Author: Nancy, PANews
Ethereum co-founder Vitalik Buterin has repeatedly supported ENS. On May 21, he said, "ENS is the most successful non-financial application in the Ethereum ecosystem. I don't know why more people don't care about it." A week later, ENS Labs made new developments, announcing that it proposed an ENS v2 upgrade, intending to migrate services from the Ethereum mainnet to the Layer2 network, in order to democratize domain name services. From a series of actions such as service upgrade migration and integration of .box domain names, ENS, which is in a growth dilemma, is trying to further open up the road to mainstreaming domain names.
ENS will migrate to Layer 2 network, focusing on the development of Optimism
ENS v2 aims to enhance scalability, reduce gas fees and improve user experience by moving core functions from the Ethereum mainnet to the Layer2 chain. In other words, if the proposal is accepted, users will benefit from lower transaction fees and improved efficiency.
At the same time, the ENS v2 upgrade can also improve multi-chain interoperability. Through the combination of CCIP-Read gateway and compatible resolvers, the practicality and influence of ENS in different blockchain ecosystems can be expanded. In addition, ENS v2 also proposes a new "layered registration system" to more efficiently manage .eth domain names, including the ability to manage subdomains and configure resolvers. This also means that each .eth name will have its own personal registry, giving users more control over the ownership of their names.
At present, ENS Labs has not yet selected a specific stack or Layer2 network for migration, but the network will become a new platform for users to interact with ENS after the migration is completed. However, according to Khori Whittaker, Executive Director of ENS, ENS is focusing on studying ways to build its protocol on the Ethereum Layer2 network, and may even consider launching its own internal Layer2. At present, they have made progress in the research and development of Layer2 applications, and it is expected that some substantial results in this regard will be seen this year, mainly focusing on the development of the pursuit of Optimism.
Comparison between ENS V1 and V2, image from TechFlow
As for the reasons for the ENS v2 upgrade, ENS Labs explained that due to the limitations of the Ethereum mainnet, ENS was quite limited in new use cases and application integration, and in order to further achieve decentralization, ENS began to reconstruct the entire architecture on the original basis. The release of Ethereum Improvement Proposal (EIP) 4844 was an important factor in promoting the ENS upgrade, which greatly reduced the cost of the Layer2 network through blob transactions.
The growth of users and revenue slowed down, and cooperation was established to expand domain name business
Every time Vitalik "calls orders", the price of ENS will rise. But in fact, ENS is now facing the dilemma of user and revenue growth.
According to Dune data, since its establishment, the number of ENS domain names created has exceeded 2.072 million, the total number of independent participating addresses has reached 886,000, and the number of primary domain name registrations has reached nearly 847,000. Among them, about 175,000 ENS domain names have been created since 2024, accounting for 41.7% in the past year; the number of new addresses has exceeded 154,000, accounting for 45.4% in the past year. However, according to the Ethereum browser, the number of independent addresses of Ethereum has exceeded 270 million, and the number of ENS domain names is only less than 1% of the former.
However, the growth momentum of ENS users is slowing down. Dune data shows that the daily rate of new ENS users has dropped from a high of 687 in April 2023 to 0.5 today.
At the same time, ENS's revenue has also shown weak growth. According to DeFiLlama data, ENS's revenue in 2023 exceeded US$9.85 million, a far cry from the US$50 million in 2022. As of May 29, ENS's revenue so far this year was approximately US$3.431 million, an increase of 33.7% from the beginning of the year. According to Token Terminal data, as of May 29, ENS's monthly active users fell by 30.7%, and its daily active users fell by more than 88.9%.
In order to improve its own predicament, in addition to upgrading its services, ENS has also expanded its domain name services through multiple collaborations. For example, in February this year, ENS announced a partnership with domain name registrar GoDaddy to help Web3 community users link ".eth" domain names with traditional Web2 domain names (.com, .xyz, etc.) for free; in April, ENS announced a partnership with Intercap to introduce .box domain names into the ENS management application. This is also the first time that ICANN-approved top-level domain names (TLDs) have been integrated into a dynamic platform. Users can now register .box domain names through the ENS management application and use them for Web2 services such as email and website hosting. It is reported that the uniqueness of .box domain names is that they run on the chain, combining the existing functions of DNS and the decentralized concept of ENS, which means that .box domain names can be used not only as network addresses and email hosts, but also as personal cross-platform Web3 identities.
Now, with the launch of ENS V2, perhaps what Vitalik considers to be “the most successful non-financial application” will attract more attention.
