What is Ethereum Name Service (ENS)?

The Ethereum Name Service (ENS) is a domain service on the Ethereum network that allows you create a simple and human-readable domain to access a wallet in the cryptocurrency ecosystem. 

Key Takeaways

• The ENS offers an attractive alternative to a random string of letters and numbers that is generally required to access a wallet. 
   
• The ENS consists of two smart contracts of the Ethereum network, the Registry and the Resolver. 
   
• The protocol issues the ENS governance token which has emerged as a popular crypto asset.

We recently reported about the integration of the Ethereum Name Service (ENS) with two leading payment services, PayPal and Venmo. The decision is set to impact over 270 million users in the United States. An increasingly popular service, the ENS is slowly gaining currency among Web 3.0 enthusiasts. Let's learn about the concept in detail in this blog. 

Ethereum Name Service (ENS)

To understand the Ethereum Name Service (ENS), we first need to draw an analogy and go back to the history of the internet. During the early days of the internet, there was no easy way to access a website. You couldn’t simply type in www.google.com to access Google’s website. Instead, you needed to enter the IP address to access Google’s website. 

An IP address is a long string of numbers and symbols. One IP address is different yet strikingly similar from another IP address. This made it difficult to remember the IP addresses of different websites. Unless you were a nerd, navigating the internet in early years was more of a nightmare. Then arrived a system of domains in the form of human-readable and pronounceable letters which you could type in to easily access different websites. 

Implemented in 1985, the Domain Name System (DNS) simplified the process of accessing different websites on the internet. Thanks to the DNS, you don’t need to type in 207.46.170.123 anymore to access Microsoft. You can simply enter www.microsoft.com to access the website. 

The blockchain technology underlying the cryptocurrency sector is still in its initial stage as well.  Each address in the crypto ecosystem is a distinct string of letters and numbers. For example, the address of its founder Vitalik Buterin’s Ethereum (ETH) wallet is 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045.  

Source: Getty Images

Given how sensitive this is, it seems obvious that even a minor typing error could lead to an unintended transfer of funds and such errors are common – and there is where the ENS comes in.  

Recommended Read: Ethereum Explained

• The ENS is a naming service created by the Ethereum network to link distinct information to a name.
   
• It is a community-driven and non-profit venture.
   
• It is a simple, secure and decentralised method of using a readable domain, instead of a random string of letters and numbers, to access a wallet in the crypto ecosystem, and issues eth.domains. 

The way the introduction of domains made the access of different websites on the internet simpler, ENS aims to make the process of locating crypto wallet addresses simpler.

Let's take a practical example: if you want to transfer crypto assets to Buterin, you could simply transfer it to vitalik.eth* instead of  0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045. The domain is merely an example of the ENS service. Otherwise, it’s Vitalik’s virtual address. 

Let's understand how this works.

How Does the ENS Work?

As a blockchain product, the ENS is built on two smart contracts of the Ethereum network, namely the ENS Registry and the ENS Resolver. 

• The ENS Registry records all the domains, subdomains, owner's details, and the link to the Resolver.
• The ENS Resolver manages the conversion of names to addresses and vice versa.

Image: How the ENS works, by ENS

Here is how even you can get a blockchain domain with the ENS:

1. Use an Ethereum wallet, integrable with the ENS, to visit manager.ens.domains.
    
2. Create a simple and easy-to-remember domain. This is going to be a difficult part as a simple one isn’t easily available.
    
3. Register the domain and confirm it with two transactions from your wallet.
    
4. The average rent for a domain is $5 a year. Choose the period for which you require the domain.
    
5. Pay the rent in ETH.
    
6. As the domain is registered with your wallet, you can even create subdomains for different kinds of Web3 resources in your possession. 
    

What is the ENS Token?

The ENS is a project of a Singapore-based organisation, ENS Labs Limited (formerly True Names Limited) that started operating in May 2017. The ENS token is the governance token of the Ethereum Name Service protocol. It is an ERC-20 utility token.

Related: What Are ERC-20 Tokens?

The ENS project airdropped ENS tokens in late 2021 to its users. It also established a decentralised autonomous organisation (DAO) for the management of its operations. The owners of the ENS tokens use their virtual assets to raise their voices on decisions such as a service price, protocol updates, and fund management within the treasury. ENS tokens can be exchanged for other cryptocurrencies on the crypto exchange. You can even redeem these tokens for US Dollar.

ENS Token Price

We earlier mentioned the integration of the ENS with PayPal and Venmo in the U.S. The announcement led to an immediate surge of 5% in the price of the ENS token as it was exchanging hands at $17.67 on the day. The ENS coin is trading $17.36 at press time. 

Image: ENS/USD, by CoinGecko

ENS has a total market capitalisation of over $570 million. Out of its maximum supply of 100 million tokens, there is more than 33 million tokens. 

1. The all-time high (ATH) of the ENS token was $83.40 on 11th November 2021.
2. The all-time low (ATL) of ENS was $6.69 on 19th October 2023.
    

Read More: Understanding Decentralised Applications (dApps)

ENS and Ethereum Ecosystem

The ENS is a prominent player in the Ethereum ecosystem that is gaining popularity due to the kind of service it offers. Ethereum's native token, ETH, is the second largest cryptocurrency with a total market cap of $280 billion. Bitcoin (BTC), with a market cap of $1.15 trillion remains the king coin within the crypto ecosystem. 

However, there is one area in which Ethereum has managed to beat Bitcoin. Ethereum boasts of the largest number of decentralised applications (dApps) on its network. In fact, it hosts over 4,000 dApps and over 53 million smart contracts. 

Despite the many good solutions being offered by several dApps operating on the Ethereum network, none of them has thought of replicating the DNS model in the crypto ecosystem yet. 

It is only the Ethereum Name Service that thought of offering these services to the burgeoning crypto market. Naturally, it found a quick success and is still expanding.

Currently, the ENS has over 2.04 million domain names, 750 integrations, and 885,913 owners. It counts Coinbase, Base, GoDaddy, Etherscan, Metamask, and Arbitrum among its partners. 

Image: Choosing a domain, by ENS

In May, the ENS labs proposed that the protocol expands to layer-2 (L2). Titles the "ENSv2," the project aims to re-envision its “architecture from the ground up.” 

The move is expected to bring about the following benefits:

• Lower gas costs
• Enhanced control and customisation
• Improved multi-chain interoperability 

We will be keeping a close watch on any updates on the transition phase of the ENS. 

Frequently Asked Questions (FAQs)

1. What is the Ethereum Name Service (ENS)?
   The Ethereum Name Service (ENS) is a domain service on the Ethereum network on which you can create a simple and human-readable domain to access a wallet in the cryptocurrency ecosystem. Generally, you need to enter a random string of letters and numbers to access a wallet. 
   
    
2. How does the ENS work?
   It is the integration of two smart contracts on the Ethereum network, the Registry and Resolver, that lie behind the operation of the ENS.
   
   While the ENS Registry records all the domains and other metadata to the ENS Resolver, the latter manages the conversion of names to addresses and vice versa. 
   
    
3. What domain does the ENS offer?
   The ENS offers .eth domain. 
   
    

4. How can I use the ENS service?
   It is very easy to use the ENS service - follow these simple steps:

   1. Use an Ethereum wallet, integrable with the ENS, to visit manager.ens.domains. 
   2. Look for a simple and easy-to-remember domain that is available.
   3. Register the domain and confirm it with two transactions from your wallet.
   4. As the domain gets registered with your wallet, you can even create subdomains for different kinds of web3 resources you hold. 
   
    

5. What benefits does the ENS token offer?
   The ENS token is the government token of the eponymous protocol which allows you to raise your voice on different decisions on the protocol, such as service price, protocol updates, and fund management within the treasury.