Ethereum Name Service (ENS) is a naming protocol that allows humans to use easy-to-remember domain names for their cryptocurrency addresses. The protocol then translates it to a machine-readable address. This process has many similarities to the DNS system we use for the internet. Furthermore, it empowers users with a tool that can unify their online presence and help them step into the realm of web3.
ENS could make all the difference in how we interact in the web3 world. We explain why this might be the case in this guide.
Table of contents
- Ethereum wallet addresses can be inconvenient
- What is the Ethereum Name Service?
- What makes ENS stand out?
- How ENS fares against DNS
- Ethereum Name Service vs. Unstoppable Domains
- What makes ENS special
- How the ENS works
- How to get your own ENS domain
- What is the ENS governance token?
- What can you do with ENS?
- ENS could be at the heart of web3
- Frequently asked questions
Ethereum wallet addresses can be inconvenient
Just like internet protocol addresses, blockchain addresses for cryptocurrency wallets are hard to use by the average user. Luckily, computer scientists have developed domain names by investing in the Domain Name System (DNS), which allows linking human-readable domain names to IP addresses.
DNS matches IP addresses with human-readable DNS names. Instead of typing 172.64.147.202 into your address box, type beincrypto.com, and you will be taken to the website.
Despite all the technological advancements in the blockchain and crypto sector, the system still uses a system similar to the old IP address setup. To send crypto to someone else, you will need their cryptocurrency wallet address, which is a long string of characters. To remember that address is highly unlikely, and it’s also not advisable since blockchain transactions are irreversible. That means that if you send funds to the wrong address, you will never not get it back.
To better understand the difficulty of the task, here’s what an Ethereum (ETH) address looks like: 0xd0eAf74B8c5bF457C7a81c3fe277aDb6Ed32DCF4
It’s a 42-character long string, and it is commonly referred to as a public address of a cryptocurrency wallet. You can recognize Ethereum network addresses because they always start with “0x”.
The main issues with having and using a blockchain address are related to the difficulty of sharing it with others and the high risk of mistyping a cryptocurrency wallet address and thus losing your funds. Furthermore, it’s important to acknowledge that most cryptocurrency users are still new to the technology and are just starting to explore it. Having to deal with long strings of characters will probably put off some of them, out of the fear of making a mistake.
This is where the Ethereum Name Services (ENS) comes in.
What is the Ethereum Name Service?
The Ethereum Name Service is an open, distributed, and extensible naming system that interacts directly with the Ethereum blockchain.
Similar to the DNS role, the ENS has the role of a domain name service that maps human-readable addresses such as “name.eth,” to a machine-readable address such as this long hexadecimal string: “0xd0eAf74B8c5bF457C7a81c3fe277aDb6Ed32DCF4.”
The personalized ENS addresses allow users to manage their cryptocurrency funds and assets by simply using a human-friendly domain name. ENS domains aim to become the usernames of web3, and it can store crypto wallets, websites, content hashes, and metadata. Owners can connect all their crypto wallets under one single ENS domain and receive cryptocurrencies or NFTs.
This means that transactions are secure and decentralized without the need for lengthy and complicated addresses. This reduces the chance of making mistakes when entering the address of the recipient to which funds are sent.
Although the ENS may be identical to the DNS system of the 1980s, its architecture is different.
The ENS is similar to the DNS in that it uses a system called domains. The domain’s creator or owner has control over the top-level domain as well as any subdomains.
Anybody can acquire ownership of domains for their own personal use. ENS supports the import of DNS names that are already owned by users for use on ENS. Due to the hierarchical nature of ENS, anyone can create subdomains for themselves or others. For instance, you can create “pay.name.eth” if you own “name.eth” and make any configurations you like.
ENS can be deployed on both the Ethereum main network as well as several test networks.
The ENS team
The initial development of the ENS was led by Alex Van de Sande and Nick Johnson of the Ethereum Foundation in 2017. But in 2018, it separated into a different organization led by Nick Johnson.
True Names LTD manages the development of ENS, a Singaporean non-profit organization. The ENS team consists of experienced Solidity developers, as well as some who used to work with the Ethereum Foundation.
The project distributed ENS tokens to the users of the service in Nov. 2021 and created a decentralized autonomous organization (DAO) to manage it. True Names Limited is the legal entity that connects to the DAO. ENS token-holders can use their assets in the same way as company shareholders; they have the ability to make decisions about pricing and protocol changes, as well managing funds within the Treasury.
