymatic_20221119_140512_600x600600×600 24.9 KB
</div></a></div>
<h1>
<a name="why-do-i-have-to-rank-all-the-options-5" href="#why-do-i-have-to-rank-all-the-options-5"></a>Why do I have to rank all the options?</h1>
While some implementations of ranked choice voting allow you to choose not to rank some options, Snapshot requires you to rank them all. People are sometimes discouraged from voting at all, because they do not want to lend any support to an option they believe is a bad choice by ranking it.
However, the implementation of ranked choice voting means that the order of options further down your list can never affect the chance of options higher up your list winning; they are considered only if all of your more preferred options have already been eliminated from consideration. Take the example of Dave’s vote above; after Capybara was eliminated, his votes went to Manatee; if he had not provided a second choice those votes would have not counted at all, and his preferred choice would still not have won.
The optimum way to vote is to rank in preference order; if there are options you truly do not want to see win, rank them so that the least bad is ranked first. If you truly do not care which of your later options is selected, rank them in whatever order you wish. Either way, there is never a case where leaving an option off results in a better outcome for you than ranking it last.
<h1>
<a name="how-can-i-vote-strategically-under-ranked-choice-6" href="#how-can-i-vote-strategically-under-ranked-choice-6"></a>How can I vote strategically under Ranked Choice?</h1>
You can’t! Simply vote for the options you prefer in the order you prefer them to win. Unlike FPTP, ‘spoiler’ votes are not a thing, and your vote always counts, even if you think your preferred option has a low chance of success.

Transitioning the DAO to an RFP model

Role & responsibilities of ENS Foundation Director

[Social] Routine DAO treasury management

An ENS enDAOment

EP2.2.4 ENS Endaoment - voting explainer

A primer on ranked-choice voting

Got something to add?