Here's our 2023 Year in Review for ENS.
The Ethereum Name Service (ENS) is a distributed, open, and extensible naming system based on the Ethereum blockchain. ENS’s job is to map human-readable names to machine-readable identifiers such as Ethereum addresses, other cryptocurrency addresses, content hashes, and metadata.
On August 19, 2022, Proposal EP2.2.4, aimed at exploring the community's interest in issuing a Request for Proposal (RFP) for an endowment fund manager, successfully passed in a Snapshot vote. The purpose of this initiative was to create a financial buffer for the DAO, combining a portion of its existing treasury with continual revenue streams. The establishment of this fund was intended to provide a safeguard against market volatility, thereby ensuring that the DAO can maintain its core operations irrespective of broader economic conditions.
Following the RFP, karpatkey, in alliance with Steakhouse Financial, submitted a proposal to become the Endowment Fund Manager. This partnership delineated clear roles: Steakhouse Financial would predominantly oversee financial reporting, while karpatkey would manage the operational aspects. This included focusing on risk management, strategy formulation, and implementation. The proposal, standing out among several reputable contenders, triumphed in one of the most participated voting events in ENS history. The joint proposal was officially selected on November 22, 2022, and the Endowment was formally established in March 2023.
The initial funding for the Endowment comprised two allocations of 16,000 ETH each, separated by 6 months from each other. These funds were strategically invested in both ETH-neutral and USD-neutral DeFi strategies. The aim was to secure positive returns relative to ETH in the former, and against USD in the latter.
Beyond establishing a robust financial management framework, ensuring transparency for the community is paramount. Both Steakhouse Financial and karpatkey provide monthly reports that transparently detail the DAO's financial health and the Endowment's operational performance.
karpatkey employs a non-custodial approach for managing the Endowment, utilising Safe, a leading multisig platform, along with the Zodiac Roles Modifier, a role-based permission tool developed by Gnosis Guild. This method ensures that ENS DAO maintains control over its funds, while karpatkey is authorised to execute only those transactions approved by the community. Designed for transparency, this system includes a community allowlisting process for transactions, effectively preventing unauthorised actions.
karpatkey’s strategy stands in contrast to the use of time-locked transactions, offering enhanced protection against front-running risks. Additionally, it provides the flexibility to adjust strategies dynamically in response to the ever-changing DeFi market conditions. karpatkey’s delegation proposals for on-chain voting define a range of broad protocol options, ensuring operational agility within established parameters. This approach eliminates the necessity for DAO-wide votes on each individual trade, thereby streamlining the decision-making process while upholding both security and strategic flexibility.
Furthermore, karpatkey implemented an emergency withdrawal protocol, subject to periodic review. This protocol enables the swift de-risking, liquidation, or swapping of all positions in scenarios such as a market crash, hack, or any unforeseen events that necessitate loss prevention measures.
karpatkey extended its role as Endowment Manager through active community involvement, contributing its expertise and insights for the collective good. For example, we launched the ENS DAO Governance dashboard on Dune Analytics, offering a thorough view of governance activities, including detailed delegate profiles, voting power distributions, and other vital metrics. The dashboard plays a key role in assessing the transparency and fairness of governance processes, thereby enhancing the community's understanding and participation in decision-making.
