The ENS airdrop is imminent. Why is a decentralized domain and account system crucial for Web3?

Author: Pan Zhixiong

If you recall your first experience with cryptocurrency transfers, especially when confirming the recipient's address, you might have been troubled by several questions: Is this string of seemingly garbled characters correct? Do I need to verify each letter one by one? Does it matter if the letter case is mixed up? What if I miss a letter? Can the transaction be rolled back if the transfer is incorrect?

In contrast, with all the conventional internet products we use, most of the time, confirming a simple name, username, nickname, phone number, or email is enough to confidently verify the other party's identity or address.

It seems that "user experience" has never been prioritized in the cryptocurrency world, and such a common need remains unresolved even after ten years.

Fortunately, more and more startup teams are beginning to explore this field, with their core focus on providing "translation" services, performing "lossless" translation between "computer languages" and "human-readable languages."

This is why when transferring to Ethereum founder Vitalik Buterin, you don't need to record his original Ethereum account address (0xd8dA…6045); you only need to remember "vitalik.eth," which is a typical human-readable username.

In fact, blockchain networks led by Bitcoin and Ethereum use asymmetric encryption technology at their core, commonly known as public-private key encryption, making this system inherently computer-friendly, which results in a lack of human readability.

To address this issue, these teams leverage the smart contract functionality of blockchain or directly utilize the public chain itself to build a "mapping" and "translation" system that maps commonly used blockchain-native underlying addresses to human-readable "usernames," serving as a "identity" for users to the outside world.

Currently, several projects are building user-readable account systems, including Ethereum Name Service (ENS), FIO, and DAS, each with its own characteristics: ENS is the most popular, FIO offers richer features, and DAS excels in interoperability.

Another Scenario: Domain Name System, the Business Entry Point

In addition to account systems, there is another vast application scenario, which is the "Domain Name System."

Because blockchain networks can not only carry user assets but also provide various services or applications with the support of smart contracts, especially in internet or financial services, many people refer to internet services built on decentralized technology stacks as Web3.

Thus, the service entry points for these businesses, which are commonly in the form of "websites" in Web 2.0, may undergo fundamental changes at the infrastructure level.

In simple terms, traditional Web 2.0 applications are mainly composed of "domain names" (like google.com) and "servers" (like those hosted on Amazon's cloud services). Then, through the traditional DNS (Domain Name Service) system, the domain names are mapped to the corresponding "IP addresses" of the servers, allowing ordinary users to access Google's website via "google.com."

In the Web3 world, to decentralize both, the storage and computing power provided by "servers" can be realized through various decentralized technologies like IPFS, Ethereum, and Dfinity, while the community hopes to decentralize "domain names" through blockchain networks.

The earliest attempt, Namecoin, is a project over ten years old that created a blockchain network with a top-level domain ending in ".bit" by forking Bitcoin's code, hoping more downstream applications would integrate with them, attempting to independently disrupt the existing DNS system.

However, they also encountered their own issues, as the project's concept was too ahead of its time, so it wasn't until eight years later that several similar projects emerged, such as Unstoppable Domains and Handshake. Additionally, both ENS and DAS also support such applications, with ENS being the most widely used decentralized domain service.

Horizontal Comparison

Among these decentralized domain and account system protocols, Namecoin and ENS are the two most core ones. Namecoin was the first to utilize blockchain for domain management, while ENS, with the support of Ethereum smart contracts, has become a new account system and part of the decentralized application protocol stack.

Along with those new protocols, all these projects can be divided into two core scenarios: focusing on domain names and focusing on account systems, with some projects supporting both types of scenarios.

Projects that "focus on domain names" have user scenarios that mostly replace or supplement the existing DNS system. By integrating with protocols like IPFS, they can achieve fully decentralized front-end website functionality, so they pay more attention to collaborating with web browsers (like Brave or Opera) to enhance user experience. Currently, ENS and Unstoppable Domains are the most integrated protocols in browsers.

Projects that "focus on account systems" are more about providing users with scenarios to use the account system, such as direct integration in decentralized applications (DApps), and they need to focus more on collaborating and integrating with entry-level products like cryptocurrency wallets to improve user experience. Currently, only ENS has been widely integrated into mainstream cryptocurrency wallets and DApps, while FIO claims to have received support from many cryptocurrency wallets, but its actual adoption is still in the early stages, and community attention has dropped to nearly invisible levels.

Another core difference lies in the ownership model of registered names; some offer permanent ownership (but may require an annual declaration transaction, incurring network transaction fees), while others operate on a leasing model, requiring annual lease payments.

Protocols that allow for permanent ownership are more user-friendly, equivalent to a one-time payment for permanent use, while leasing models are more favorable to the protocol itself, as continuous income can be used for protocol maintenance and feature iteration.

