Hashes and signatures and keys — oh my! Trying to infer something comprehensible from a chunk of data from a blockchain can be a headache. If you frequent Crypto Twitter or even Web3, you must have noticed users with “.eth” in their display names. What if we told you this is what a blockchain address can look like? Check out our explainer on Ethereum Name Service to learn how it is possible.
Key Takeaways
- Ethereum Name Service is a protocol that “translates” ETH addresses into a human-readable form. It can be easily recognized by an extension “.eth”, although it lets you choose from a wider variety;
- Since November 2021, ENS has been governed by a DAO. The voting is done off- and on-chain and the latter utilizes a native token ENS;
- ENS is used in the most popular crypto products: Coinbase, Metamask, and Uniswap, among others.
What is Ethereum Name Service?
Due to its roots in cryptography, blockchains rely on hashing and encrypting data; this is the main reason why addresses, keys, and pretty much all data recorded in it look like long strings of seemingly random characters.
The logic of this denomination is clear to computers and algorithms, but not humans. For a long time, crypto users had to work around the data strings with mnemonic phrases, and memorizing an address was nigh impossible.
A solution to this problem came from the modern history of communication: domain names. Before the Domain Name System (DNS), Web addresses used to look like strings of numbers.
Ethereum Name Service (ENS) to Web3 is what DNS is to the Internet. ENS is an open-source decentralized internet naming protocol powered by a set of Ethereum smart contracts.
ENS consists of three main components:
- registry — a smart contract that stores all the names, subdomains, and their owners;
- registrars — smart contracts that own domains and release subdomains to owners that meet the criteria;
- resolvers — smart contracts that store and serve records on request. These smart contracts can be thought of as entities that do the interpreting.
But how are these smart contracts keeping track of ownership and unique labels? Easily: each ENS domain name corresponds to a non-fungible ERC712 token. Using an ENS domain incurs an annual fee.
History and Team behind ENS
The idea of ENS was conceptualized in April 2016 by Nick Johnson. With an idea on hand, Johnson was joined by other Ethereum developers such as Alex van de Sande to make the vision a reality.
The mainnet was launched on May 4, 2017. A year later, Nick Johnson left the Ethereum Foundation with a $1 million grant to focus on ENS development and founded True Names Limited in Singapore.
Until November 2021, True Names Ltd. remained at the helm of the project. However, by late 2021 the transfer of governance to ENS DAO was finalized: since then, the protocol has been steered by this community.
The governance and steering are not entirely left to the DAO: there is a Caymans-based ENS Foundation that has been established at the same time. The non-profit is concerned with legal relations and brand.
What is an ENS Crypto Token?
The formation of ENS DAO called for a governance token to be created and distributed. The DAO held a retroactive airdrop of the token to the second-level domain name owners and contributors on November 8, 2021.
25 million (25%) of a 100-million total supply was distributed between second-level .eth domain owners. Users who actively utilized their domain name before October 31, 2021, were eligible for double the rewards.
Another 25 million was distributed by a loosely defined group called contributors: from 11 core developers to active Discord server members. The rest of the supply, 50 million remained in the DAO treasury.
Due to core contributors and the treasury receiving the largest shares and holding a significant amount of the token supply (69.54%), their rewards have a vesting period of 4 years. Airdrop receivers, translators, and Discord server members could use their ENS tokens freely from the very start.
What are Ethereum Name Service and ENS used for?
Ethereum Name Service DAO uses delegated on-chain voting to carry out voting and steering the protocol’s development. It means users are encouraged to delegate the voting power of their ENS tokens to a voter that represents their vision of ENS.
Not all voting is done on-chain though: for collecting ideas and probing the sentiment, ENS DAO uses Snapshot. The Tally governance portal acts as a front end for on-chain voting.
By delegating ENS tokens to a voting address, users relegate their vote to a representative of their choice. They can vote on things like domain pricing, the governance of the price oracle, etc.
