Last year, we saw an explosion in DAO activity with treasuries and member participation increasing by multiple orders of magnitude. To industry insiders, the boom was no surprise. 2021 was a big year for crypto across the board - NFTs, DeFi 2.0, GameFi, DAOs, and more. The culture, monetary, and technological levers all lined up perfectly. The race was on.
In time, mature DAOs began to identify a recurring problem.
DAOs were founded on the principles of democratic participation, but requiring all decisions to go through a voting procedure was laborious. Many DAO members became fatigued or lacked the appropriate context to make informed decisions.
On the other hand, natural working groups began to form. Contributors started to take an interest in marketing while others gravitated towards development, but any action required buy-in from the entire DAO.
The convergence of these two phenomena resulted in constrained delegation, a model in which DAO’s token holders delegated a certain set of powers and decisions to a trusted group to act with relative autonomy.
Just weeks after launch, ENS DAO began workshopping constrained delegation through “working groups.”
What is ENS DAO
- ENS (Ethereum Name Service) maps human-readable names to unique identifiers used to reference data. Think of ENS names like nicknames for an Ethereum address, replacing the indecipherable address with
- ENS is widely integrated and used across the crypto ecosystem, with nearly a million ENS names and over 500 integrations with existing applications
- Launched in November 2021, ENS DAO governs the ENS protocol parameters, such as fees and the registration process
- ENS DAO uses the $ENS governance token to vote on proposals. Token holders delegate their voting powers to delegates who vote on their behalf
ENS Working Groups
A month after launch, the ENS community began to workshop the creation of Foundational Working Groups that would own particular workstreams.
- Meta-Governance: Providing governance oversight and support of the management and operation of the ENS DAO and working groups;
- ENS Ecosystem: Continuing development and improvement of the ENS protocol and ecosystem, with a focus on all technical matters related to ENS;
- Community: Supporting the people and organizations that are users of ENS, with a focus on non-technical matters
- Public Goods: Amplifying ENS as a public good and funding public goods more broadly within web3.
Upon consent from the $ENS delegates, these working groups would be funded by the central treasury and empowered to tackle a particular function with autonomous control over their operations, such as:
- Managing operational tasks related to the administration of a working group
- Requesting working group funds from the DAO
- Approving and making funding available to sub-groups, workstreams, or contributors within a working group
In doing so, ENS pushes decision-making to the periphery and towards a specialized group of contributors to make the best decisions on behalf of the DAO.
To account for possible future tensions and edge cases, the ENS DAO’s proposal to create working groups also includes a detailed specification for governing these working groups.
- Working groups are managed by a group of five stewards for six-month terms. These stewards are elected by $ENS voters and can be removed by $ENS voters or fellow stewards.
- Working groups request funding from the DAO that, upon approval, is sent to a multi-sig made of the five stewards
- Working groups can be instantiated and dissolved by vote. Upon dissolution, any funds held in the multi-sig must be returned to the DAO treasury
Technical Implementation of Working Groups
A popular framing for DAOs is code at the center, humans at the periphery. In other words, when humans make a decision, the execution of that decision should be automatic and trustless, not reliant on trusted human coordination.
For ENS DAO, that means being able to rotate Stewards, fund working groups, and dissolve them without trusting a core group of multi-sig signers to execute these outcomes.
To this end, ENS DAO decided to partner with Metropolis, an extensible and modular DAO implementation, built around small working groups called pods. Metropolis' pods are the technical implementation that helps bring ENS DAO’s conceptual framework of workstreams on-chain and allow them to operate in a DAO-native way.
DAOs always retain some degree of power over pods they create, such as ENS DAO having the rights to vote and recall Stewards or deprecate working groups and clawback funding. In order to enforce these decisions on-chain, the ENS DAO holds an
admin key to each pod.
By holding the admin key in a Governor contract, $ENS token holders can hold on-chain votes and execute an administrative decision for pods, such as adding/removing members or deprecating the pod itself.
Access to pods is authorized through membership NFTs (ERC 1155s). These NFTs are like keycards - replaceable keys with certain privileges that can be minted or burned based on pod needs.
For ENS DAO, each steward has been minted their respective pod membership NFT, giving them the ability to vote on pod-specific activities and execute transactions.
Permissions to add and revoke NFT membership are managed by the pod’s admin key. Because the key is given to the Governor contract, members are directly beholden to $ENS token holders and their votes. In other words, if ENS DAO decides to elect to recall Stewards, they can hold a vote whose decision is automatically enforced by the Governor contract and admin key.
At a certain level of scale, keeping track of various different pods can get confusing. With larger DAOs, it’s nearly impossible to fully map the disparate working groups as more and more are spun up every day.
To facilitate organizational visibility and transparency, each pod created for ENS DAO will have its own ENS subdomain, allowing each ENS working group to see a human-readable name when interacting with various web3 apps.
These ENS domains fit in nicely with Metropolis' Podarchy UI, where pod members and pod relationships can be understood.
ENS DAO has mandated that pods have the ability to create their own member pods in order to further delegate workloads.
ens-publicgoods.pod.xyz may want to create separate workstreams for infrastructure and research. These sub pods can be spun up by the super pod and governed in a variety of different ways, similar to how $ENS token holders govern the four super pods.
These sub pods can be configured in a variety of ways most suitable for the working group.
Benefits for ENS DAO
The creation of ENS DAO working groups and Metropolis pods are a perfect match. Together, ENS DAO benefits from:
- Transparency and Visibility: Access to funds and permissions for subgroups and contributors
- Modular Org Design: Pods are a flexible primitive that can click together and integrate with other governance primitives. Pods are modular enough to support an organization as it evolves, matures, and decentralizes.
- Sub-Treasuries: Workstream pods act as committees with full autonomy over fund disbursements.
- Agility: As small and nimble committees, workstream pods can make quick decisions, accelerating innovation within the ENS ecosystem.
- Composability: Pods use Gnosis Safe on the back end, so they can leverage any compatible DAO tooling for things like payment, treasury management, and reputation.
Metropolis is the on-chain permissions layer for DAO working groups.