In addition, various protocols differ in whether they choose to build their own public chains, specific registration prices, and other dimensions.

Ancestor: Namecoin

Namecoin is one of the earliest forks of Bitcoin, even predating Dogecoin, with its genesis block created just 2 years and 3 months after Bitcoin. Its non-anonymous founder, Vincent Durham, has long since retired, and the protocol is now maintained by other developers.

However, Namecoin can be considered a failed attempt; it is currently neglected and lacks specific applications, so if you're not interested in this part of history, you can skip it and move on to the next chapter.

Many parameters of Namecoin directly reference Bitcoin, with a total of 21 million native tokens (NMC), but its smallest token unit, "swartz," is named in honor of RSS protocol and Markdown protocol developer, Reddit co-founder Aaron Swartz, who previously described a solution (Nakanames) that was later implemented by Namecoin in his blog.

Unlike those cryptocurrencies that use Bitcoin's code to create similar projects, Namecoin aims to use blockchain technology to store records similar to DNS, meaning it records the "mapping relationship" between ".bit" and other specific IP addresses or internal system addresses on the Namecoin blockchain.

Thus, the Namecoin blockchain can be seen as a database maintaining records of the ".bit" top-level domain. As for why they chose the ".bit" domain, it may be because this term represents the smallest unit of binary in the computer field.

For most traditional top-level domains (like the most popular ".com"), they are managed and maintained by a non-profit organization called ICANN, which stands for the Internet Corporation for Assigned Names and Numbers. This organization was established in 1998 and is located in California, USA. In addition to managing and coordinating top-level domains, it is also responsible for managing the global allocation of IP addresses.

Namecoin currently operates independently of the ICANN system, and fortunately, the ".bit" domain is not a traditional top-level domain, so there is still a possibility of compatibility or integration with ICANN in the future.

However, compared to the centralized management of ICANN, Namecoin's characteristics are quite distinct; like Bitcoin, its ledger is based on distributed storage, network security relies on computing power, and more importantly, its domain registration process is resistant to censorship and does not require permission.

User Scenario: ZeroNet

During the decade since Namecoin's inception, the most important user scenario comes from its integration into the "decentralized network" ZeroNet, becoming the "domain name" within that network.

It's also quite simple to use; when users register a Namecoin domain, they can map a page link within the ZeroNet network to a specific ".bit" domain, allowing other users to access the ZeroNet page using "xxxxx.bit."

For Namecoin, it merely stores the bit domain and the unique identifier of the third-party system page (similar to IP) data on the Namecoin network's blockchain, while the third-party system only needs to run a Namecoin node to access all these associations.

Speaking of ZeroNet itself, it is a relatively geeky and niche project that uses Bitcoin's cryptographic technology and BitTorrent's P2P network technology to build a decentralized network. Within this network, users can create websites or services without permission, and the website content is stored in a decentralized distributed manner, allowing offline access. Users only need to run a ZeroNet client to connect to the network.

The ZeroNet protocol was actively developed between 2015 and 2019 but has since been neglected in terms of maintenance. The protocol has not issued tokens, and due to its excessive freedom, it may be used in illegal dark web scenarios, leading to it being blocked by some countries through technical means.

How to Integrate with Existing Infrastructure?

As a protocol independent of the ICANN system, Namecoin currently cannot directly reuse existing internet infrastructure, especially the domain resolution (DNS) process.

For traditional domains, when users access a ".com" domain, they achieve domain-to-IP address resolution through various levels of caching or DNS services, which has become the default process for most devices, requiring no user awareness.

However, for users of bit domains, they need to run specific software or services to achieve this, which increases the user onboarding threshold.

The security of Namecoin blockchain data itself is guaranteed by cryptography, so users first need to run a full Namecoin node to download all domain records locally. They also need to run an official tool called NMControl, which acts like a local DNS server, compatible with and processing all connections to the internet.

There may still be some compatibility issues, as it relies on Python, making it somewhat unfriendly in Windows environments. The official statement is, "NMControl has good compatibility, but it is not perfect."

However, it still has a long way to go before it can become a mass-market product.

Industry Benchmark: Ethereum Name Service (ENS)

It is no exaggeration to say that the Ethereum Name Service (ENS) has gradually evolved into the most influential account system and decentralized domain name system in the cryptocurrency market, although it is still a small-scale project with a very early user experience.

ENS was initially a project incubated by the Ethereum Foundation, implemented based on Ethereum's smart contracts, so it does not require maintaining an additional blockchain network, and even the currency system reused ETH, only recently announcing the issuance of a protocol token. As the project has matured and gained continuous cash flow, it now operates independently of the Ethereum Foundation.

