Ethereum Name Service (ENS): Domain platform for the internet of tomorrow

The Ethereum Name Service (ENS) aims to make the crypto space more accessible and clear the path for the internet of tomorrow (Web 3.0).

The Ethereum Name Service (ENS) aims to make the crypto space more accessible and pave the way for the internet of tomorrow (Web 3.0).

The Ethereum Name Service is an ETH protocol that lets users create decentralized names for crypto wallets, websites, and more. In short, ENS provides a platform where users can create domain names for Web 3.0. The special thing about these domains is that they can be linked to information from blockchains (think wallet addresses, transaction hashes, etc.).

The project’s goal is to make the Ethereum ecosystem more accessible and easier to understand by simplifying interaction with it. The project still has a lot of disagreements.

What is Ethereum Name Service?

The Ethereum Name Service protocol is a dedicated system that basically maps information to easy-to-remember names (e.g., leon.eth, amazon.eth, etc.). Users can create internet domains using ENS whose URLs end with ".eth". These URLs or names can then be directly linked to Ethereum wallets or other information on the blockchain.

The project is basically similar to Web 2.0’s Domain Name Services (DNS), which let us access information on the current internet via names and surf the web more easily. It wasn’t always this simple: when the internet was new, you could only find information if you knew the exact IP address; DNS changed that.

Thanks to DNS, today you only need to enter a domain name (btc-echo.de, wikipedia.de, etc.) next to a complex IP address. The domain name then automatically routes you to the corresponding IP address.

The crypto space is currently at a similar stage to the internet before DNS was introduced. Users are currently forced to use long codes like their wallet address or transaction hashes to navigate Web 3.0. The Ethereum Name Service project wants to change that.

ENS can, for example, be used to create a domain like amazon.eth or volkswagen.eth that can be linked to an Ethereum wallet. Normally, a wallet looks something like this: 0x5bsfjbk634bssf1iwark ... But with ENS, crypto users can now interact directly with an ENS domain and don’t have to enter the wallet address first.

How does Ethereum Name Service work?

The ENS protocol translates domain names into machine-readable addresses using smart contracts. Each ENS domain automatically gets the right user, website, or address assigned.

A big difference between ENS and DNS is that ENS is built on the Ethereum blockchain. Domain names are created as NFTs on the ETH blockchain and can be created, bought, and sold as needed, with each ENS domain only able to be created once on the Ethereum blockchain.

In theory, this makes Ethereum Name Service safer, private, and censorship-resistant than traditional DNS domains.

The user who first registers a .eth domain gets ownership of it. As long as they own the ENS domain, they can freely trade it, rent the name, or create subdomains (like donate.amazon.eth or electriccars.volkswagen.eth) and shape them as they see fit. If a user doesn’t renew their ENS domain rights, the domain becomes available again after 90 days.

What is the ENS Governance token?

The Ethereum name service protocol didn’t have a token in its first three years. It wasn’t until the development team announced in November 2021 that ENS would decentralize further by forming a DAO (decentralized autonomous organization) that the ENS token was created.

At that time, the ENS community received just under 50% of the total supply, while .eth domain owners and ENS developers each received 25%. Since then, ENS has served as the protocol’s governance token. It gives holders the right to vote on changes to the protocol. ENS token holders can influence ENS development, similar to shareholders in a company. For example, ENS holders can vote on how high the registration fees are for ENS domains. They can also decide what to do with the protocol’s revenues.

Currently, the ENS protocol earns money in two ways. First, from registration fees users pay when creating a .eth domain, and second, from renewal fees.

In the last 30 days alone, Ethereum Name Service generated more than $15.89 million in protocol revenue, as several .eth domains sell for hundreds of thousands of dollars.

Additionally, ENS token use can be expanded by adopting changes to ENS rules. However, changes must be approved by at least 67% of votes and with at least 5% token participation.

Summary

The crypto space isn’t very beginner-friendly due to its complexity. ENS aims to reduce this complexity and lower access barriers by turning addresses into short, memorable links, making the blockchain world more approachable and less technical.

Moreover, ENS plans to open not only .eth domains but the entire DNS domain space in the future. This means everyday websites like amazon.nl could be linked to amazon.eth someday.

Users would be able to view content on a domain and send money to the same domain without any hassle. This could be especially useful for online stores or other service providers.

With more than 1.67 million registered domains owned by over 482,000 people, ENS is currently the largest name domain protocol in the crypto space.

ENS won’t be worth much if a similar protocol is built on another, more popular blockchain in the future. But it’s not just similar projects on other blockchains that could threaten ENS; competition within the ETH ecosystem could be a threat too. Unstoppable Domains and Aave’s Lens Protocol are notable competitors.

Read also: How Cosmos wants to revolutionize Web 3.0