Comparison with Similar Projects: FIO Protocol
The idea of ENS is not a new one, and other protocols tried to solve the long unreadable address problem similarly. FIO Protocol is another project that suggested a similar solution.
If ENS to the Web3 is what DNS to the Internet is, then FIO Protocol is better likened to HTTP (Hypertext Transfer Protocol). The FIO Protocol addresses are slightly different and look like this: name@domain.
FIO Protocol is powered by its own blockchain based on EOSIO: the addresses also exist in it as NFTs and native tokens FIO can be staked and is required for network fees. The protocol does not integrate with other blockchains, which also makes it interoperable, like ENS.
To use the Ethereum Name Service, owning ENS tokens is optional.
What is Ethereum Name Service Criticized For?
In early 2022, the ENS name came under fire when a 2016 tweet from the core contributor Brantley Milligan resurfaced. In that single post, he denounced “homosexual acts”, “transgenderism”, abortion, contraception, masturbation, and porn — in no uncertain terms.
The post caused a backlash from the community members and even his fellow ENS team members and was taken down. The problem with it is that the views Milligan communicated denigrated a significant portion of a community, in particular women and LGBTQIA+ identifying persons.
The backlash caused him to double down, and True Names Limited attempted to hold a vote regarding his involvement in the project. The catch was that Milligan held the most voting power in ENS than anyone else, so the ultimate decision to oust him was not made in consensus with the community.
Partnerships and the Future of ENS
While there is the ENS Foundation to consider, the main steering force of ENS today is ENS DAO. The process of implementing changes implies coming up with proposals first and then putting them up for voting on-chain.
The latest discussions can be viewed on the official forum. At the moment, community members are discussing the integration of dynamic decentralized websites, and reviewing an economic model of ENS tokens… and merch!
ENS is already integrated into a considerable amount of crypto services: from exchanges like Coinbase to Metamask and Uniswap. Millions of users enjoy using these platforms, and offering the utility of ENS is a way to make crypto more accessible.
How to Store the ENS Token?
As an ERC20 token, ENS can be stored in most wallets that have support for Ethereum tokens. For example, Metamask lets you utilize its useful integrations.
The ChangeHero team recommends the Exodus wallet for storing ENS. It offers an instant swap feature, and the best rates for it are provided by ChangeHero.
How to Exchange ENS?
Now that you know more about ENS, you can easily swap its token with 100+ other assets with ChangeHero!
- Choose the currencies on the home page, amounts, and the type of exchange. Provide your wallet address in the next step and check the amounts;
- Double-check the provided information, read and accept the Terms of Use and Privacy Policy;
- Send in a single transaction the sum of the cryptocurrency you will be exchanging. Fixed Rate transactions have a 15-minute limit;
- All done? Now we are doing all the work: checking the incoming transaction and doing the exchange as soon as it arrives.
The Best Rate transactions will use the rate current to the time when your funds arrive. Fixed Rate will use the rate at the time of step 1;
- As soon as the exchange has been processed, your AAVE is on the way to your wallet.
Customer support is available 24/7 in the chat on the website or through the email: [email protected].
Conclusion
Ethereum Name Service is one of the protocols spearheading global crypto adoption. If it manages to do what DNS did for the Internet, crypto as a whole will become more user-friendly and widespread.
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Frequently Asked Questions
What is Ethereum Name Service?
Ethereum Name Service (ENS) is an open-source decentralized Internet naming protocol powered by a set of Ethereum smart contracts. The domain names, usually ending in .eth are represented by ERC721 (non-fungible) tokens.
What is ENS crypto?
ENS crypto token is the native governance token of Ethereum Name Service. It is used for voting for changes to the protocol.
How do I register an ENS domain?
Connect your wallet to app.ens.domains, pick a name and if it is vacant, follow the instructions in the manager. Shorter names will generally be more expensive to own and/or purchase.
What is the future of ENS crypto?
The ENS crypto protocol’s future depends on whether it manages to become an industry standard. The users are already discussing monetary incentives to boost voting in the community.
