One of blockchain's biggest challenges is improving its ease of use and accessibility. If we look at payments using ETHereum (ETH) or Bitcoin (BTC), new and even experienced users can find long wallet addresses impractical and confusing. Hexadecimal strings of numbers are simple for a computer to read but less intuitive for human users.
The ETHereum Name Service (ENS) combats the problem by allowing anyone to create simple website-style addresses that are easier to remember and use. Let’s take a look at how does ENS work and what you can do with it.
What Is The ETHereum Name Service (ENS)?
The ETHereum Name Service (ENS) is an Ethereum-based project launched on May 4, 2017, by Alex Van de Sande and Nick Johnson from the Ethereum Foundation. The project allows users to display long Ethereum public addresses in a simplified text-based way. This makes it easier to share, use, and remember addresses and other data. Turning machine-readable numbers like 0xAb5801a7D398351b8bE11C439e05C5B3259aeC9B into human-readable alternatives is an important part of improving blockchain adoption.
ENS isn't just limited to wallet addresses, either. It can be used to represent transactions IDs, hashes, and metadata, all commonly found in the cryptocurrency world. You might already be familiar with the Domain Name System (DNS), a naming system that acts like the internet's phonebook. DNS takes hard-to-remember IP addresses and attaches them to an easy-to-use URL. In effect, ENS is the DNS of the ETHereum blockchain.
ENS has since launched a governance token as part of its transition to a decentralized autonomous organization (DAO). Due to a large rise in the token's price, the project has started trending and generated a lot of interest.
How Does ENS Work?
An ENS domain name uses ERC-721 Non-Fungible Tokens (NFTs) to represent a unique address. You can trade a domain by transferring or selling the NFT to someone else. Wallet addresses and other information are attached to each token, which is manageable by the owner. A top-level domain like .ETH is owned by a smart contract called a registrar that controls the creation of subdomains. If you wanted to create BitKan.eth, you would need to interact with the .eth registrar.
To purchase an ETHereum domain name, you can check its availability and rent it yearly. Popular names were, however, initially auctioned off. The highest bidder who won the domain could then attach addresses, create sub-domains, and loan or sell their domain name. For example, if you owned BitKan.eth, you could also create learn.BitKan.eth for free.
What Can I Do With My ENS?
If you've ever got confused with multiple addresses when sending cryptocurrencies, you'll understand the need for ENS. Like you would save a friend's phone number under their name, ENS lets users turn long numbers into easy-to-remember words. This creates a more straightforward experience with less chance for errors.
An ENS domain owner can also create subdomains that they can then assign other data to. It doesn't always have to be a wallet address, either. You could use it to direct to a smart contract, transaction, or metadata.
How Much Does It Cost to Get an ENS Domain?
There are two possible parts to the cost of an ENS domain: auction costs and rental costs. The price of an ENS domain name in an auction was dependent on the popularity of the name. Recognizable names like God, Car, or ETH, fetched higher prices, and short, three-letter words were typically the most expensive. For instance, boy.eth managed to fetch $62.3k while a niche ENS domain like sportsbet.eth fetched a whopping $142k.
Additionally, once you own an ENS domain, you'll need to pay a yearly renewal cost payable in ETH. Fees are denoted in dollars but converted using an exchange rate given by the Chainlink ETH/USD oracle. The annual renewal cost is $5 per year for names with five characters or more but becomes more expensive the fewer letters you have.
Closing Thoughts
In the world of decentralized networks, ENS is a step forward to creating easily accessible ways of interacting with a blockchain. Just like we no longer use IP addresses to navigate the web, we may see an increase in ENS names due to its usefulness and increasing popularity. Since its airdrop, there has also been a rise in interest from the cryptocurrency ecosystem in the project judging from the increasing monthly Google searches of “how does ENS work”.
