The Ethereum Name Service (ENS) Domain is a naming system based on Ethereum Blockchain and works on three main features: distribution, openness, and extensibility. It is one of the most popular projects of Ethereum.
The concept came into existence because Ethereum wallet addresses are complex and impossible for the human mind to read. Users find it difficult to work with. For instance, if you send funds to an Ethereum wallet, you may mistype the address and check multiple times to establish the right one. As there is no central authority, users can lose the funds.
The concept aims to simplify the crypto and decentralized finance (DeFi) space by allowing users to create a universal nickname for all their public addresses and decentralized websites. Instead of having an unreadable string of keys for each crypto address, users will have a single ENS domain. To understand this naming protocol’s impact, let’s dig deeper.
What Is Ethereum Name Service (ENS)?
These domains are labels assigned to each crypto wallet on the Ethereum network. The tags convert machine-readable names into human-readable ones to create an Ethereum address. In layman’s language, you may call it a look-up service built on the Ethereum blockchain.
Users can share their ENS domain name instead of long and complex addresses when they want to receive a payment on the Ethereum wallet.
Rather than receiving a payment that looks like “Ox4h42j34298sd68” in your wallet, you can use an assigned label to buy human-readable names along the lines of johndoe.eth, which allows users to remember addresses more easily.
Besides Ethereum addresses, it also offers human-readable domains for other crypto wallets, websites, content hashes, and metadata. The aim is to create a Web3 username, connecting all your addresses and websites under a single nickname so that you can receive any type of cryptocurrency or NFTs via your ENS domain.
According to official documentation, ENS has similar goals to DNS, the Internet’s Domain Name Service, but has a significantly different architecture due to the capabilities and constraints provided by the Ethereum blockchain. Like DNS, it operates on a system of dot-separated hierarchical names called domains, with the owner of a domain having complete control over subdomains.
How Does ENS Work?
ENS has two main components called smart contracts: Registry and Resolver. The developers call it Ethereum Name Service Architecture.
The Registry keeps track of all domains registered on Ethereum Name Service. It stores three critical pieces of information about each domain:
- the domain’s owner,
- the domain’s resolver, and
- the caching time for all records under the domain.
The second smart contract, Resolver, translates the domain names to machine-readable addresses and vice-versa. It matches each domain to the relevant user, website, or address.
The registry is a simple process only responsible for mapping from the owner to the resolver. Whereas, Resolvers are responsible for the actual process of translating names into addresses. Any contract that implements the relevant standards may act as a resolver in Ethereum Name Service Domains.
How To Create Your ENS Domain?
Those who need to create a Web3 login can visit the ENS app and look for an available domain name. But before making your Ethereum Name Service domain, you must have a crypto wallet such as Metamask, Torus, or MEW. Nevertheless, you must complete the registration procedure once you find your domain name.
The process needs you to confirm two transactions from your wallet and pay a monthly fee of $5 for titles with more than five characters. Once you have the domain, you may connect it to your crypto wallets, websites, and numerous subdomains, such as email.satoshi.eth and website.satoshi.eth, all of which will come under the same domain.
Ethereum Name Service Governance Token
The creators of the Ethereum Name Service Domain initiated ENS governance tokens for the service users. The token holders act as shareholders in the corporation, making choices regarding pricing, protocol modifications, and how funds are managed in the treasury. There are several arms to govern Ethereum Name Service; let’s briefly overview them.
Ethereum Name Service DAO
The ENS Token is fully decentralized and run by the Decentralized Autonomous Organization (DAO). DAO allows users to vote as well. The token holders can vote on the following things:
- Executable proposals for a series of smart contract operations, such as distributing a portion of the liquid token pool to fund a grant for Web3 development.
- They can use their votes to appoint or remove a director, member, or supervisor.
- Constitutional amendments to decide the directions for ENS to conduct its mission.
ENS Token Distribution
A standard token using the ERC-20 standard on the Ethereum blockchain. The system primarily uses it for governance. Token holders can propose their opinions on the subject matter and cast their votes. The central place where community members can discuss ideas and have governance-related discussions is the forum discuss.ens.domains.
To distribute Ethereum Name Service Domains to the community, developers allocated 25% to users who had signed up before Oct. 31, 2021. Token distribution:
- 50% Community treasury (ENS DAO)
- 25% Airdrop to .eth holders
- 25% ENS contributors
The allocations were based on the time a user-owned an ENS domain. Casual users could receive tens of thousands of tokens in the airdrop, while domain owners who have been around for a long time received much larger allocations.
