Launched in 2017, ENS’s impact extends beyond just naming; it is reshaping the very fabric of digital identity and ownership in the Web3 space.
Today, we will cover the following topics:
- About Ethereum Name Service
- How does Ethereum Name Service work?
- Key FeatureS
- Technical Analysis
- Why is ENS The Coin of the Week?
About Ethereum Name Service (ENS)
What is Ethereum Name Service?
Picture this: instead of sending ETH to 0x1234...5678, you simply type in "johndoe.eth". Sounds neat, right? That's ENS in a nutshell.
ENS is like the DNS of the crypto world. It takes those mind-numbing strings of numbers and letters and turns them into something your grandma could understand. But it's more than just a pretty face for ugly addresses.
ENS is the brainchild of Nick Johnson and Alex Van de Sande. These guys saw a problem - crypto was too darn complicated - and set out to fix it. The result? A decentralized naming system that's changing the game.
Dig deeper into Ethereum Name Service whitepaper.
ENS Token
The ENS token, introduced in November 2021, is a crucial component of the ENS ecosystem.
Here's a deeper dive into its features and uses:
Revenue Distribution
A portion of the revenue generated from ENS name registrations and renewals is distributed to ENS token holders. This creates a direct link between the success of the protocol and the value accrued to token holders.
Delegation
Token holders can delegate their voting power to other addresses. This allows for a more fluid governance system where users can entrust their voting rights to entities they believe will make good decisions for the protocol.
Vesting
To ensure long-term alignment, a significant portion of ENS tokens allocated to the core team and contributors are subject to vesting periods.
Treasury Management
The ENS DAO, controlled by token holders, manages a substantial treasury. This funds ongoing development, grants, and other initiatives to grow the ENS ecosystem.
Deflationary Mechanism
A portion of the fees generated by ENS is used to buy back and burn ENS tokens, potentially creating deflationary pressure on the token supply.
How does Ethereum Name Service work?
The ENS Registry
This is the core contract that maintains a inventory of all domains, marking three unique types of info for each node:
- The owner
- The resolver
- The caching time-to-live for all records
Resolvers
These handle the process of translating names into addresses. Each domain can specify which resolver to use.
Registrars
These are contracts that own a top-level domain (like .eth) and specify rules for subdomain allocation. The .eth registrar uses an auction system for allocating names.
The process works like this:
- A user registers a domain (e.g., "myname.eth") through a registrar.
- The registrar records the registration in the ENS Registry.
- The owner sets a resolver for the domain.
- The resolver is configured with the records for that domain.
In other words, when you type in an ENS name, it's like a game of telephone.
The system asks the Registry, "Who's in charge of this name?" Then it goes to the Resolver and says, "What's the address for this name?" Voila! You've got your destination.
Key Features
Decentralized Naming
No big boss calling the shots here. It's all run by the community.
Unlike traditional domain systems, ENS is fully decentralized. No central authority can seize or modify domain names arbitrarily.
Reverse Resolution
Not only can you find addresses from names, but you can also find names from addresses. Cool, huh?
Subdomains
Want "blog.johndoe.eth"? Go for it! ENS lets you create your own little naming empire.
Users can create subdomains under their main domain, allowing for hierarchical naming structures. This is useful for organizations or individuals managing multiple addresses.
Integration with Web3 Services
More and more services are jumping on the ENS bandwagon. It's becoming the de facto standard for naming in the crypto world.
Many wallets (like MetaMask), dApps, and services support ENS, allowing seamless interaction using human-readable names.
NFT Avatars
Because who doesn't want a cool picture to go with their crypto identity?
ENS domains can be associated with NFT avatars, adding a visual element to blockchain identities.
Text Records
ENS domains can store and resolve arbitrary text records. This can include email addresses, URLs, or other information.
Content Hashing
ENS supports content hashes, allowing names to point to decentralized websites on IPFS or Swarm.
Multicall
This feature allows multiple ENS operations to be performed in a single transaction, saving on gas fees.
Technical Analysis
As per our previous market outlook, the crypto market has been in a bullish correction phase.
ENS is no different. It has been overall bullish, trading within the rising channel marked in green.
Currently, ENS is approaching the lower bound of the range.
As long as the $24.5 mark holds, we expect a continuation towards the $33.33 resistance level.
However, if the $24.5 low is broken downward, a bearish movement towards the $20 support level would be expected.
Why is ENS The Coin of the Week?
ENS is more than just a clever way to rename addresses. It's a fundamental piece of the Web3 puzzle. As crypto goes mainstream, tools that make it more user-friendly are going to be huge. And ENS is leading the pack.
With steady growth in .eth domain registrations and more platforms integrating ENS, it's clear this project has legs. As the crypto market shows signs of life, infrastructure projects like ENS could be set for a big leap.
Additionally, from a technical perspective, ENS is hovering around the lower bound of its rising channel, providing us with a good opportunity to capitalize on the next bullish phase.
Also read more Coin of the Week articles.
Thanks for tuning in to this week's coin of the week! We appreciate your readership and enthusiasm for exploring the crypto landscape with us.
See you next week for another coin of the week! 🚀
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