About Ethereum Name Service (ENS)

The Ethereum Name Service is a distributed naming system that maps human-readable names to complex strings of data like crypto wallet addresses and content hashes.

The platform is positioned as Web3’s equivalent to Web2’s Domain Name System (DNS). Similar to how DNS allows simple URLs (eg, Buy Bitcoin, XRP, Ethereum Online - Uphold ) to represent complex IP addresses; the Ethereum Name Service attributes human readable nicknames - like uphold.ETH - to confusing and over complicated wallet addresses.  

Per CoinDesk, these nicknames (domain names in technical talk) exist as Ethereum-based NFTs and can be used to send and receive cryptocurrency. Domain names can also double as a web address for sites hosted via the Inter Planetary File System. Users are required to pay an annual fee to the protocol to maintain the domain name.

Built on Ethereum, the Ethereum Name Service if comprised of two unique smart contracts, a registry, responsible for storing individual domain names, and a resolver contract used to translate domain names into machine-readable data (and vice versa). 

Ethereum Name Service has a native governance token, ENS, that’s used to confer voting rights within the ENS DAO. According to Blockworks, token holders have the ability to vote on several pertinent issues affecting the platform including constitutional amendments and resource allocation. 

As of July 2022, over 1.12 million unique names were registered with the ENS.

Moreover, the platform currently features integration with over 400 Ethereum-backed applications and emerging web browsers including AAVE, Uniswap, OpenSea, and Brave.

When was ENS created and how much was it worth?

One of Ethereum’s first NFT projects, ENS was created by two Ethereum Foundation (EF) developers, Nick Johnson and Alex Van de Sande, in May of 2017.

Roughly 1 year later, in May of 2018, Johnson received a $1 million dollar grant from the EF to build out the Ethereum Name Service. The funds were used to establish True Names Limited, the firm tasked with overseeing ENS’ development.

The platform’s native token, ENS, was initially distributed to over 137,000 eligible wallet addresses in November of 2021 and initially began swapping hands at a price of $43.44.

According to Messari, the token’slaunch coincided with the creation of the Ethereum Name Service DAO, a decentralized autonomous organization designed to facilitate community-lead governance.

Pricing data from CoinGecko notes that ENS performed well in the days following its release with the token hitting to an ATH of $83.40 on 11/11/21. Following a brief dip which saw the ENS lose nearly half of its value within the span of a week, the token once again rose over the latter half of November ’21 to a local high of about $75. ENS has experienced downside volatility since.

How is the price of ENS determined?

ENS is a deflationary asset with a hard cap of 100 million tokens. According to CoinDesk, 25% of ENS’ total supply was initially distributed via airdrop to over 137,000 eligible wallet addresses. An additional 25% of supply was airdropped to the project’s early advisors and core development team while the remaining 50% was allocated to the ENS DAO treasury. As of July 2022, there were 25.6 million ENS tokens in circulation.

Why does ENS have value?

Its Web3’s equivalent of the Domain Name System, a core functionality component of the centralized internet, Blockworks explained. If a decentralized web is to succeed, and ENS value increase, there will need to be simple URLs to complex machine readable IP addresses and data streams.

Is ENS secure?

ENS leverages the security framework of the Ethereum blockchain, a PoW -based (soon to be PoS) ledger that’s secured by a global, decentralized network of node operators. Despite its limited scale, the original “network of networks” is noted for its robust security functions.

What are the main benefits of ENS?

•  The Ethereum Name Service maps simply human readable ‘nicknames’ to complex strings of data like crypto wallet addresses.
•  Domain names procured on ENS can be used as a website address for sites hosted on the Interplanetary File System. 
•  A governance token, ENS confers voting rights within the community lead Ethereum Name Service DAO.

What do the critics say about ENS?

Poor price performance. Despite a hot start, ENS has failed to inspire in terms of price appreciation. As of July 2022, the token was sitting nearly 90% from is ATH. With an uncertain global macro environment brewing, the token will likely have a hard time generating outsized returns in the short to medium term.