Everything you need to know about the ENS Endowment
The ENS Endowment is a dedicated fund established by the ENS DAO to ensure the long-term sustainability and financial security of the Ethereum Name Service (ENS) protocol. Its primary goal is to guarantee that ENS can meet its ongoing financial obligations—even during periods of low ETH prices or reduced registration and renewal revenue.
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.
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.
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).
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.
Karpatkey receives a 0.5% annual administration fee and a 10% performance fee on returns above the reference currency, as defined in the management agreement.
All major decisions regarding the Endowment—such as funding tranches, manager selection, and policy changes—are made through DAO proposals and votes. The process is open and transparent, with active discussion and feedback from the ENS community.
