Is the decentralized domain name system really a pseudo-demand? The industry continues to debate this

Author: Vanguard 0

Recently, the blockchain community's attention has focused on an article by Vitalik Buterin on the X platform. In the article, he proposed a viewpoint: all Layer 2 solutions (L2) should operate on a trustless CCIP parser based on Merkle proofs. This assertion directly points to the importance of the Ethereum Name Service (ENS), but it also raises further thoughts about the role and impact of ENS in the blockchain world.

Below is an introduction to the concept of ENS and its related technical features, along with some valuable analysis and outlook for readers.

Vitalik's special attention has led to a short-term surge in ENS assets, but the market is skeptical about its future stability and sustainability

ENS is essentially a decentralized domain name system based on Ethereum, which converts complex Ethereum addresses into easy-to-remember names, similar to the internet's DNS. Vitalik's viewpoint not only highlights the practicality of ENS in simplifying blockchain operations but also raises a broader question: how to make this technology more accessible and widespread for ordinary users.

However, this viewpoint needs to find support in market realities. Currently, the market value of ENS is $14.14, with a 24-hour trading volume reaching $638 million, indicating a price increase of 37.54% in the past 24 hours and 36.10% over the past 7 days. These data seem to support Vitalik's viewpoint, suggesting that the market holds a positive attitude towards the practicality and future potential of ENS.

However, this rapid growth has also sparked discussions about the future sustainability and stability of ENS. The enthusiastic market response to new technologies is often accompanied by volatility and uncertainty, which may serve as a warning signal for those hoping to realize a decentralized internet vision through ENS. Furthermore, the widespread adoption of ENS also depends on users' demand for and acceptance of decentralized solutions, as well as its integration within the entire blockchain ecosystem.

The functions and vision of ENS are indeed appealing, but there are issues of excessive centralization in its operational methods

The Ethereum Name Service (ENS) is a decentralized domain name system built on the Ethereum blockchain, with its core function being to convert complex wallet addresses into easy-to-remember and use ".eth" domain names, significantly enhancing the user interface friendliness and efficiency for blockchain users. This technology not only simplifies the transaction and communication processes between users but also contributes to the usability and popularity of the Ethereum ecosystem.

Each ENS address is essentially a non-fungible token (NFT) that follows the ERC721 standard, providing liquidity in the NFT trading market. This design not only offers additional value to ENS users but also brings new dynamics to the entire blockchain asset market. For example, Vitalik Buterin's ETH wallet address can be transformed into the more recognizable "vitalik.eth" through ENS, greatly simplifying the interaction process between users.

From market data, ENS's performance in December 2023 was particularly noteworthy. In that month, ENS registered 23.4 thousand new ".eth" names, bringing the total registration volume to 2.1 million. Meanwhile, ENS generated $1.36 million in protocol revenue, all of which belongs to the ENS decentralized autonomous organization (DAO). This organization is composed of ENS token holders who are responsible for deciding the project's key policies.

Additionally, in December 2023, ENS added 18 thousand ".eth" accounts containing at least one ENS name, reaching a total of 800 thousand accounts. The month also set up 16.8 thousand main names, bringing the total to 701 thousand, and added 4,600 avatar records, accumulating to 143 thousand.

The decentralized governance of ENS reached an important milestone that month. The holders of the project's root key transferred the final authority to the ENS DAO, marking the project's complete transition to a community-driven governance model. This model not only reflects the ideals of decentralization and democratization in governance but also raises important questions about efficiency, transparency, and sustainability.

However, this model has also sparked discussions about the efficiency and transparency of decentralized governance. While decentralized governance is conceptually appealing, it may face challenges in practical operations, such as slow decision-making and difficulty in reaching consensus. Furthermore, whether ENS's success can be replicated or scaled to other blockchain projects is also a question worth further exploration.

In summary, while ENS's technological innovations and governance model have achieved certain successes in the market, further observation of its long-term impact and sustainability is needed. Vitalik's emphasis on ENS may not only be based on its technical characteristics but also on its potential value as an innovation in blockchain governance models.

A question of great interest: Can the integration of ENS and L2 bring positive changes to the Ethereum ecosystem?

The application of the Ethereum Name Service (ENS) in Layer 2 (L2) technology and its potential impact on the entire Ethereum ecosystem. ENS adopts L2 technologies, such as sidechains, state channels, or Plasma, to address issues of mainchain congestion and high transaction fees. The goal of this initiative is clear: to accelerate transactions, reduce costs, while maintaining decentralization and security.

In the practice of ENS, this represents an important shift—users can perform more efficient domain operations on L2 platforms without relying on centralized structures. However, this shift hides a larger mystery: does this strategy of ENS imply a deepening reliance on the data availability (DA) capabilities of the Ethereum mainnet?

The answer to this question may hold key clues to the future of the Ethereum ecosystem. The effective use of ENS services in L2 solutions suggests a possible trend: ENS may become an important tool for maintaining the orthodox status of Ethereum's mainnet DA. After the Cancun upgrade, L2 solutions have emerged like mushrooms after rain, and Vitalik's strategic layout seems to be a thoughtful prediction and adjustment regarding the future development direction of the Ethereum mainnet.

Considering that if Ethereum validators lose control over DA, the role of the Ethereum mainnet may be marginalized, Vitalik's strategy becomes particularly crucial. This is not only a technological innovation but also a subtle game about the future direction of the Ethereum ecosystem. In this game, ENS is not just a technical tool but also a strategic piece that relates to the future trajectory of the entire Ethereum network.

Therefore, the combination of ENS and L2 technology may not merely be a simple technological upgrade; it could be a contest over the future status of the Ethereum ecosystem, a strategic game hidden behind technological innovation.

The future direction of ENS remains uncertain, but it is bound to bring certain variables to the Web3 industry

As ENS develops in conjunction with Layer 2 technology, we stand at a critical point to observe the future direction of the Ethereum ecosystem. The strategies of ENS and its application in L2 solutions not only reflect a facet of technological innovation but also demonstrate a deep reflection on the entire blockchain technology ecosystem. Whether this integration will become a turning point for the future development of the Ethereum network is a question worth discussing.

As an observer in the blockchain field, we can see that Vitalik's attention to ENS and the Ethereum ecosystem showcases an understanding and prediction of current blockchain technology trends. The future role and impact of ENS as a technical tool and ecological component in the Ethereum network is undoubtedly an important factor in assessing the future direction of the entire ecosystem.