Compared to its predecessor Namecoin, ENS has further expanded its use, not limited to the decentralized domain field, but indirectly becoming a community-consensus-based account system.

In addition to many DeFi and DApp projects deploying decentralized front-end website versions through ".eth" domains, many KOLs in the crypto community use their ENS accounts as Twitter names, and many applications adopt ENS's secondary domain names as protocol account systems.

Moreover, ENS's decentralized domain resolution capability has been integrated into several cryptocurrency-friendly web browsers, such as Brave and Opera.

Additionally, ENS has proposed another magical solution; compared to Namecoin, ENS can more easily integrate with traditional internet infrastructure, compatible with all existing browsers. This solution is actually quite simple: the ENS team purchased the traditional domain eth.link to provide resolution services for all users accessing ENS domains.

In other words, users only need to add ".link" after the ENS domain. For example, for browsers with native resolution capabilities, accessing the "uniswap.eth" URL will lead to the decentralized version of Uniswap's website, while for browsers without native resolution capabilities (like Safari or Edge), accessing "uniswap.eth.link" will also reach that website, because the holder of "eth.link" is the ENS team, who can decide which resources the secondary domain "uniswap.eth.link" accesses.

However, whether eth.link itself is accessible may vary by country or region. Additionally, this may introduce some centralization risks, such as the eth.link server potentially being attacked. Therefore, the service provided by ENS is currently a compromise between security and user experience, and in the long run, it still needs to rely on full nodes of the Ethereum blockchain to ensure absolute data security.

Reverse Resolution: Initial Success of the Account System

The integration of ENS's reverse resolution feature in various decentralized applications indicates that both users and applications are viewing ENS as a foundational account system.

It is necessary to explain that for Ethereum users, they typically first create an Ethereum address starting with 0x as their receiving address. Then they consider registering an ENS name, such as vitalik.eth, mapping vitalik.eth to this 0x starting Ethereum address, a process known as forward resolution.

Forward Resolution: vitalik.eth ---------> 0xd8dA…6045

Reverse resolution, on the other hand, occurs when a user logs into an application with their 0x account address, such as the Uniswap website. The user will not see this string of 0x addresses but will be directly mapped to the user's ENS address.

Reverse Resolution: 0xd8dA…6045 ---------> vitalik.eth

This means that users and applications are starting to treat ENS names as their default usernames. Interestingly, addresses that have been set up for reverse resolution will directly display the ENS account name on Etherscan, the largest block explorer for Ethereum users.

After the reverse resolution feature was launched, the community did not initially realize its usefulness on a large scale, but the ENS team held related community activities to encourage more applications and users to set up reverse resolution (as this feature requires additional steps), which led to its understanding by various applications and users.

Third-Party Protocol Integration: The Default Account System for Web3 Applications?

Additionally, ENS has become the account system used by many integrated protocols, generally implemented through secondary domain names, such as the three major Web3 applications Mirror, Radicle, and Argent.

Mirror is a decentralized content publishing platform where text content is permanently stored on Arweave, while the business logic and account system are built on Ethereum. Since Mirror has the traditional domain Mirror.xyz, and ENS has conducted in-depth cooperation with xyz domains, xyz domains can also operate within the ENS system.

The magic of the Mirror account system lies in its dual functionality: it can serve as both a mapping for Ethereum addresses and as a website link.

Users can register (currently not fully open to the public) a secondary domain of mirror.xyz as their account name and website, for example, Linda Xie's Mirror account is "linda.mirror.xyz," which in ENS resolves to an Ethereum address and can be directly accessed in a web browser to enter Linda Xie's Mirror page.

Radicle follows a similar approach; it is a decentralized code management tool (similar to GitHub). In the Radicle system, users can register a secondary domain "radicle.eth" as their username and unique identifier across the entire Radicle network.

Argent is a smart contract-based cryptocurrency wallet, allowing users to register a secondary domain "argent.xyz" as their account name, facilitating the use of wallet tools. Coincidentally, the official websites of the three projects mentioned above all end with .xyz, as ENS had more favorable support for .xyz in its early days, and it has now opened up to a more general domain system.

Newcomers: DAS, Unstoppable Domains, Handshake, and FIO

In addition to the two earliest domain systems mentioned above, several newer protocols are also worth noting, particularly DAS, Unstoppable Domains, Handshake, and FIO.

DAS: Focused on Interoperability, Supporting Any Blockchain

DAS stands for Decentralized Account Systems, and it uses Nervos as the infrastructure for the system. Because it utilizes Nervos, it can achieve many unique functions compared to Ethereum, such as allowing the registration and management of DAS using private keys from any public chain.

