What Is the Ethereum Name Service (ENS)?

During the early days of the internet, one of the main problems that computer scientists faced was that domain names and internet protocol addresses were not matched up. This made the internet not very user friendly from the perspective of an average user. The problem has been fixed with the introduction of the Domain Name System (DNS). This new technology allows each public IP address to correspond to a unique domain. In practice, the system translates IP addresses into domains through dedicated servers (name servers). For instance, instead of typing out 34.465.191.121, you can simply type Gate.io into your search bar and be directed to the website. Now, Ethereum Name Service (ENS) is to take the DNS concept to the next level.

What Is the Ethereum Name Service (ENS)?

The Ethereum Name Service is a distributed, open and expandable naming system that interacts with the Ethereum blockchain. The role of the ENS is to turn machine-readable numbers into human-readable alternatives. For example, instead of seeing the classic Ethereum address 0xa3B1E324GA1ce40db73eD6026c4A179F099B6870 displayed, we will have ‘alice.eth’. ENS allows users to buy a domain registered on the Ethereum blockchain, and thus have complete control over it without intermediaries.
The biggest advantage of owning a domain on the blockchain is being able to receive cryptocurrencies, NFTs, and anything else that can be sent on the blockchain. In fact, a .eth domain makes the process of sending cryptocurrencies much easier, while decreasing the margin of error. Since the deposit address is ‘added’ within the domain, a user just needs a glance to check and double-check the address.

How Does Ethereum Name Service Work?

Anyone can buy a .eth domain. There are basically two ways: register it if available, or buy it (for example on Opensea) if it already exists. In fact, anyone can go to the Ethereum Name Service website and see the address of who has registered it and who controls it. Once the domain is obtained, a user can trade it by transferring or selling it to someone else. Wallet addresses and other information are attached to each token, which is manageable by the owner. The transfer of ownership takes place in the same way as sending an NFT. In fact, an ENS domain name uses ERC-721 Non-Fungible Tokens (NFTs) to represent a unique address. It follows that the related .eth domain is able to maintain its uniqueness without the help of a centralized system, as is the case with classic web domains.

Source: ENS Domains

The two main components of ENS are the registry, and resolvers:

• Registry: The owner who wishes to buy a domain is called a ’registrant’, because he or she must register that domain on the ENS. The funcion ‘registry’ records, monitors, and tracks the activities of those who have registered a domain. ‘Registrars’ are smart contracts that are governed by the main registrar, and their main feature is issuing subdomains to users that follow some set of rules defined in the contract.

• Resolvers: Those who are responsible for the actual process of translating names into addresses are called ‘resolvers’. Any contract that implements the relevant standards may act as a resolver in ENS. Resolvers are capable of associating not only a name to blockchain addresses, but also a name to an IPFS content identifier. The resolver address is stored in a registry. Users then contact the registry to retrieve the resolver associated with the name.

In a nutshell, resolving a name in ENS is a two-step process: First, the registry is asked which resolver is responsible for the name, and second, that resolver is asked to answer the query.

ENS governance & token

The ENS is operated by a Decentralized Autonomous Organization (DAO), which governs the protocol. The ENS consists of a set of binding rules that determine what governance actions are legitimate for the DAO to take. The DAO governs itself through the ENS token, which was created on the Ethereum blockchain and is used primarily for voting activities by its holders.
If users want to submit a proposal to the ENS community, they will need the support of 100,000 tokens to be voted on. The token has a maximum supply of 100 million. At launch, the project airdropped 25% of the supply to holders of .eth domain names. Another 25% of the supply was airdropped to contributors, who include the development team, translators, and advisers. The remaining 50% was reserved for the DAO Community Treasury. The total liquid supply should reach the fixed, capped amount of 100 million by early 2027.

