ENS Proposal Signals Retreat from DAO Governance Model

On 19 Jun, ENS, a project that provides the technology for decentralized domain names, published a proposal that would remove much of its treasury and day-to-day control from token holders and vest it in a foundation run by a full-time executive director and a five-person board.

Authored by delegate katherine.eth, the proposal argued that token voting is "structurally good" at stewarding the protocol and "structurally incredibly bad" at running an organization.

The proposed fix would empower the existing ENS Foundation with the DAO's treasury and authority over broader strategy. Token holders would retain control of protocol upgrades and fees, along with the power to remove directors. The stated goal is "a DAO that rarely votes and matters every time it does."

The proposal has attracted criticism. Community members allege that Nick Johnson, one of the DAO's founders and lead developers, has been delegated 47% of voting tokens and is likely to vote the proposal through to cement his control over the treasury, which ENS analytics put at roughly $354mn.

Kovac, a web3 community builder and governance commentator posting on X as @Mr__Kovacs, wrote that "most of the 'DAOs' work exactly the same way, ENS is just the one getting caught this week."

Over the past year, the DAOs of large crypto projects, including Yuga Labs, Tally, SingularityNET and Jupiter Exchange have wound down their community governance structures in favour of founder or board-led models, citing dysfunction and sluggishness from voters.

But as the DAO governance model fades, a different model – coalitions of focused, independent teams – appears to be taking its place.

Migration to foundations

In June 2025, Yuga Labs, a company focused on digital collectables, moved to dissolve the ApeCoin DAO and transfer roughly $168mn in assets to ApeCo, a company-run entity. Co-founder Greg Solano called the DAO "sluggish, noisy and often unserious," demanding "a leaner, faster org." 

That same month, Jupiter, the largest decentralized exchange on Solana, paused all DAO votes until the end of the year. Its co-founder Meow cited "a breakdown in trust" and a structure "not working as intended." SingularityDAO wound down in January 2025, merging into Singularity Finance and exchanging its governance token one-for-one for a new one. Tally, a company that provides tooling for DAOs, shut down its own DAO in March 2026 after concluding the market for DAO software does not exist at venture scale.

What sets ENS apart is the scale of what would move. Delegates estimate the assets at roughly $100mn in Ether (ETH) and stablecoins, plus another $250mn in ENS tokens, currently held in onchain contracts governed by token holders. The proposal would hand practical custody to a five-person board, two of whose members come from ENS Labs, with three selected with Labs' input.

The proposal frames the shift less as a retreat from decentralization than as a sharpening of focus. ENS, it argues, has grown into internet infrastructure that requires an institutional home for the standards and advocacy work the protocol now demands – from pursuing the .ens top-level domain at the Internet Corporation for Assigned Names and Numbers (ICANN) to representing ENS at the Internet Engineering Task Force (IETF).

Under the proposed plan, the new Foundation would take responsibility for strategy and advocacy around the namespace and identity layer, while ENS Labs retains product and engineering. The proposal also maps out formal agreements between the ENS Foundation and peers including the Ethereum Foundation and Mozilla, and a grants programme to fund Ethereum core development directly.

Dream of the DAO

When ENS and its peers launched DAOs around 2021, the premise was that a protocol could be governed by everyone holding its token – coordinating onchain, without a leader or executive board. ENS leaned hard into that thesis, putting half of the token supply into an onchain treasury controlled by the DAO and committing to build in public.

James Waugh, founder of Fire Eyes DAO, a governance and token-design collective that helped architect the original ENS token launch, described the early goal as "decentralization, experimentation and genuine community ownership" and a token and DAO that could be "a true pillar of Ethereum and its values."

In practice, DAO governance has been beset with frustrations at scale. Research into decentralized science DAOs has cited tensions between token-weighted decision-making and domain expertise as significant challenges to effective governance.

Lane Rettig, who spent two and a half years as a core developer at the Ethereum Foundation before leaving in 2019, has observed the DAO experiment from the inside. "They've been disastrous, in general," he said in a 2025 interview, describing the typical DAO as "a group of internet friends with a bank account."

Most DAOs refuse to meet in person, and trust, Rettig argued, cannot be built over a pseudonymous Telegram chat. "If you're serious about governance, you need to get the stakeholders physically in a room together. It is the only way that humans build trust, period." He attributed much of the dysfunction to that cultural failure, and believed addressing it would resolve most of the problems.

The treasuries DAOs were built to steward are, in his view, also what poisons them. "Money screws everything up," he said. "A lot of these DAOs are governing big treasuries, and they are designed to do things like grants and public goods funding, and they just attract the wrong types of people. They attract mercenaries rather than missionaries."

Rettig stopped short of writing the obituary, however. He thought DAOs were only now "beginning, just beginning" to work, and that the best-run projects have so far stayed more centralized, governed by what open-source culture calls "a benevolent dictator." "We learn a lot from Linux Foundation, Python projects," he said.

Decentralized governance, in this view, works for protecting the protocol but requires an executive branch for everything else – which today takes the form of a foundation.

Network of nodes

The narrowing of focus at ENS mirrors a shift reshaping the wider Ethereum ecosystem. On 23 Jun, the Ethereum Foundation announced it was cutting its workforce by 20%, narrowing its remit to what it calls CROPS: censorship resistance, open-source, privacy and security.

In a May post on X, Ethereum co-founder Vitalik Buterin cast the downsizing as an intention rather than a crisis. The foundation, he wrote, had largely completed the work it was built for and was "not designed to be an eternal steward." He described a desire for the Ethereum Foundation to become "one node" of many supporting the ecosystem.

What follows a central foundation, in Buterin's account, is a coalition: respected people and projects setting up independently, with focused mandates that can attract their own capital. A coalition of opinionated, mandate-bound nodes, he argued, is harder to capture and harder to corrupt than a single primary foundation spread across multiple functions.

On 22 Jun, a group of former Ethereum Foundation researchers launched Ethlabs, an independent non-profit lab focused on improving Ethereum's technical design. It was backed by corporate treasuries including Bitmine and Sharplink, alongside Ethereum co-founder and Consensys chief executive Joe Lubin, who described it as "one node in a much larger network of stewards" working towards "the multi-node future."

Whether the wave of restructuring ultimately advances or retreats from Ethereum's founding vision of decentralization will be tested soon. ENS token holders are set to weigh in as the proposal moves to a binding vote.