DeFi drama: ENS governance battle, EF cuts and Gnosis reboot

Last week was a dramatic week for DeFi with the Ethereum Name Service ($ENS) DAO facing a proposal that’s been branded an attempt to “steal its treasury,” Gnosis DAO rerunning recent treasury redemption discussions, and the Ethereum Foundation announcing a 20% staff cut.

The proposal facing the $ENS DAO entitled “Next Era of $ENS DAO: Empowering the $ENS Foundation,” would see day-to-day operations and treasury assets transferred to the $ENS Foundation, “led by a full-time executive director and staff.”

It cites issues such as “delegate fatigue,” exacerbated by the DAO making “too many small decisions and too few big ones,” a lack of accountability from grant recipients, coordination problems and the potential to put treasury funds to work.

Lefteris Karapetsas, who admits he’s “inactive and no longer participates in DAO governance,” got into a heated exchange on X with $ENS lead developer Nick Johnson, who’s worried the DAO is “almost solely concerned with how best to spend the treasury.”

Karapetsas accuses Johnson of “delegat[ing] ~50% of the entire voting supply to yourself,” though Johnson counters that such low delegate participation is “a testament to how difficult it’s been to keep the DAO secure using token-weighted delegated voting.”

Almost six years ago the pair clashed on the topic.

Johnson stressed the need for the legitimacy of a DAO over treasury spending, while Karapetsas had hoped that $ENS wouldn’t have a token at all.

The controversial proposal’s author Katherine Wu made a lengthy post in an attempt to “clear some things up” but, by turning off replies, has only faced further criticism.

Johnson has insisted that $ENS was always meant to be a governance only token, with the treasury solely meant for “building $ENS, and… funding public goods, and not to be used for anything else.”

With many upset at the direction of Ethereum’s most popular name service, an L2BEAT researcher decided to set up an “ownerless and unruggable” alternative.

According to DeFiLlama data, the $ENS DAO treasury is valued at around $350 million, or $88 million if excluding the project’s own $ENS token.

DAO treasuries are occasionally targeted by so-called “RFV raiders,” who buy up large voting positions in order to use governance to redistribute DAO assets.

One such activist investor suspects that the move from $ENS may be in order to pre-empt any such “raid.”

Another longstanding DAO, Gnosis, recently faced such a treasury redemption proposal, which was ultimately rejected.

However, the DAO did ultimately vote in favour of a second, simplified iteration of the idea, which was “developed jointly with the Gnosis founding team.”

The governance drama comes during a tricky period for Gnosis, which recently saw its Gnosis Pay crypto card experience a security incident, and its X handle compromised to promote a phishing site.

Ethereum Foundation layoffs

Following a number of recent high-profile departures, the Ethereum Foundation announced a 20% staff cut.

In a euphemism-packed blog post, the foundation announced that a reorganisation would mean “parting ways with 54 of our colleagues.”

Ethereum co-founder Vitalik Buterin expanded on X, linking the layoffs to a 40% decrease in the foundation’s budget this year.

He highlights the loss of “brilliant” colleagues, and presents the changes as Ethereum’s “third iteration.”

It includes optimising the “multi-client model” for specialization, “implementing ZKP-based privacy and scaling” and a reduction in scope of non-development activities.

Meanwhile, non-profit R&D outfit Ethlabs announced its launch, with former EF member Barnabé Monnot joining the organisation, among others.

In other DeFi news…

When a predatory MEV bot gets rekt, scammers waste no time in taking advantage.

After notorious, prolific sandwicher jaredfromsubway.eth fell into an expertly crafted approvals booby trap last weekend, losing $7.5 million, a scammer wasted no time in spinning up a spoof X account to profit off the attention.

The account has since been used to promote fake bounty offers, giveaways and even launched its own Pump Fun token.

The JARED token struggled to break a $25,000 market cap, and currently sits at just $9,200.

Meanwhile, it appears the genuine 50% bounty offer fell on deaf ears, when the proceeds began to be laundered via Tornado Cash on Tuesday.

Recent exploits on Taiko and SecondFi have security researchers scratching their heads.

Taiko developers apparently left a signing key on GitHub, which was initially thought to be the cause of a recent $1.7 million hack.

However, a SuccintLabs developer’s theory is that the root cause was a “missing check,” not the leaked key. The attacker was able to rebuild Taiko’s prover in debug mode, extract an “in-enclave signing key,” and use that to drain the bridge.

Then, what began as a $2.4 million hack on Cardano wallet provider SecondFi was thought to be far larger, until the firm assured users that the majority of funds were rescued in a whitehat operation.

The problem was that, days later, Cardano founder Charles Hoskinson claimed that Emurgo, SecondFi’s developer, didn’t know who the whitehat was…

The bug itself was reportedly down to a very basic and unfortunately-named “public nonce” issue, which allowed an attacker to use public transaction data to back-calculate private keys of SecondFi wallets.

Coinbase’s layer two network Base went offline on Thursday, marking its second outage in less than a year.

According to the network’s status page, the chain was stalled following “a consensus problem that caused an invalid block to be sequenced.”

After approximately two hours, block sequencing resumed, with any stuck nodes needing to restart and resync.

Less than 24 hours later, however, the disruption flared up again.

Finally, shutdown season continues.

Lending platform Ionic Money announced it was unable to recover from last year’s hack (not to mention the two hacks it suffered in 2023 under its previous moniker Midas Capital).

Following a bank run, Altura decided to sunset its AVLT amid the Main Street msUSD depeg chaos.

Loopring, “the very first zkRollup on the market,” is winding down, citing a lack of “meaningful adoption.” Users’ assets will be returned directly to their wallets.

And, after being depegged for over a year, Synthetic sUSD will be deprecated at “a slight premium to par” following a lock up period.