Controversial “ENS Fairy Proposal” Sparks Debate in ENS Community

Recently, the ENS DAO, the governing body of the ENS protocol has faced controversy surrounding a proposal to allow the buying and gifting of ENS domains, which has sparked a heated debate among the ENS community. This article will delve into the details of the proposal and the controversy surrounding it.

The Proposal

ENS DAO passes a variety of proposals to inspire innovation within the ENS community and to fund a variety of initiatives. One of those initiatives is the ENS Fairy project, which buys ENS domains that belong to celebrities & brands and gifts them in hopes of increasing ENS adoption.

The Buying and Gifting Proposal was made as part of funding the ENS Ecosystem Working Group, on January 19, 2023. The proposal requested funding for its activities for the first and second quarters of 2023, and bundled in the proposal was funding for ENS Fairy.

The ENS Fairy project is set to receive $50,000 in USDC and 174 ETH.

Although the goal of the proposal aims to make it easier for celebrities and brands to onboard into ENS, many in the community argue that it could lead to a concentration of power in the hands of the ENS DAO making buying decisions, centralizing the procedures, and potentially reducing the value of ENS domains.

The Debate

On Twitter, the ENS community pointed out that the ENS DAO would effectively bypass the premium fee, because the fee they’d pay goes right back to the ENS DAO treasury, and then this would create a free infinite-money loop. When the ENS DAO spends money (from their own treasury) minting ENS Names (in the premium drop-auction), then that money goes right back to the ENS DAO treasury.

In the ENS DAO forums, Alisha.eth explains that when the DAO spends money to mint an ENS name, then ENS DAO loses the funds that would have otherwise been created by the ENS name being otherwise minted by a squatter or domainer. Also, this is not bypassing the premium fee, it is adding the ENS DAO as an equal buyer.

The initiative would only target notable names & brand names that could meaningfully increase the adoption of ENS.

I imagine this will amount to a handful of names & the initiative will likely spend a fraction of allocated ETH. Funds will be made available on an as-needed basis.

— alisha.eth (@futurealisha) January 30, 2023

Critics of the proposal argue that funding the ENS Fairy would allow ENS DAO to buy up large numbers of valuable ENS domains; potentially increasing the competition for domain names and limiting the opportunities for ENS buyers of brand names, which could be used in a generic manner. Yet, Nick.eth said this would not include generic ENS names.

They also argue that funding the ENS Fairy could be used to sidestep the current bidding process, which ensures that the highest bidder is awarded the domain name. In reality, the ENS Fairy uses the exact same process as everyone else. Also, it is actually not possible to sidestep the current bidding-or-buying process (without voting or forking).

So much of the fuss around the ENS Fairy proposal amounts to "why isn't the DAO paying squatters, or at least letting them extort businesses and celebrities without getting in the way"?

— nick.eth (@nicksdjohnson) January 31, 2023

On the other hand, supporters of the proposal argue that funding the ENS Fairy would allow for more efficient and flexible transfers of ENS domains, reducing the barriers to entry onboarding new influential users, and making it easier for people to use and discover the ENS/SIWE ecosystem. They also argue that the buying and gifting of ENS domains are already happening, and funding the ENS Fairy would simply make it easier and more transparent with the DAO organization and community.

Nevertheless, the proposal aims to make it easier for the ENS DAO and community to onboard new users, and gift some influential brands ownership of their ENS/.eth names.

The best argument I hear are the "slippery slope" arguments of:
1. what is/isn't a non-generic name,
…how many users of a name are there;
2. what is a 'bad/curse word',
…vs not always a 'bad/curse word'; &
3. Objective/Definition change-or-creep.

— GaryPalmerJr.eth.limo 👁 2223.eth 🌱🐇 (@garypalmerjr) January 31, 2023

Critics argue this is a “slippery slope”, and that it could still lead to a change in scope or definitions of what is a “brand word” is, which would affect t names bought in the auction premium. Everyone agrees, it is important for everyone to keep watchful of the process, as this moves forward.

The Conclusion

Despite the heated debate, the Snapshot for EP3.1.1 passed, and the Tally on-chain vote (for funding all ENS Working Groups) is also expected to pass. This outcome will have a significant impact on the future of the Ethereum Name Service and its domain name registry.

Due to the controversy of the proposal, and the overwhelming response of the ENS Community at large, ENS DAO, along with the ENS Fairy will need to adopt impeccable transparency, with clear guidance, as to how the funds will be used and what names are minted, when this project-proposal is put into play.

Whether the buying-and-gifting of ENS domains (through the ENS Fairy) will continue to be funded via the ENS DAO in the future is unclear, everyone across the ENS community will be watching the potential implications for the ENS ecosystem and its users.