If you’ve seen any portion of crypto twitter, then you’ve almost certainly seen usernames with “.eth” at the end of their name. More recently, some public figures like Shaq and Paris Hilton have adopted these usernames, revealing a public-facing interest in the Web3 and crypto space that is often accompanied by a non-fungible token (NFT) profile picture. Naturally, you might wonder as to whether these domains, referred to as Ethereum Name Service (ENS) domains, are analogous to their Web2 “.com” counterparts in terms of utility and value. Let’s dive in.
What Are ENS Domains?
Fundamentally, ENS domains are labels for wallets on the Ethereum network, enabling a human-readable element (such as shaq.eth) to the string of numbers and letters that makes up an Ethereum address. Furthermore, the owner of an ENS domain can make subdomains, which can be useful for scaling multiple pages or addresses to a domain. The Web2 parallel to this is the Domain Name System, which, for instance, resolves the address 184.108.40.206 to google.com and houses subdomains like drive.google.com. Additionally, ENS domains can optionally point to other pieces of information, including addresses on other blockchains, photo avatars, a textual bio and social network profiles.
In this sense, an ENS domain can be said to be the rough equivalent of a universal username, especially with the rise of Sign-In with Ethereum as an authentication method for internet accounts. The ENS domain also has the implication of making Web3 anonymity feasible, which can be seen in the crypto Twitter community and the Web3 career space with how individuals have built brands and identities around their anonymous domain names.
Brief History of ENS Domains
The ENS project has existed since 2017, as an offshoot of the Ethereum Foundation, which became a distinct organization in 2018. As of now, some of the financial contributors to the ENS project include the Ethereum Foundation, BinanceX, Chainlink, Ethereum Classic Labs and Protocol Labs. In addition to the individuals mentioned earlier (here’s a leaderboard of the most popular ENS holders by Twitter followers), there has been substantial corporate investment into ENS domains, with beer.eth being owned by Budweiser in the buildup to its collection of NFTs. Broadly speaking, if a public figure is associated with the Web3 space in any sense, they likely have an ENS domain.
How to Buy an ENS Domain
So how do you go about buying an ENS domain? At the point where domains are unique, meaning that no two Joes can simultaneously have total control over joe.eth, ENS domains are registered on a time basis, with ownership of the domain being transferred via an NFT. Crucially, the latter detail means that ENS domains can technically be bought on the secondary market, but this practice is relatively uncommon.
- Open a cryptocurrency exchange account.
The first step to buying an ENS domain is purchasing Ether, which can be done by sending fiat currencies to a centralized exchange (CEX) such as Coinbase Global Inc. (NASDAQ: COIN), Gemini or Voyager or by sending tokens to a decentralized exchange (DEX). Note that costs for ENS domains depend on the length of the domain (the part that precedes the .eth), the length of time for which you want to register the domain and current gas prices, which will be further discussed in Step 5.
- Download a crypto wallet.
In order to have an ENS domain, you need a wallet address for that domain to point to, which then means that you need a wallet. Typically, a user’s first wallet will be a wallet that can be accessed through a browser extension so as to be able to interface with any Web3-enabled sites. The most popular wallet, by far, is MetaMask, which offers extensions for Chrome, Firefox, Brave and Edge. Some browsers like Opera and Brave also offer native browser wallets.
Exercise extreme caution when navigating to a wallet’s site as these are prime targets for phishing attacks. Furthermore, the private key associated with your wallet can be used to recover it or to drain it of funds, so store it with caution.
- Send ETH to Metamask.
In order to register your domain, you need to send your Ether to your MetaMask wallet, which is done using your wallet’s underlying Ethereum address (of the form “0x” followed by 40 hexadecimal digits (0-9 and a-f)). MetaMask can copy your address to your computer’s clipboard through the account header in the top center of the extension window. This data can then be pasted into the transfer destination address field of the exchange that you used to purchase your Ether.
- Connect your wallet to ENS Domains.
Once your wallet has Ether, you can navigate to the ENS dApp, where you can connect your wallet to the site by pressing the “Connect” button in the top left corner of the page. This action will prompt a MetaMask (or other wallet if you’re not using MetaMask) popup with further instructions on how to authorize the connection. Once you follow the steps outlined in your wallet, then your wallet is connected to the dApp and can now be used to transfer Ether in order to make a purchase.
- Choose an ENS Domain and make your purchase.
Once on the ENS dApp page, you can use the search bar to see if your desired domain is available for registration, and its current owner and the expiration of its current registration if it is already registered. When purchasing an unused domain, three-character .eth names are around $640 in ETH per year, four-character .eth names are around $160 in ETH per year, and Five-plus-character .eth names are around $5 per year. This registration cost doesn’t factor in gas prices, so registering qeod.eth currently costs about $287 for 1 year (0.06 ETH * 1 year + 0.047 ETH gas fee), and about $447 for 2 years (0.06 ETH *2 years + 0.047 ETH gas fee) and so on, while registering aadharsh.eth currently would cost ~$119 for 1 year (0.002 ETH * 1 year + 0.042 ETH gas fee), and ~$124 for 2 years (0.002 ETH* 2 years + 0.042 ETH gas fee).
Note that the gas fee is the vast majority of the cost associated with the shorter domain, which is especially important given that Ethereum’s upcoming upgrades are aimed squarely at reducing gas fees.
Cryptocurrency Exchanges for Ethereum
What Can ENS Domains Be Used For?
Given the fairly significant cost associated with registering an ENS domain, one might understandably wonder as to what the utility of having an ENS domain is, especially at the point where adding information to the domain constitutes a transaction on the Ethereum network, meaning that such actions are still subject to gas fees.
Domains can be used for connecting multiple wallets, signing into sites that have implemented the Sign In with Ethereum authentication protocol and generally serving as a singular username or hub for your Web3 identity, albeit a decentralized one unlike Facebook or Google accounts in Web2.
ENS domains can also be subject to token airdrops, like the ENS token airdrop, which enables decentralized governance for the ENS project. As of late, ENS domains have also enabled easy forms of social engagement with various Web3 personalities and projects like JokeDAO on platforms like Twitter and Discord. In this sense, an ENS is like a calling card of sorts.
Is it Worth Getting an ENS Domain?
The value of an ENS domain’s utility drastically differs from person to person depending on how often they interact with Web3 and conduct transactions, which is something worth noting when considering whether or not you want or need an ENS domain.
For what it’s worth, blockchain ecosystems like Solana and Terra have launched similar services, indicating that an easily-readable name service has some utility in terms of developing a solid community over time.
The upcoming raft of Ethereum network upgrades also promise lowered gas fees, so it’s almost certain that domains will eventually become cheaper to own, so unless you have a time-sensitive use-case or have a specific domain that you need to secure, waiting to register an ENS domain is a smart choice.
Some people have also made profits by registering domain names that could have high demand in the future — celebrity domain names like magnuscarlsen.eth or disguisedtoast.eth — with the expectation of selling these domains on the secondary market by transferring the registration’s underlying NFT at high prices. While such opportunities are mostly taken, looking at valuable domains that are about to expire could prove fruitful.
A final thing to note is that a domain does, to some extent, reduce privacy, in the sense that a person could look at all of Paris Hilton’s transactions by putting her ENS domain into Etherscan. This eventuality could be avoided by using multiple wallets or by using a mixer or another service intended to maintain privacy.
Frequently Asked Questions
Who is the founder of Ethereum Naming Service (ENS)?
The founder of Ethereum Naming Service is Nick Johnson.
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