Summary

Proposes to reimburse True Names Limited for expenses incurred on behalf of ENS and the DAO.

Abstract

Since ENS started allowing registrations using the annual-fee model, revenue from this has accrued to the ENS root multisig, which is controlled by seven individuals drawn from the Ethereum community. In order to shield them from individual tax liability, True Names Limited, the development company responsible for ENS development, historically identified itself as the beneficial owner of these funds, which obliged True Names to pay tax on any income to the multisig.

In past years True Names has covered this tax bill from its own reserves - primarily out of funds that were collected during the Short Name auction - but in 2021 revenue rose to a level that meant that was no longer sustainable. Accordingly, True Names requested funds from the multisig to cover the anticipated tax, and the multisig agreed.

The calculation used to determine the tax owing used the actual income to October 20th, plus a 1/12th buffer to cover the anticipated income between the launch of the DAO and its potential request for control of the funds from the keyholders. This total came to $2,163,921 USDC.

However, this failed to take into account the enormous uptick in interest that the announcement of the DAO produced, and so falls significantly short of True Names’ actual tax obligations for FY 2021. This proposal requests that the DAO sends True Names the remainder of the funds required to cover the multisig’s income during the period that True Names was the beneficial owner.

Further, True Names has incurred the following expenses on behalf of the DAO in January 2022:

We additionally request the DAO reimburse True Names for these expenses in the total of $48,637.

Revenue

Revenue to the multisig came exclusively from ENS name registrations and renewals, and can be calculated from onchain data using this BigQuery query, producing the following results:

Month	ETH	USD
Jan 2021	411.6875	498484.22
Feb 2021	383.5613	643985.05
Mar 2021	453.5619	776834.28
Apr 2021	429.0654	955345.36
May 2021	243.0624	740165.91
Jun 2021	422.2419	993899.95
Jul 2021	384.6863	811202.23
Aug 2021	849.9890	2563121.38
Sep 2021	728.7825	2490699.18
Oct 2021	500.3753	1863125.83
Nov 2021	1699.4660	7643673.03
Total	6506.4793	19980536.41

Tax

Singapore’s company tax rate is 17%, meaning that the tax owing on $19,980,536 comes to $3,396,691. After deducting the $2,163,921 USDC already sent by the multisig, this leaves a shortfall of $1,232,770.

Specification

We request that the DAO send $1,281,407 USDC to coldwallet.ens.eth.