ENS stands for “Ethereum Name Service”. It was founded in May 2017 and is a decentralized domain name service provider built on Ethereum. ENS is essentially a search mechanism that connects data to domain names, making it easier for people to use.
This article will give you a detailed introduction to ENS, including what is ENS, what are its uses, how it works, an introduction to ENS coins, future analysis, and how to invest in ENS.
What are ENS domains?
ENS stands for Ethereum Name Service, which is a decentralized domain name system built on Ethereum. It can condense our complex wallet addresses and even web pages into short characters such as "XXX.eth", making it easier for users to trade and search, greatly improving the usability of the Ethereum blockchain. Each ENS address is an ERC721 NFT that can be traded on NFT trading markets such as Opensea.
Ethereum founder Vitalik Buterin's ETH wallet address is a 42-digit number and letter expression. On ENS, it can be directly converted to "vitalik.eth". If you want to transfer money to Vitalik on the chain, you only need to enter "vitalik.eth" and ENS will automatically help you find his address wallet.
ENS features:
NFT: ENS domain names are built on Ethereum's ERC-721 standard, so each ENS domain name can also be considered an NFT. Therefore, you can manage ENS domain names like holding and using NFTs, and it also allows transactions and transfers. Since the right to use this ENS domain name belongs to you, you can control your personal information and data and bring it to every ENS DApp application and service you use.
Point to wallet address: After successfully registering the ".eth" domain name, users can set up reverse resolution to convert the Ethereum address into a domain name. Your domain name "Shell.eth" can point to your "0x" eth wallet address. In terms of fees, after owning an ENS domain, you will need to pay the annual renewal (maintenance) fee in ETH.
Simplify on-chain transfer payments: Currently, ENS also supports addresses such as LTC, DOGE, and BTC. If you want to transfer these assets to another party, you don’t need to enter any address, just enter the other party’s “.eth” domain name. In addition, you can also bind your domain name with your social software account and email and other online accounts. The address of the purchased NFT work can also be recorded on the domain name, or set as your ENS domain name avatar.
How are ENS domain names different from traditional domain names?
As we all know, Internet domain names are generally website names with suffixes such as ".com", ".org", ".me", etc., such as google.com, facebook.com, etc. These websites are identified and used by netizens in the form of domain names, and computers actually only recognize IP addresses composed of decimal numbers. However, since this kind of IP address with a combination of numbers is difficult to remember and inconvenient for users to use, the reason for the birth of domain names is to convert digital IP addresses into human-readable language.
In the real world, the most famous domain name server is DNS (Domain Name Server), which is a server that converts domain names and their corresponding IP addresses. When we enter "xx.com", "xx.tw" and other URLs on a web browser to access a web page, the DNS domain name server acts like a "translator" and automatically translates the website domain name we entered into the corresponding IP address, thereby calling up the corresponding web page.
After understanding traditional Internet domain names, it is easier to understand ENS. It runs in the blockchain network. Its main function is to translate Ethereum addresses composed of random numbers and letters into domain names ending with ".eth". Each domain name ending with ".eth" can also resolve the corresponding Ethereum address. It can be said to be the "translator" of the on-chain address.
Ethereum addresses start with 0X and consist of a series of uppercase and lowercase letters and numbers. The general address length is 42 characters, which is not only difficult to remember and difficult to read, but also prone to errors during use. When transferring, recharging, and withdrawing assets generated by the blockchain, it is often possible to accidentally miss a character or enter the wrong character, resulting in a transaction failure or transfer to the wrong account, resulting in asset loss, which is theoretically impossible to recover.
Traditional Internet products allow users to register accounts with simple usernames, mobile phone numbers or email addresses to manage and use products. If blockchain is to become popular, the addresses on the chain also need to be optimized and turned into a language form that is easy for users to recognize in order to improve the user experience.
