blockworks.co
Ethereum Name Service (ENS), a decentralized naming system for Ethereum addresses, is voting to execute the swap of 10,000 ETH into stablecoin USDC.
The ENS DAO, which oversees the ENS protocol and its treasury, currently holds an estimated $1.2 billion in funds, with $227 million in liquid assets, according to DeepDAO.
10,000 ETH, about $16 million, is equivalent to 25% of the total ether held in its treasury and register controller, the DAO said in a proposal.
When the proposal was written, it was expected that the sale of its ETH holdings would generate more than $13 million USDC, which will cover ENS DAO’s operational expenses over the next 18 to 24 months. At current prices, $10,000 ETH is worth $15.8 million.
As DAO operations are often quite expensive — with a majority of its expenses funneled into salaries — it would be necessary for organizations to have a steady source of income.
If the proposal were to be approved, the trade would occur on CoW Swap, decentralized exchange aggregator that leverages Batch Auctions as its price-finding mechanism.
Since entering the bear market, ether prices have been fluctuating. At the time of writing, ether is trading around $1,600, down 44% over the past year. Exchanging a portion of ENS’ ether for a dollar-pegged asset like USDC would go a long way if the bear market extends much further.
Token Terminal, a cryptocurrency data aggregator, estimates annual salaries for DAO members for MakerDAO, Lido, and SushiSwap cost $205,000, $132,000, and $256,000, respectively.
Ethereum Name Service DAO members worry about USDC
In the case of ENS, pseudonymous community member futurealisha noted the majority of USDC expenses at the DAO come from ENS Labs, the Singapore-based non-profit powering ENS development.
“ENS Labs receives a daily stream of $11,500 USDC, which amounts to [around $4.2 million per year. Over two years, that is [roughly $8.4 million],” futurealisha wrote in a discussion forum.
Another source of USDC spending would be working groups, “This budget would allow working groups to claim up to [about $1.5 million] in USDC per term between them. This amounts to [around $3 million per year and $6 million over two years],” she said.
Not all community members are thrilled about the swap. Another user posted that USDC is a centralized token which could be blacklisted by the US government, echoing concerns raised by MakerDAO members last year.
“The DAO will have little recourse to recover the funds in this instance as the ENS token will be considered an illegal security if things get to this point,” they said.
The on-chain proposal vote is currently live on Tally, with 98% of voters currently in favor of the proposal. A quorum of 1 million has also passed — though voting will continue until Feb. 7.