As of May 2022, the circulating supply was around 20.24 million ENS. At the time of writing, the price of Ethereum Name Service has risen by 3.31% in the past seven days. The price declined by 4.33% in the last 24 hours. The current price is $16.63 per ENS. Ethereum Name Service is 80.59% below the all-time high of $85.69. At the time of writing circulating supply is 20,244,862.091 ENS.
According to WalletInvestor, the price of tokens might drop and reach $1.16 by the end of 2022 and $0.40 by the end of 2027.
ENS Foundation
Caymans Island Foundation, known as ENS Foundation, is a legal entity that represents DAO. The foundation has three directors: Nick Johnson, Brantly Millegan, and Kevin Gaspar, ENS’s core team members. It has a few purposes, which include:
- Helping to meet tax requirements whether you have access to DAO funds or not. Participants can be responsible for a certain proportion of DAO’s income without legal support.
- To enter into contracts with other companies.
- To provide limited liability for participants in the DAO for the actions of the DAO.
Where To Buy ENS Tokens?
You can purchase these governance tokens at the following exchanges:
Centralized
- Binance
- Okex
- FTX
- ByBit
Decentralized
- Uniswap
- SushiSwap
- 1Inch
Top Ten Ranking Of Most Expensive ENS
If you are following the news, you would know Ethereum Name Service domains sharply rose in last six months. Due to the scarcity of domains, prices and demand have gone up, and during September only, the registration count hit 437,000. Following are the top ten most expensive Ethereum Name Service Domain sales until now:
- Paradigm.eth – Sold for 420 ETH on October 2021, or more than $2 million.
- pjfi.eth – Sold for 350 ETH on September 2022, worth $463,200.
- 000.eth – Sold for around 300 ETH on July 3, 2022, or $317,000.
- Porno.eth – Sold for 184 ETH, or $234,087.30.
- Sam.eth – Sold for 100 ETH, or $129,781.50.
- Buymydomainplz.eth – Sold for 95 ETH, 0r $123,546.08.
- 09jul.eth – Sold for 95 ETH, or $240,000, on May 8, 2022.
- Abc.eth – Sold for 90 ETH, or $254,000.
- Games.eth – Sold for 80 ETH, or $103,825.20.
- Samsung.eth – Sold for 60 ETH, or $77,868.90.
Difference Between DNS And ENS
Paul Mockapetris, a computer scientist from the US, created the Domain Name System in 1983. The purpose of creating DNS is to match internet protocol (IP) addresses with human-friendly names of the domain. Users can type in the website’s name instead of typing the complete numeric IP address. On the other hand, Ethereum Name Service attempts to give people an easier way to read and share cryptocurrency addresses.
The Domain Name System and the Ethereum Name Service are protocols that control how a programmer can resolve certain operations, either on Web 2 or Web 3. The DNS converts the IP address of the web server into a human-readable link called a URL. The Ethereum Name Service converts an Ethereum address into a human-readable link formatted like a URL.
DNS is part of the IP system that allows Web2 to work efficiently. Web3, a concept describing the new decentralized version of the internet, is still in the infancy stage and has issues that hinder adoption, such as long addresses.
Right now, the primary purpose of Ethereum Name Service is to give people and applications an easy way to read and share crypto addresses and make Web3 more digestible. As Web3 matures, you may observe more protocols building around Ethereum Name Service.
Why Should You Use ENS Domains?
Most people today consider ENS Domain as a status purchase rather than a necessity. However, if you’re into cryptocurrency and believe Ethereum will remain an integral part of the digital economy. In the rest of 2022, you may observe ENS breaking records of several other registered domains and sales as even more people, and brands become engrossed in the Web 3 ecosystem.
Besides known companies, Ethereum Name Service domains have become a status symbol. As tommygun.eth explained via Twitter Space, owning an NFT from the desired collection has led many collectors to purchase ENS names that align with their brand. In this way, it almost seems like the vanity license plates of the NFT space.
Final Thoughts
The Ethereum blockchain has high gas fees per transaction and minimum volume that causes limited accessibility. Web2 requires you to input long IP addresses, and you have to use complex wallet addresses and transaction hashes in the Web3 and crypto spaces. Ethereum Name Service rectified this issue and gave blockchain users a more accessible and efficient way of making payments via crypto wallets.
Since smart contracts are the foundations of ENS domains, users consider them more secure and private than DNS. As you know, these domain names exist on Ethereum’s highly programmable ecosystem, thus allowing the domain to interact with other smart contracts outside of naming. Moreover, digital agreements help decrease payment delays and risks of errors, making ENS highly safe for users to adopt.
