Origin and function of ENS
ENS (Ethereum Name Service) is the full name of Ethereum Domain Name Service. It was established in May 2017 and is a decentralized domain name system built on the Ethereum blockchain. Its main function is to simplify complex Ethereum wallet addresses or web links into an easy-to-remember "XXX.eth" format, greatly improving the convenience of users using blockchain.
Ethereum founder Vitalik Buterin's ETH wallet address, for example, can be converted to the easy-to-remember "vitalik.eth" through ENS. This means that if you need to transfer money to him, just enter "vitalik.eth" and ENS will automatically convert it to the corresponding Ethereum address.
Functions and advantages of ENS
NFT Features: Each ENS domain name is an NFT based on Ethereum's ERC-721 standard. This allows you to handle and hold your ENS domain name like managing and trading other NFTs, ensuring your control over your personal assets and data.
Point to wallet address: After registering a ".eth" domain name, you can set up reverse resolution to map the Ethereum address to the domain name. For example, "Shell.eth" can directly point to your "0x" Ethereum wallet address. The annual renewal fee for maintaining the domain name must be paid in ETH.
Simplify transfers: ENS not only supports Ethereum addresses, but can also resolve to addresses of other crypto assets (such as LTC, DOGE, BTC). This means that you can transfer crypto assets by entering the ".eth" domain name instead of a complex address.
Binding with social accounts: You can bind your ENS domain name to social media accounts, email and other online accounts, or record the address of your NFT work on the domain name, or even set a domain name avatar.
The difference between ENS and traditional domain names
Traditional Internet domain names (such as ".com" and ".org") use the DNS (Domain Name Server) system to translate human-readable URLs into computer-understandable IP addresses, allowing us to easily access web pages. Similarly, ENS runs on the Ethereum blockchain, converting difficult-to-remember Ethereum addresses into easily recognizable and usable domain names ending with ".eth".
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.
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 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 future $ENS tokens.
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.
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.
Summarize
The emergence of ENS not only simplifies blockchain operations, but also improves user experience and security. By mapping complex Ethereum addresses to simple ".eth" domain names, ENS has brought important progress to the popularization and use of blockchain technology. As a domain name system based on NFT standards, ENS is not only a technological innovation, but also an indispensable part of the blockchain ecosystem.