What is the Ethereum Name Service and Why is ENS Rallying?

Tired of Complicated Crypto Addresses? ENS Might Be for You

As its name suggests, the Ethereum Name Service can be used to assign names to wallet addresses (of over 100 blockchains), web domains, hashes or other machine-readable identifiers. By “names,” we mean names that you or any other semi-literate human being can comfortably read, such as cryptovantage.eth or bitcoin.eth. Not only that, but the names assigned by the service actually come in the form of non-fungible tokens, meaning they can be traded and transferred after use.

And by assigning a name to an address, for example, people can send you cryptocurrency without having to copy-paste a long-winded hexadecimal hash and then check, double-check and triple-check it.

All names assigned by the Ethereum Name Service carry the “.eth” suffix, making them pretty easy to remember. They can be claimed by participating in an auction: users can head over to app.ens.domains, check the name they want to claim for availability, and then start the registration process if the name is available.

Source: Ethereum Name Service

Users can choose to register the name for one year or more, and will need to pay a subscription fee that increases the shorter the name is. Fees are paid using ethereum.

Right now, the Ethereum Name Service has created just under 500,000 names, and has currently registered 123,000. Unsurprisingly, most of these were registered in November of this year, which counted for 90,000 registrations. This is in comparison to 27,800 the month before, and to 3,000 in May 2019, some two years after the service was first launched.

Source: Dune Analytics/@makoto

To put this in some perspective, November’s tally represents approximately a 1,950% increase over the same month in 2020. Even compared to the previous month it shows a 220% increase.

Also, if you’re wondering whether you may have qualified for the ENS airdrop, you may have if you held a ‘.eth’ domain prior to or on October 31, 2021, when the snapshot for the airdrop was taken. If you think you do qualify, you have until May 4, 2022 to make your claim, which you can do by heading over to claim.ens.domains.

Is the ENS Crypto Likely to Rise Higher?

In other words, the Ethereum Name Service is growing rapidly, and this largely accounts for why its ENS governance token is shooting up the cryptocurrency charts right now.

For example, on November 22 (the earliest available date for a CoinGecko archive), ENS was ranked 138th and priced at $43. It’s now ranked 103rd, while it has broken into the top 100 on multiple occasions in the past few weeks.

At the moment, the following major crypto-exchanges list ENS:

• Binance

• Coinbase

• Crypto.com

• Gate.io

• Uniswap

• Digifinex

This isn’t a large list, implying that when other big exchanges join the fray and list ENS, it will experience further boosts. Indeed, the market saw this recently with shiba inu (SHIB), which rallied strongly on November 30 after Kraken announced it would finally list it.

Two things are important to note about ENS: 1) it’s the governance token of the Ethereum Name Service; and 2) it’s limited to a total supply of 100 million ENS. This supply cap could, all other things being equal, point towards gradual price increases in the future, as demand overwhelms the cryptocurrency’s fixed supply. Particularly when 50% of the 100 million ENS is being held in the Ethereum Name Service’s community treasury.

On top of this, there’s a third feature of the Ethereum Name Service worth underlining. Namely, ‘.eth’ domains are tradeable on secondary markets such as OpenSea, since they’re non-fungible tokens. This tradeability will help drive further interest and liquidity towards the service and its native token, helping to push the price of ENS up further still.

With regards to the first feature, holding ENS grants individuals with certain governance rights with regards to the Ethereum Name Service. Firstly, they can vote on altering protocol parameters, such as pricing and the service’s price oracle (which is used to calculate how prices should be set). Secondly, holders can vote how funds in the community treasury are used, and on how this treasury receives future revenue.

Basically, holders of ENS control how the Ethereum Name Service functions and evolves. This is a significant privilege, given how central the service is likely to become as Ethereum itself (and crypto more generally) attracts wider mainstream adoption.

ENS is Yet Another Project That Could Drive Adoption

Because so many laypersons (and investors) still complain about how complicated and user-unfriendly crypto is, something like the Ethereum Name Service should conceivably become increasingly popular as cryptocurrencies attract more adoption.

In fact, anyone particularly bullish about the Ethereum Name Service may even argue that it will be one of the key ingredients if crypto is to become truly mainstream. Because instead of asking people or businesses to send crypto to ‘a4332jbjdsJnd07HanKw’, you can instead ask them to send payments to ‘JohnSmith.eth.”

It goes without saying that this seems much more inviting — and more easily remembered — than a seemingly random string of alphanumeric characters. So while ENS continues to fluctuate between higher and lower valuations at this precise moment in time, it’s easy to envisage it becoming much more expensive over time. Particularly when Ethereum Name Service registrations are growing by around 220% per month and 2,000% per year.