What is Ethereum Name Service? (ENS)
Summary of Ethereum Name Service
- The Ethereum Name Service (ENS) is a domain name service (DNS) built on the Ethereum blockchain
- ENS works in a similar way to the Internet's DNS system and helps users to find Ethereum addresses via human-readable names, rather than complex hexadecimal characters
- ENS does not seek to replace DNS, but is instead designed to work alongside it
Ethereum Name Service (ENS) is a domain naming system built on the Ethereum blockchain. Ethereum Name Service allows the randomly generated letters and numbers of a standard Ethereum address to be converted into more easily recognizable words, like the name of a person or brand.
In this way, ENS functions similarly to traditional domain name services, where the string of numbers making up an IP address is represented by a human-readable website name that people can more easily remember.
ENS presents an open, decentralized and extendable naming system as an alternative to the general operation of centralized domain naming services (DNS). It also uses blockchain technology to mitigate the security risks associated with having a single point of control. The network does not seek to replace traditional DNS, but to work alongside them.
The ENS token is used for governance of the ENS decentralized autonomous organization (DAO) that manages the shared treasury of the protocol. The ENS token allows holders to submit proposals and cast votes on decisions that influence the management and future development of the protocol.
Who created Ethereum Name Service (ENS)?
ENS was launched on May 4, 2017 by Nick Johnson and Alex Van de Sande from the Ethereum Foundation (EF).
Johnson and Van de Sande both have previous experience working in traditional software engineering roles at Google, as well as design and frontend development roles at the Ethereum Foundation. Together they led a team that was involved in the initial development of the Ethereum Name Service protocol.
ENS was initially funded by the Ethereum Foundation, which authorized its development under Nick Johnson. The $1 million USD grant they received enabled the founders to build a team and develop the earliest iterations of the protocol. ENS also received a grant of an unknown amount from Chainlink in 2020.
How does Ethereum Name Service work?
Ethereum Name Service offers a secure way to translate the cryptographic string of letters and numbers that make up an Ethereum address into easily recognized, human-readable names.
Say, for example, an individual wanted to sell an item, such as a non-fungible token, to her friend and be paid in ETH. For this to happen, the seller must share her public Ethereum address, made up of 42 hexadecimal characters, which may look like the following:
ENS addresses the confusion of having to remember a cryptographic public key and reduces the chances that this address can be entered incorrectly. Instead, ENS allows crypto users to represent their cryptographic address with a memorable, human-readable word or phrase such as kraken.eth.
The ENS architecture is made up of two smart contracts: the registry and the resolver.
The ENS registry consists of a single smart contract that maintains a list of all domains and subdomains available through the ENS service. It also stores three crucial pieces of information regarding each domain:
- The owner of the domain, which may be either an external account or a smart contract.
- The resolver for the domain, responsible for the actual process of translating ENS names into addresses and vice-versa.
- The caching time-to-live for all records under the domain, which is the time required to translate the names to addresses.
The ENS resolver is the smart contract at the heart of the service which translates the human-readable ENS domain names into its corresponding cryptographic address and vice-versa.
The resolver does this with a two-step process: first, it asks the registry which resolver is responsible for the name. Then, it asks that resolver for the answer to the query.
Note that ENS is a hierarchical system, similar to the current domain name services common on the web and allows the domain owner control over their subdomains. This allows the owner of a domain, like kraken.eth, to create other sub-domains such as learn.kraken.eth and ens.learn.kraken.eth.
How to get an ENS domain
Users can lookup available domain names on the ENS app.
After identifying their desired address name, ENS users request to register their address name by confirming the first of two transactions from their connected Ethereum wallet. The second transaction confirms the registration and must be processed within seven days of the first transaction. Users then define the length of time they wish to have access to this domain, called the rental period.
As the owner of a domain, users can set up the various sub-domains and the different addresses they want their name to link to. But the largest benefit ENS offers is being able to share a more immediately recognizable Ethereum address than the standard string of random letters and numbers.
Why does ENS have value?
The ENS token was launched on November 8, 2021 and airdropped to everyone who owned an ENS domain name (.eth address) before October 31, 2021. The eligibility to claim ENS tokens was based on the formula derived from several historical factors of the wallet address:
- Age of the .eth address (with older registrations receiving more ENS).
- Owners who had set a primary ENS (formerly referred to as Reverse Record that makes Ethereum addresses point to ENS names) got a 2x multiplier.
Users were required to claim their tokens within a certain period of time before they were burned.
There is a total of 100 million tokens, distributed as follows:
- 25% airdrop to .eth holders: Were available for claim for a certain period of time, after which any remaining tokens were sent to the DAO treasury.
- 25% to ENS contributors: Tokens for core contributors have a four-year lock-up and vesting schedule.
- 50% to the DAO community treasury: 10% of this allocation was available to the DAO at launch, while the rest remained locked for a duration of four years.
Why buy ENS?
Those who find value in purchasing a unique, human readable Ethereum address may choose to purchase ENS tokens in order to simplify their crypto transactions.
Others who are interested in voting on governance proposals raised within the Ethereum Name Service DAO may also want to purchase ENS tokens.
Finally, those that believe demand for access to the ENS DAO may increase over time may also be interested in buying ENS tokens.