This is a vote on EP2.2.4, the ENS Endaoment RFP. This is the first time an RFP has been put to a DAO-wide vote, so a brief explainer is warranted.
What is an RFP?
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.
What is the ENS Endaoment RFP?
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.
What am I being asked to vote on?
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.
Overview
The DAO is seeking a fund manager to manage an endowment fund. This fund will be established from some combination of current treasury and ongoing revenue, and will exist to insulate the DAO from economic fluctuations, ensuring it can continue its core operations regardless of the wider economic outlook.
Funds will be drawn from the DAO's general funds, currently held in ETH and USDC, as well as from ongoing DAO revenue until the fund reaches its target size. Proposals should outline how much of the DAO's current funds the intend to appropriate, as well as what proportion of ongoing revenue will be required, and for how long.
The DAO's accounting basis divides assets into earned and unearned income. Unearned income corresponds to funds paid for registrations and renewals that are future-dated; for example, if a user spends $100 to register a name for 20 years, after a year $5 of that will be counted as earned income and the remainder as unearned income.
Unearned income may be incorporated into the fund, but must be risk-neutral with regard to ETH. Earned income should be risk-netural with regard to USDC.
The DAO's current balances can be viewed here; as of this writing they are:
- 13,069 ETH (~$20M) in earned income
- $3,817,067 USDC
- 18,184 ETH (~$20M) in unearned income
Scope of Work
- Expand the endowment structure specified in the accepted proposal into an executable form.
- Work with the ENS Meta-Governance stewards to refine the proposal.
- Implement the proposal onchain.
- Administer and adjust the endowment as necessary on an ongoing basis.
Selection Criteria
The endowment will need to be able to sustain annual withdrawals of at least $4M USDC without a long-term reduction in principal.
Proposals should include, at a minimum:
- Intended high-level fund allocation of the endowment.
- Initial and target size for the endowment fund, including the proportion of funds sourced from earned and unearned income.
- How incoming revenues and income will be assigned to the fund.
- Specific information on how the fund will be managed, and what steps will be taken to minimise custodial risk.
- A fee schedule for the fund manager.
- A detailed description of the reporting structures that will be put in place.
Priority will be given to proposals that:
- Minimise custodial risk by using onchain mechanisms that allow administration of the funds without the fund administrator having custody of the funds.
- Lay out a coherent strategy for how investment returns can be maintained in the short/medium/long term.
- Minimise capital risks relative to the expected returns.
- Define clear mechanisms for assessment and adjustment to changing external and internal conditions in order to continue to meet the endowment's objectives.
- Offer a high rate of return proportional to risk.
- Define a clear reporting structure for frequent and comprehensive reporting of the fund's status to the DAO.
Timeline
|
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| Submission Period |
September 15 - October 10 2022 |
| Approval Period |
October 10 - November 7 2022 |
RFP Manager
The Meta-Governance WG stewards are the RFP managers for this RFP.
Proposals can be submitted via forum DM to the stewards. They will be held in confidence until the end of the submission period, at which point all applicants will be invited to post their proposals publicly for feedback on the forum.
Once a winning proposal is selected by the RFP managers, it will be announced and posted publicly.
Budget
The endowment is expected to be funded out of a combination of capital and performance fees as proposed by the fund manager.
