🤔 What is Etherium name service(ENS) ?
Etherium name service is a look-up system similar to traditional DNS system that maps crypto addresses to human-readable names like john.eth. Similar to how we save phone numbers as names on phones.
The look-up table is stored on Etherium, hence it is called Etherium name service. However, the lookup table can be used to store any addersses.
💡 What role does ENS token play ?
ENS is the governance token for ENS ecosystem. ENS token holders propose and vote on updates to ENS protocol and decide how to spend ENS treasury.
📝 Origin of ENS
Although Vitalik Buterin highlighted the need for a decentralized naming system in the Ethereum whitepaper, it was not until April 2016 that the idea of Ethereum Name Service was conceptualized by Nick Johnson.
Nick, Alex Van de Sande and a few other developers from the Ethereum Foundation set to work and finally launched the ENS on May 4. 2017.
In May 2018, Nick Johnson left the Ethereum Foundation with a $1million grant to focus on developing the ENS product. With this grant, True Names LTD was founded in Singapore to organize the product development.
In November 2021, the governance of ENS became fully decentralized with the formation of the ENS DAO. Also, 25% of the total supply of the ENS governance token was airdropped to users. With this transition, a delegated on-chain governance structure was implemented.
Also, the ENS Foundation was incorporated in the Cayman Islands to serve as the legal representative of the DAO.
👴🏻 Nick Johnson - Founder
- Education: BSc in Computer Science from the University of Canterbury.
- Software engineer at Niche software Ltd in 2001-2004.
- Developer at Google from 2009-to 2016.
- Software engineer at Etherium foundation from 2016-to 2018.
- Founded ENS in 2018.
😌 What problems does it solve ?
- From centralized to decentralized:
- Present system of mapping domain names to web servers is centralized. ICANN (Internet Corporation for Assigned Names and Numbers) is a private, non-government, nonprofit corporation that maintains the repository of domain names.
- ICANN is the central point of failure, having power to censor any domain.
- Users can use their ENS domain as payment address:
- Senders can write receiver’s ENS domain name instead of writing the wallet address.
- Users can map crypto addresses of various blockchains to their ENS domain. This will allow them to share their domain name instead of remembering all the wallet addresses on various blockchains.
- Many users copy-paste receivers’ wallet addresses because they are difficult to type. Viruses that change the copied wallet address to the hacker’s wallet address are very commonly used by hackers diverting the funds to their addresses instead of the receiver’s address.
- No trusted third party: Users do not have to trust ENS team. The code is open source, anyone can see and verify how the code works.
- ENS is governed by DAO, which cannot be regulated by any government.
🤖How does it work ?
ENS has two principal components:
- ENS Registry: It consists of smart contracts that maintain list of all domains and subdomains, and stores three critical pieces of information about each:
- The owner of the domain
- The resolver for the domain
- The caching time-to-live for all records under the domain
- Resolvers are specific to domains in the registry and serve to obtain addresses mapped to names.
- Resolving a name in ENS is a two-step process: First, ask the registry what resolver is responsible for the name, and second, ask that resolver for the answer to your query.
In the above example, we’re trying to find the Ethereum address pointed to by ‘foo.eth’. First, we ask the registry which resolver is responsible for ‘foo.eth’. Then, we query that resolver for the address of ‘foo.eth’.
The owner of a domain may be either an external account (a user) or a smart contract.
Registering & setting up a .ETH name
🤔 Who gave them the right to sell.crypto domains ?
Unlike present centralized system being run by ICANN, ENS domains had to bootstrap the system from the ground up. The team had to sell domains to users and convince wallets and browsers to support their standard for crypto domains.
Other projects can also start selling .crypto domains but they will also face the same problem – convincing users, wallets and browsers to use their system.
🏛️ Governance model
ENS DAO was set up in November 2021 that handle all the decision-making. On-chain voting and other relevant on-chain governance acts are carried out on the Tally governance portal. With the portal, token holders can delegate their votes, and delegates can create and/or vote on proposals. There are three classes of proposals that can pass through the on-chain governance process:
- Executable Proposals: These are proposals relating to smart contract operations to be executed by accounts controlled by the DAO. Proposals of this nature require a quorum of 1% and a minimum vote approval of 50% to pass.
- Social Proposals: These proposals are for decisions that cannot be enforced on-chain. An example of such is a proposal to increase the royalty fee for the ENS secondary market on OpenSea. These proposals have a 1% quorum requirement and 50% voter approval to pas.
- Constitutional Amendment: As the name implies, it is a proposal petitioning the DAO to amend certain parts of the constitution. This has a quorum requirement of 1% and minimum approval of two-thirds to pass.
The ENS DAO also has an off-chain representation in an entity called the ENS Foundation. This Foundation, set up in the Cayman Islands, helps the DAO comply with tax requirements, enter contracts and partnerships with other legal entities, and also provides limited liability to DAO participants for actions the DAO takes.
ENS DAO has significant power over the Foundation as specified in the Foundation’s Articles of Incorporation. The DAO has the power to appoint/remove a director, member or supervisor. It can also instruct the directors on specific actions to take such as engaging another legal entity on behalf of the DAO, signing contracts, and even winding up the foundation.
😨 Risks and challenges
- To facilitate the possibility of upgrades and maintenance, the ENS root is controlled by four of seven multisig, with members of related projects as keyholders. This is to facilitate administrative changes and recover from an emergency. However, key holders may collude to:
- Control allocation and replacement of TLDs other than .eth – this is required to implement DNSSEC integration.
- Enable and disable controllers for the .eth registrar, which affect registration and renewal policies for .eth names.
- Update the pricing for .eth names.
- Receive and manage registration revenue.
- ENS project is built on Etherium. Success of the project will also depend on long-term sustainability of the underlying blockchain.
- Some users may host controversial content like child porn etc using ENS domains. Such content can be filtered at browser and ISP(Internet service provider) level.
- ENS domain is a direct threat to DNS controlled by ICANN. The project may face stiff regulatory pressure from incumbents that benefit from the present system.
- Competition: There are many crypto projects that are in direct competition with ENS domains like Unstoppable domains.
The 100 million ENS tokens were launched in November 2021. They have been distributed as follows:
- Airdrop to .ETH Holders: 25% of the 100 million token supply has been earmarked as an airdrop to ETH addresses that are registrants of a .ETH second-level domain.
- Contributors: This group of recipients are allocated 25% of the total supply. Core contributors (11 people) were apportioned a large chunk of the allocation with about 19% of the total supply. Other contributors include launch advisors (0.58%), future contributors (1.25%), external contributors (1.29%), translators (0.05%), select integrations (2.50%), keyholders (0.25%), and active discord users (0.125%).
- Community Treasury: The rest of the supply (50%) is allocated to the DAO treasury. This allocation will be combined with the treasury of funds raised from .ETH name registrations and previously in the custody of the ENS root multi-sig. The DAO would employ this fund towards financing the growth and development of ENS.
These tokens will be released as follows:
🧐 Indicators to watch out for
- Number of ENS domains being registered is growing:
- Twitter following is growing: