The Ethereum Name Service (ENS) is a decentralized, open, and extensible naming system built on the Ethereum blockchain. In simple terms, ENS functions as the domain name system (DNS) of the blockchain world, allowing users to replace lengthy cryptographic addresses with human-readable names.
On November 1, 2021, ENS announced the launch of its governance token, marking the protocol’s transition into a decentralized autonomous organization (DAO). The token claim process opened on November 8, and eligible users had until May 4, 2022, to claim their tokens.
In this article, we explore key insights from an interview with Brantly.eth, ENS Operations Lead, covering topics such as DAO governance, the airdrop, and Layer 2 expansion plans.
Introduction to the ENS Token Distribution
The total supply of ENS tokens is 100 million. Twenty-five percent of the total supply was airdropped to users holding .ETH names, with over 137,000 addresses qualifying. Another 25% was allocated to ENS contributors, including more than 100 individuals and teams, as well as hundreds of Discord users. The remaining 50% was reserved for the ENS DAO community.
It is important to note that DNS-integrated names and subdomains were not included in the airdrop. The ENS project has never undergone external fundraising, and the core team did not provide liquidity for the token or proactively seek exchange listings.
Understanding ENS and Its Role in Web3
ENS serves as an identity protocol for web3, designed to be universally applicable across the internet. It allows users to own a single username, control their profile data, and use it across various decentralized applications (dapps) and services. This stands in contrast to the web2 model, where each service requires a separate account and identity.
Besides serving as a universal username, ENS simplifies cryptocurrency payments by replacing long addresses with readable names. It can also function as a decentralized website.
The History and Evolution of ENS
ENS was launched on May 4, 2017, making it one of the oldest non-fungible token (NFT) communities still in operation. It predates well-known NFT projects like CryptoPunks and Curio Cards.
What began as a side project by Nick Johnson and others at the Ethereum Foundation has since evolved significantly. Initially, ENS only supported .ETH names for Ethereum addresses and Swarm hashes. Today, it supports addresses on any blockchain, content hashes for platforms like IPFS and Arweave, and profile data such as avatars. It also integrates traditional DNS names into the ENS system.
Fair Distribution of Governance Power
Half of the ENS token supply was allocated to the DAO itself. The other half was distributed to .ETH holders and contributors based on the duration of domain ownership rather than the number of domains held. This approach prevents large-scale domain squatters from gaining disproportionate influence.
Projects that contributed significantly to the ENS ecosystem, such as ENSUser, received additional tokens from the contributors’ allocation.
Managing the ENS Treasury
The ENS treasury holds more than $24 million in registration fees. Moving forward, the DAO will decide how these funds are used. The core team has suggested allocating resources first to ENS development, then to the broader ENS ecosystem, and finally to web3 public goods.
Reducing Gas Fees with Layer 2 Solutions
High gas fees remain a significant challenge for Ethereum users. ENS plans to use CCIP-read to allow users to store records and subdomains on their preferred Layer 2 network. However, reducing the cost of .ETH domain registrations will take longer. The team is considering moving all registrations to Layer 2 but is waiting for the Layer 2 ecosystem to mature further.
Innovative Applications Built on ENS
Brantly.eth highlighted that using ENS names as usernames across dapps is one of the most powerful use cases. He also mentioned a project that uses ENS to name stored files on distributed file networks, demonstrating the protocol’s versatility.
DNS Integration and the Value of .ETH
ENS allows users to integrate traditional DNS names into its system. While this functionality offers similar features to .ETH names, .ETH names have unique advantages. For example, .ETH names are fully self-custodied, while DNS names integrated into ENS rely on traditional DNS security.
Moreover, .ETH has strong branding potential. Just as .COM symbolized the rise of the internet, .ETH could become synonymous with the growth of web3.
Frequently Asked Questions
How can I participate in ENS DAO?
To participate, you simply need to hold $ENS tokens. Governance rights are granted to token holders.
What functionality do $ENS tokens have?
$ENS tokens allow holders to vote on proposals within the ENS DAO, influencing the future direction of the project.
Will ENS be listed on major exchanges?
The core team did not provide liquidity or seek exchange listings. Listing decisions are made by the exchanges themselves.
Why weren’t DNS-integrated names included in the airdrop?
The airdrop was limited to .ETH holders because the DAO primarily governs matters related to .ETH names and registration mechanisms.
Can locked tokens be used for voting?
No, locked tokens do not carry voting rights. Only liquid tokens can be used in governance.
Is there a plan for liquidity mining?
The core team has no plans to provide liquidity or initiate liquidity mining programs.
How will future registration fees be determined?
The DAO will control registration fees and decide whether to increase them. There is no plan to limit the number of domain registrations.
What is the long-term vision for ENS?
The goal is for everyone to have an ENS domain. The team is focused on expanding usability and adoption across the web3 ecosystem.
For those interested in exploring more strategies for participating in decentralized governance, staying informed is key.
Conclusion
The transition to a DAO marks a new chapter for ENS, empowering the community to steer the project’s future. With a fair token distribution, ambitious plans for Layer 2 integration, and a growing ecosystem of applications, ENS is poised to remain a critical infrastructure component in the web3 landscape.
As the space evolves, community involvement and adoption will play pivotal roles in shaping the future of decentralized naming systems. Whether you're a user, developer, or stakeholder, understanding ENS’s governance and roadmap is essential for navigating the decentralized web.