The addition of ENS tokens to the project’s funding model allowed it to transition away from grants. The ENS tokens can be traded for U.S. Dollars and other cryptocurrencies on crypto exchanges. This provides a financial support system to the developers of the project.
The ENS Foundation
The ENS DAO is represented by the ENS Foundation. The foundation is able to provide legal support for DAO participants.
The ENS Foundation, a foundation limited by guarantee, is registered in the Cayman Islands. It is a non-profit and does not pay dividends to its members or directors. One supervisor is appointed by DS Limited, a Cayman Islands company.
More details about the ENS DAO and how the ENS foundation operates can be found on the ENS documentation page.
What makes ENS stand out?
The ENS domain name is your IBAN equivalent, which allows others to send cryptocurrency to your wallet. Using ENS, you can create a “nickname” for your public address. This means that instead of sharing a long string of characters with a friend, you will have a link like “Julia.eth,” which is automatically connected to your public address.
The ENS was created for Ethereum smart contracts and is native to the Ethereum ecosystem. It doesn’t have the security problems that a DNS system has. The DNS records for domain names and names are kept on a central server. They are vulnerable to hackers. There are thousands of attacks on DNSs and internet providers every year.
However, ENS records can’t be hacked or deleted and are protected by the Ethereum Blockchain.
Moreover, by using an ENS domain, the entire interaction between users becomes more transparent and easier to follow. This gives users of the Ethereum blockchain the unique opportunity to open a wallet and stand out from the other addresses.
How ENS fares against DNS
Both the Domain Name System (DNS) and the Ethereum Name Service (ENS) are protocols that can handle human interactions with web2 and web3. DNS converts an IP address into a human-readable string known as a URL.
The Ethereum Name Service (ENS) converts an Ethereum address into a human-readable string formatted as a URL. Both functions are similar to a phone book. It is possible to look up a person’s name in a phone book and find the number that allows you to contact them.
Web2 can work seamlessly with the DNS as part of a network of internet protocols. Web3, the concept that describes the new, decentralized internet, is still in its infancy and faces many challenges.
ENS’s primary purpose is to make web3 easier to understand and to share crypto addresses. As time passes, more blockchain protocols will support and integrate ENS as part of their web3 integration.
Ethereum Name Service vs. Unstoppable Domains
Of course, there is another foundation that aims to simplify the way humans interact with blockchain addresses. The main competitor of ENS is Unstoppable Domains, which also offers transferable domains.
Both Unstoppable Domains, as well as ENS, are built on the Ethereum blockchain. They both allow users to create and register a human-readable crypto address.
There are, however, some significant differences in the philosophy behind these projects. ENS is an open protocol that is visible to the public. Developed by a non-profit organization, it focuses on community decision-making and decentralization.
Unstoppable Domains is a business-oriented project. Many domains are “brand protected” to stop individuals from owning specific names, words, or phrases. Some individuals have complained that they are unable to purchase domains with their names, even though the domain isn’t in use.
One big difference between ENS and Unstoppable domains is the payment method. ENS domains allow purchases for a limited period of time, just like normal website domains, and you have to renew your domain each time it expires. Since you will have to use Ethereum (ETH) to pay for the ENS domain and have fees, the prices will differ depending on the moment you want to buy the domain.
However, you can secure your ENS domain for many years and only pay the gas fee once, during registration. Another interesting aspect is that anyone can extend the registration of your ENS domain, but this doesn’t give ownership over your domain.
Unstoppable Domains need to be registered only once, and there is no expiration date for your domain. Also, they allow multiple payment options (credit/debit card, PayPal, crypto, and through the Crypto.com app).
What makes ENS special
The ENS is built using Ethereum’s smart contract and inherits all benefits of the network. This makes it more secure and private and resists censorship than the internet Domain Name Service (DNS).
The future web3 aims to be a decentralized and open infrastructure, and it only makes sense when using internet-naming infrastructure such as ENS domains. Since ENS uses the existing Ethereum ecosystem, it can easily interact with other smart contracts and applications built on Ethereum.
The main advantages of having and using an ENS domain are:
- Have multiple web services combined into one
- Unify your online presence
- Central user-owned storage identity
- ENS is a router for non-Ethereum addresses too, like BTC, LTC, etc.
- The ENS name can be linked to a contract address and trigger a function when funds are received
- The ENS domain is linkable to IPFS to actually host a censorship-resistant website behind the ENS name
- Users can have subdomains linked to different addresses for different purposes
How the ENS works
ENS is built upon two Ethereum smart contracts. The first one is the ENS registry, which records all domains registered on ENS. It also stores three crucial pieces of information about each domain. These are the domain owner, resolver, and caching time.
