Background
The concept of the ENS Endowment was first introduced in March 2022 on the ENS governance forum. The intention was to set aside a significant portion of the DAO’s treasury and future registration fee revenue to create a fund that could support ENS development and operations indefinitely, regardless of market conditions.Structure and Funding
- Funding Sources: The Endowment is funded in tranches from the DAO’s treasury (primarily ETH and USDC) and ongoing registration/renewal revenue.
- Phased Funding: The DAO has approved multiple funding tranches, each requiring a separate vote. The initial funding was 16,000 ETH, with subsequent tranches added as needed.
- Sustainability Target: The Endowment is designed to sustain annual withdrawals (e.g., $4M USDC per year) for operations without reducing the principal, ensuring long-term viability.
Investment Policy and Management
- Manager Selection: After a competitive RFP process, the DAO selected Karpatkey as the Endowment manager through a ranked-choice vote.
- Investment Policy Statement (IPS): The Endowment operates under a formal Investment Policy Statement that defines roles, responsibilities, risk management, and investment guidelines.
- Diversification: Endowment assets are diversified across various investments to balance growth and risk, following the IPS.
- Risk Management: The Endowment uses onchain mechanisms to minimize custodial risk, and distinguishes between “earned” and “unearned” income for risk-neutral management (e.g., ETH for unearned, USDC for earned).
Transparency and Reporting
- Onchain Controls: The Endowment is managed using onchain smart contracts, with the DAO retaining ultimate control over the funds.
- Regular Reporting: Karpatkey provides monthly performance reports, and the Endowment’s status is transparently tracked via dashboards and forum updates.
- Audits: The Endowment is subject to independent audits and regular reviews to ensure compliance and security.