To put it simply, ENS is about solving the readability problem of on-chain addresses. It translates on-chain addresses into a way that is easy for ordinary people to recognize and use, and parses a series of disordered characters into the domain name language "xx.eth" that netizens are already accustomed to.
What are ENS coins?
The ENS token launched its initial coin offering (ICO) on November 9, 2021, with a total supply of 100 million tokens. Its annual inflation rate is up to 2%, and the specific amount is determined by the DAO.
The specific token distribution is as follows:
Treasury (unlocked in 4 years): 5KW, accounting for 50% of the total ENS, of which 10% is released during DAO
Airdropped to users (>137k accounts): 2.5KW, 25% of the total ENS tokens, but only 1.96kw (78.5%) were claimed.
ENS core contributors (unlocked in 4 years): 1.896 KW, accounting for 18.96% of the total
Other ENS contributors (including 100 individuals and groups, and hundreds of Discord users): 0.604 KW, accounting for 6.04% of the total.
Overall, ENS is very web3-friendly and has airdropped 50% of the total tokens to ENS users and contributors. Although the 25% of the total tokens airdropped to ENS contributors have a 4-year unlocking period, such a huge airdrop is bound to cause considerable selling pressure on $ENS tokens in the future.
Ethereum Name Service (ENS) exchange rate introduction
What is the potential of ENS? Is ENS coin worth investing in?
To understand the potential of ENS, we can first look at the current data performance of ENS.
First of all, the total number of domain name registrations of the ENS protocol has reached 1.12 million. Currently, more than 500 wallets or protocols have been integrated, and the number of users exceeds 400,000.
Among the total historical revenue of all projects, ENS's historical revenue is about $56.7m, ranking 15th among all projects, with strong profitability. Unlike other protocols, the ENS protocol only generates revenue when users make their first purchase or renew their subscription. For nearly 90% of players, there is a 90% probability that they will spend $5 per year on ENS.
Since the ENS airdrop was announced, ENS's revenue data has shown explosive growth, with revenue increasing more than eightfold in the past year. The revenue has exceeded $1.8 million for 11 consecutive months.
From the perspective of business structure, new domain name registration fees are the main source of ENS's revenue, and new domain name registration revenue is more than 10 times the renewal revenue. Currently, most of ENS's revenue is incremental revenue.
ENS registration volume experienced two bursts (as shown in the yellow circles in the figure above):
The first outbreak period ENS announced an airdrop, and a large number of users participated in the airdrop at zero time
The second outbreak period was the ENS domain name hype that began in April 2022.
Currently, the ENS protocol has entered a period of rapid expansion, and the number of new ENS domain name registrations continues to grow.
Judging from the revenue composition data in the past year and a half, the renewal income from old users has increased steadily and accounts for about 10% of the total revenue.
In general, ENS domain names are now more like identity labels. The account functions that ENS actually represents have not yet been fully explored. In the web2 era, not everyone needs a domain name, but in the web3 era, a wallet address is essential to enter web3. ENS will have a broad market in the future. As the web3 infrastructure gradually improves and the ecology prospers in the future, ENS will become an important part of DID. ENS will have a lot of room for imagination in the future web3 world.
What problems will ENS coin face in its future development?
First of all, Ethereum (ETH), as a basic public chain, has a key impact on the development of ENS. The important risk that ENS will face in the future may also come from ETH's lagging behind in the future public chain competition. However, according to the current development trend of the ecology, ETH is likely to maintain strong competitiveness.
In addition, ENS has attracted a lot of hype and new users over the past year, but with the expiration of domain names and the decline of the crypto market, ENS's revenue data may face pressure to decline sharply in the short term.
For ENS tokens, the project has not enabled $ENS. At the same time, about 25% of the tokens will be unlocked in the next 3.5 years, and ENS tokens will face considerable supply pressure.
Finally, ENS domain name NFT is still in the hype and may face large price fluctuations in the short term. However, currently high-priced domain names may also face the risk of a sharp drop in price in the future.