The resolver is the second smart contract. It converts domain names into machine-readable addresses and vice versa. This smart contract matches each domain with the appropriate user, website, or address.
How to get your own ENS domain
To create your web3 username, you need to have an Ethereum wallet — such as MetaMask — and visit the ENS domains web app. First, search for a domain name. After finding one, you will need to complete the registration process. This includes verifying two transactions from your wallet and paying the annual fee of $5/year, if the name is longer than five characters. Once you have the domain, you can link it with your crypto wallets and websites.
You can also create multiple subdomains like email.rick.eth and website.rick.eth under the same ENS domain. Note that each modification happens directly on the Ethereum blockchain and will incur a gas fee, which may vary depending on the day and time of the day you’re trying to modify your details.
It’s also worth noting that ENS domains are scarce, and the process is very similar to how you would purchase a DNS name. Since this is still a new side of web3, some crypto enthusiasts purchase multiple ENS domains, hoping to flip them later, when more people and brands get into web3. For instance, “exchange.eth” has sold for 6,660 ETH, and “weather.eth” sold for 300 ETH.
The ENS register also supports most popular DNS names such .com, .org, .io, .app and many more.
What is the ENS governance token?
ENS is an open-source protocol that is fully decentralized. It is community-governed by a DAO, which consists of community members that hold ENS tokens.
The ENS DAO is completely governed and controlled by the community using the ENS token. This token is the utility token and governance token that allows users to submit proposals and vote to shape the future direction of the protocol. Anybody can vote for proposals on the ENSDAO if they hold ENS tokens. As with any DAO, no changes in the protocol can be made without a governance vote.
ENS tokenomics
ENS governance token is an ERC-20 token. The maximum supply is 100 million ENS tokens.
To distribute ENS to the community, developers allocated 25% to users who had signed up for an ENS domain before Oct. 31, 2021.
Token distribution:
- 50% Community treasury (ENS DAO)
- 25% Airdrop to .eth holders
- 25% ENS contributors
The developers distributed the tokens to wallets that had ENS domains. The allocations were based on the length of time an ENS domain was owned by a user.
This means that casual users were able to receive tokens worth tens of thousands of dollars 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 is at around 20.24 million ENS. Currently, the token is trading at around $14, and the market cap is $279.6 million. According to WalletInvestor, the price of ENS might drop and reach $1.16 by the end of 2022 and $0.40 by the end of 2027.
ENS is available on the most popular centralized cryptocurrency exchanges, including Binance U.S, Coinbase, Kraken, Kucoin, and others. It is also on DEXs such as Uniswap and SushiSwap.
What can you do with ENS?
The main thing cryptocurrency users can use ENS for is to replace their long addresses with human-readable domains that will facilitate crypto operations. Humans can easily remember an ENS that is something like “name.eth,” but will find it almost impossible to remember a string like “0xd0eAf74B8c5bF457C7a81c3fe277aDb6Ed32DCF4.”
At the same time, this will save them time and potential mistyping when connecting to a new DApp that requires them to input their wallet’s address.
ENS domains personalize details of wallets, and this will make it easier for anyone looking to transfer your funds or any other details such as your website or social media handle. This feature can limit the fraudulent attempts of others trying to impersonate you and steal funds from your friends or collaborators.
ENS could be at the heart of web3
The ENS was created for Ethereum smart contracts and is native to the Ethereum ecosystem. This means that it inherits its security and transparency, as opposed to the DNS records that are kept on central servers that remain vulnerable to hackers.
Cryptography is complex and can discourage beginners from getting involved. ENS eliminates this barrier to adoption by making crypto easier and more accessible. ENS converts the machine-readable public addresses into short, memorable links, which allow transactions and interactions with any cryptocurrency or NFT. It aims to link all wallets, websites, and subdomains under one link, making crypto more accessible and less technical.
As blockchain addresses become more accessible to new cryptocurrency users, we might see an overall increase in adoption over the long run. For global crypto adoption to be successful, ENS and other similar incentives are crucial.
Frequently asked questions
What is the difference between ETH and ENS?
What is ENS crypto?
Where can I buy Ethereum Name Service (ENS)?
How do ETH domains work?
How much does an ENS name cost?
When did Ethereum Name Service start?
Trusted
Disclaimer
In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