ENS Use Cases

As already mentioned above, ENS domains facilitate the exchange of cryptocurrencies between users. However, use-cases are not limited to just this functionality. The integration of ENS with IPFS makes it possible to build decentralized and distributed sites, which opens up many other use cases. Creating a real website could be quite complex, but it has many advantages:

• No other person than the owner of the domain can close the site;
• Once a user owns a name, he or she can create their own subdomains;
• By owning a username, a user can store an avatar and other profile data, and use it across services;
• With one simple ENS name, it is possible to store addresses and receive any cryptocurrency, token, or NFT;
• It is not necessary to go through centralized intermediaries;
• On commercial sites, it is no longer necessary to use payment, banking, or authentication services.

In the near future, many more features could be available, as long as the development continues in terms of integration with other existing services, since some web browsers are not yet compatible with ENS.

For now, the numbers are quite important, considering that the concept of decentralized domain name has not yet become mainstream. Ethereum Name Service (ENS), recorded tremendous progress in July 2022, performing a 67% growth from the 122,327 total names registered in June. Monthly registrations made in July also surpassed the 365,000 monthly registrations logged in May to reach an all-time high. At the time of writing, the Ethereum Name Service domains exceed 2 Million.
This bursting growth was probably driven by the fact that some well-known entities registered their own ENS domains. For example, a decentralized community has developed around the 10,000 4-digit numbered domains and has dubbed itself the 10K Club. They are not officially affiliated with the ENS team and have created their own community around ENS.

Why Is ENS Important for the Internet Economy?

The Ethereum Name Service acts as a bridge between social networks, cryptocurrencies, communities, and web 3.0 sites, which is why it has a lot of potential to develop. The integration with DNS names has been one of the most important steps forward, because it allows any company to take its DNS domain to ENS and use it as a decentralized wallet, username, and website. Furthermore, ENS is not only limited to Ethereum: it can support other protocols, blockchains, and domains. This factor helps the cryptocurrency industry to become more user-friendly, as it can make crypto trading much simpler and leaner. ENS translates long series of numbers, which are machine-readable public addresses, to short, memorable links that users can use to transact, interact with dApps, and receive any type of cryptocurrency and NFTs.
However, the most important thing to point out is that, unlike classic DNS systems, ENS records of domains are not centralized in a single server, which makes them much less hackable and censurable. In a world, where centralization and data tracking have reached ‘worrying’ levels, ENS could truly become a great tool to protect both users’ privacy and freedom to enjoy the internet without restrictions.

What Is the Difference Between Ens and Unstoppable Domains?

Ethereum Name Service is not the only one of its kind. In fact, there are several others, and among them Unstoppable Domains stands out. Both of them have the same structure and functionalities, but with small differences in terms of governance and the way they operate.
ENS has a more democratic operational approach. As an ENS holder, users can vote on the future of policies on the DAO, allowing them to influence any future features. Basically it gives more power to the community, instead of centralizing everything in the hands of the few members of the organization.
On the other hand, Unstoppable Domains provides users with an easier way to purchase their domain, because it also works as a cryptocurrency wallet. This makes buying a domain with cryptocurrencies significantly more user friendly. In addition, all domains purchased on Unstoppable Domains are owned for life. This removes the recurring costs of renting a domain and gives the user full power over how they use it.
However, it is worth mentioning that Unstoppable Domains operates as a for-profit company, and many of its domains have been ’brand protected’ to prevent individuals from owning certain names, words, or phrases. This is one of the biggest criticisms that have been made to this project.

Conclusion

Most likely, the Ethereum Name Service will soon be fully available as an open public utility. With the help of community governance and decentralized components, ENS can ensure a formidable support for the crypto and DeFi ecosystem, thanks to its integrations and decentralization. However, decentralization is not always to be combined with positive results. Since the concept of censorship does not exist in the case of a totally decentralized web, what can be done in the case of scam websites or, even worse, websites whose contents risk damaging the sensibilities of others? Decentralization is a beautiful concept and, for many people, it is synonymous with individual freedom, but it must be treated carefully in order to prevent the situation from getting out of control.