Explore Ethereum Name Service (ENS) Future outlook, growth potential Evolving role in web3 and cryptocurrency space.
Recently, Ethereum Name Service (ENS) has been attracting attention from the cryptocurrency community with a notable surge in market performance. This surge is closely tied to the growing popularity and usefulness of the ENS domain within the cryptocurrency ecosystem.
In early January 2024, Ethereum (ETH) co-founder Vitalik Buterin highlighted the importance of ENS to the broader Ethereum landscape, sparking a noticeable increase in trading activity surrounding the price of the ENS token.
As of January 19, the value of the ENS token was approximately $19, a notable increase from the all-time low of $6.70 in October 2023.
However, it is important to note that the ENS token is currently rebounding from a significant downtrend. Previously, in November 2021, the ENS token reached its highest value at $85.69.
Current market activity surrounding the ENS token and domain suggests renewed interest and optimism about ENS within the cryptocurrency space.
Let’s take a closer look at ENS to understand what it is, how it works, and what impact it could have on cryptocurrencies and Ethereum in 2024.
What is Ethereum Name Service (ENS)?
Ethereum Name Service (ENS) is an essential component of the ENS blockchain ecosystem, providing a user-friendly interface to complex and technical blockchain addresses.
The main function of ENS is to convert complex Ethereum addresses, which typically consist of long numbers and letters, into human-readable names.
This service is similar to the Domain Name System (DNS) used on the Internet, but is tailored to the decentralized nature of blockchain.
Consider a scenario where you want to receive Ethereum (ETH) as payment. Traditionally, this transaction requires sharing your Ethereum wallet address. These addresses are typically strings of 42 hexadecimal characters, which can be complex and error-prone when shared or entered.
For example, the Ethereum address is:
0x6310ae27e35D2d850eE1913E0447c0cc85Eb1Cdf
This is where the ENS cryptocurrency becomes very valuable. ENS solves the problem of remembering and using these complex addresses correctly.
Instead of relying on long strings, ENS allows users to represent their Ethereum addresses with simple, easy-to-remember names.
So instead of sharing a string, you can use an ENS domain like garygensler.eth.
These changes significantly reduce the risk of transaction errors and make the process of sending and receiving digital assets more user-friendly.
How does ENS work?
ENS works using two main smart contracts: the ENS Registry and the Resolver.
ENS registry maintains a list of all domains and subdomains, storing important information such as domain owners, domain resolvers, and caching time of records under a domain.
Resolvers, on the other hand, are responsible for the actual process of converting names to addresses and vice versa.
ENS enhances security and reduces the risk of transaction errors. Its decentralized nature makes it more resistant to censorship and hacking attacks than traditional DNS.
Additionally, ENS domains have grown in value and popularity, with shorter names becoming particularly rare and popular.
Obtaining an ENS domain is relatively simple. You can check availability and register your domain through their website. The cost of acquiring and maintaining an ENS domain includes auction fees for popular names and annual renewal fees payable in Ethereum.
ENS governance is community driven through a Decentralized Autonomous Organization (DAO) where ENS token holders can submit proposals and vote on decisions affecting the protocol.
These tokens are used for protocol governance and influence decisions about pricing and other operational aspects.
ENS use cases
In addition to converting complex Ethereum addresses into user-friendly domain names, the Ethereum Name Service (ENS) offers several real-world use cases. These include:
decentralized website: ENS allows you to launch censorship-resistant websites on distributed networks like the InterPlanetary File System (IPFS). This feature is especially important for content creators and businesses looking to secure their online presence from centralized control or censorship.
Identity Management in Blockchain: ENS allows users to attach personal information, such as email address and avatar, to their ENS username. This feature can improve the way you interact online by making your ENS-enabled username your primary digital identity on the web.
Create a subdomain: ENS domain owners have the flexibility to create subdomains. These subdomains can be used for a variety of purposes, including guidance on smart contracts, transactions, or metadata. This feature provides a level of customization and control that can be particularly useful for businesses and developers operating in the blockchain ecosystem.
Improved security and transparency: The decentralized nature of ENS, built on the Ethereum blockchain, makes it more secure and less vulnerable to hacking than existing DNS systems. This increased security is critical to users and businesses who prioritize the safety of their digital identities and transactions.
What can we expect from ENS in 2024?
Here is a breakdown of the current trajectory of the ENS cryptocurrency market and what to expect based on emerging patterns.
Increased registrations and renewals
ENS has been performing strongly in recent months, with a significant increase in domain registrations and renewals.
This trend is likely to continue into 2024, driven by the growing recognition of ENS domains as valuable digital assets.
The increase in registrations, especially for cheaper 4+ character domains, is indicative of an expanded user base. Exclusively priced short-name renewals suggest a strong and loyal user base within the ENS ecosystem.
Increased integration and adoption
Work could be done to integrate ENS into various blockchain platforms and services, such as decentralized apps (dapps) and decentralized exchanges (DEXs).
As ENS simplifies the user experience on the Ethereum-based web, it could see increased adoption, especially among new users entering the cryptocurrency space.
Adoption rate can be an important factor in increasing the ENS cryptocurrency price and service usability.
The role of ENS in web3 and digital identity
The importance of ENS may also grow in the web3 space. Its role in linking human-readable names to blockchain assets makes it a useful element of the web3 identity protocol.
This utility goes beyond simple address simplification and taps into the broader topics of digital identity and the decentralized internet.
future trajectory
As Ethereum continues to grow, ENS is ready to scale along with it. The growing adoption of Ethereum for a variety of applications, including decentralized finance (defi) and non-fungible tokens (NFTs), may lead more users to use ENS for easier and more secure interactions on the Ethereum blockchain. .
There are currently approximately 2.1 million .eth ENS names registered.
As the Ethereum ecosystem evolves with the latest Dencun upgrade, ENS can play a powerful role in improving user experience and accessibility, potentially leading to broader adoption and integration within the blockchain space.
Frequently Asked Questions
How to buy an ENS domain?
To purchase an ENS domain, you must follow a series of steps:
Earn ETH: First, ENS domains are purchased with ETH, so you must have ETH in your account. You can purchase ETH through centralized and decentralized exchanges.
Cryptocurrency wallet setup: Next, you need a cryptocurrency wallet that supports Ethereum, like MetaMask. This wallet is where the ENS domain points to and is required to interact with the ENS system.
Connect to ENS dApp: With ETH in your wallet, go to ENS dapp (app.ens.domains). Connect your wallet to your dApp.
Select your ENS domain: Search for the desired domain name in ENS dApp. If possible, proceed with the purchase. If you have already used it, you may need to look for an alternative or buy it on the secondary market.
Complete your purchase: Follow the dApp’s instructions to register and purchase a domain. This course includes registration fees and payment of applicable gas fees.
Why buy ENS tokens?
Purchasing ENS tokens can be a strategic move for those who want to participate in the governance of the ENS protocol. Holding ENS tokens allows users to vote on key decisions and contribute to the development of the ENS ecosystem. However, it is important to exercise caution. As with all cryptocurrency investments, ENS tokens are subject to market volatility, which can result in significant price fluctuations. You should conduct thorough research, consider the risks inherent in cryptocurrency investments, and only invest what you can afford to lose.