In terms of specific use cases, DAS currently supports managing and controlling the DAS protocol through ETH and TRX private keys, meaning Ethereum users can directly manage smart contracts related to DAS on the Nervos network without needing to generate a Nervos address.

This functionality is possible because the underlying design of the Nervos protocol is more abstract, allowing it to be compatible with the specific cryptographic algorithms of any blockchain. For example, another team called Portal Wallet previously demonstrated the ability to send and receive assets on the Nervos network using an Ethereum address because Nervos supports Ethereum's public-private key algorithms.

In terms of wallet support, DAS is second only to ENS, already supporting multiple mainstream wallets, including TokenPocket, imToken, HuobiWallet, AlphaWallet, HyperPay, BitKeep, etc. Applications like NFTScan and NFTGo have also integrated DAS.

Additionally, DAS has adopted the ".bit" domain, as this domain is not a patent of the Namecoin team and has not been registered with ICANN, so everyone can use it. Although this may cause some confusion for old Namecoin users, there should be no old Namecoin users left (for example, I once registered a bunch of Namecoin accounts but never renewed them).

The core scenario of DAS, besides serving as a unified cryptocurrency receiving account supporting multi-chain asset transfers, is also as a personal information homepage (bit.cc) or as a domain for decentralized websites. However, from the team's vision and product name, DAS seems more like an account system, with domain names being just an accompanying feature.

After launching the mainnet, the data growth of DAS is also noteworthy. According to the latest official data, the number of independently registered addresses has exceeded 5,000 in the past three months, with over 25,000 registered accounts, and currently, only 35% of the total number of 4-digit and above accounts is open, with more accounts expected to be gradually opened as the system matures.

Unstoppable Domains: Permanent Ownership Domains

Unstoppable Domains offers top-level domains like ".crypto" (and many more) for purchase with permanent ownership, and it has a significant advantage in browser integration, as it supports almost all the browsers that ENS supports. In addition, Unstoppable Domains has developed its own web browser (based on an open-source version of Chrome) to provide a better user experience.

Unstoppable Domains has not launched an independent blockchain but operates on smart contracts of other blockchains. For example, the domain service for ".crypto" is based on the smart contract system within the Ethereum network, allowing it to conveniently reference the ENS protocol.

Handshake: Auctioning Any Top-Level Domain

Handshake has even bigger ambitions, aiming to build a completely parallel system to ICANN from the ground up. In this system, users can register ".crypto" or ".eth" domains, but they must first go through an auction, providing limitless possibilities for domain structures. To facilitate the migration of the existing DNS system, it has reserved domains for the world's most well-known websites, allowing their owners to acquire domains in Handshake through cryptographic verification.

Handshake is an independent public chain that adopts a PoW mining mechanism, and there are specialized teams that have launched Handshake mining machines. However, this may introduce a problem where a protocol that originally only needed to handle business logic must also worry about network computing power and the potential for attacks, while ENS and Unstoppable Domains only need to rely on the security of Ethereum.

FIO Protocol: Focused on Cryptocurrency Wallet Integration

FIO Protocol is a decentralized account system focused on collaboration with wallets, as its full name is the Foundation for Interwallet Operability. Its most important partners are wallets, as they are the entry-level applications for cryptocurrencies. Deep integration with wallets can provide a more complete user experience for the FIO protocol, such as offering features like "request transaction" and "contextual transaction" for transaction functionality.

FIO Protocol has also launched its own blockchain network, adopting dPoS consensus, which may become an advantage for high performance but could also raise concerns about its security.

Conclusion

Decentralized domain and account systems based on blockchain have been around for ten years. The pioneer Namecoin, while still operational, has become a niche project with low user adoption.

Later, ENS took a more pragmatic route and, with the rapid expansion of the Ethereum ecosystem, has reaped many benefits, with numerous third-party applications utilizing it to build specific account systems, becoming an indispensable infrastructure within the Ethereum ecosystem.

Because of its deep binding with the Ethereum ecosystem, it may limit its potential to become a more universal protocol; after all, using an Ethereum domain ".eth" to send and receive assets like Solana, Mina, BTC, or BSC feels somewhat odd.

From this perspective, protocols like ".crypto," ".bit," or customizable top-level domains may be more appealing, as their domain universality is better. Additionally, these protocols are exploring more possibilities in wallet integration, interoperability, and ownership models.

Fortunately, the number of projects in this track is not as overwhelming as in DeFi, nor is it particularly homogenized. Whether in the future this type of protocol sees one dominant player or multiple protocols coexisting is not particularly important, but I believe that in the world of Web3, such decentralized domain and account systems are essential to support applications, websites, and user identities. However, the current projects are still in a very early exploratory stage, with much room for improvement in protocol integration, user experience, and connections with the Web2 world.