The Ethereum Name Service Is Turning Nearly 300,000 .ETH Domains Into NFTs
An effort to build a domain name system on top of the ethereum blockchain network is gearing up for a major upgrade early next month — and the project’s developers are urging stakeholders to prepare.
At the heart of the upgrade is the replacement of the Ethereum Name Service’s registrar, with the goal of vastly speeding up the process of registering .eth, .xyz, and .lux domain names. What’s more, names registered on the ENS will be treated as non-fungible tokens (NFTs), allowing them to be bought and exchanged like similar kinds of tokens on the ethereum network.
During an April 16 blog post, Ethereum Name Service (ENS) lead developer Nick Johnson wrote that registered domain users have one year after May 4 to migrate their domain to a new registar that is replacing the existing one.
The service first launched back in May 2017, allowing users to register .eth domain names and link them to ethereum resources such as smart contracts, wallet addresses, and more. This is a particularly useful application given the complex naming system attached to such resources.
Since inception, more than 270,000 domain names have been set up using the ethereum domain .eth, according to Brantly Milegan. the developer coordinator for ENS.
And data from Curious Giraffe shows the economic impact — that is, how people are actually using the network’s native ETH token to participate. To wit: nearly 800,000 auctions have been started, drawing in 3.2 million ETH worth of bids and a total of about 170,000 ETH locked up (successful bids are locked up in a contract so long as the bidder holds the domain itself). Much of that activity was seen in the earliest days of the project.
Now, Johnson and the team at ENS are looking ahead to improving the domain name registration system in major ways.
First, as opposed to waiting roughly five days for a domain name to be registered, users of the new ENS system will be able to complete orders within a minute.
“Registering a name is nearly instant,” according to Johnson. “Users submit two transactions, first committing to registering the name, then actually registering the name. In order to prevent front-running, these two transactions must be mined at least 1 minute apart.”
ENS developer relations coordinator Brantly Milegan added that this speedy registration process was made possible by replacing the service’s “blind auction process” with “instant [domain] registration.”
Milegan told CoinDesk:
“The reason we had an auction process is because we thought that was the most fair way to have an initial distribution of domains…We’re now moving to instant registration because we’re assuming that if there was a valuable domain it’s already been contested through auction.”
Once registered, domain names will be treated as non-fungible tokens (NFTs) that just like any other unique asset on the ethereum blockchain can be easily collected and transferred between users.
“[ENS names] were always non-fungible but they’ll have the same properties as other NFTs, they will plug into other NFT systems,” Milegan explained.
Thirdly, the new ENS system will eventually be opening up a three-step allocation process similar in part to the blind auction process for domain names shorter than seven characters. Finally, for all domain names longer than seven characters, users will have to pay an annual fee of $5 in order to guarantee ownership over the name.
“Imposing a cost on name registrations is necessary to limit ‘land grabs,’” explains Johnson in his blog post. “The interim registrar achieved this with a deposit based scheme…But experience has shown us that this is less effective than we had hoped.”
Milegan estimates that the forthcoming yearly rent will amount to roughly $250,000 starting sometime in 2020.
As stated in a Reddit AMA about the forthcoming ENS upgrade, funds will initially be sent “to the ENS root multisig wallet for the key holders to determine how to allocate funds.”
Milegan explained in a blog post published April 19:
“What this means is whatever four of these seven people can agree to do with the ETH from the yearly rent is what will happen to it.”
The seven individuals in charge of collectively managing the ENS root multisig include Johnson, two individuals from the Ethereum Foundation, CEO of crypto wallet application MyCrypto, founder of ethereum mobile client Status, software developer at Consensys, and lead engineer at blockchain startup Colony.
Before the introduction of rent fees, these individuals were actually primarily tasked “to facilitate the possibility of upgrades and maintenance and in exceptional circumstances to handle problems with the ENS,” as stated on the official website. Now, these keyholders are looking for feedback from the community about how best to allocate future funds from a yearly rent model.
Ultimately, however, the intention will be to migrate away from a multisig system entirely and create “some form of distributed decision-making process” to takeover the task of both ENS fund management and system administration.
As stated by Aron Fischer – lead engineer at blockchain startup Colony – on Twitter:
“The ultimate goal, is and has always been, to get rid of (the need for) the multisig…Ideally, the permanent registrar eventually reaches a level of maturity which obviates the need for any entity having the permissions to change its code. “
Ether image via Shutterstock