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Ethereum Name Service (ENS) Token

The Ethereum Name Service (ENS) tokens are the ERC-20 governance tokens of the ENS system. The Ethereum Name Service (ENS) is a decentralized domain name system built on the Ethereum blockchain. Nick Johnson and Alex Van de Sande from the Ethereum Foundation developed the ENS.

They later distributed ENS tokens to users in November 2021 and created the Decentralized Autonomous Organization (DAO) to make the system decentralized. The tokens were airdropped to early adopters, allowing them to submit their proposals and decide based on the voting result. 

About ENS System and its DAO

The Ethereum Name Service (ENS) serves as a decentralized blockchain-based equivalent to the traditional Domain Name System (DNS), it is a distributed, open, and extensible naming system.

The ENS registry maintains a list of all domains and subdomains, with three critical information about each: the domain owner’s details, the resolver for the domain, and the caching time-to-live for all records under the domain. The system essentially maps human-readable names to machine-readable identifiers ending in “.eth”

The DAO governs the ENS system with the help of its governance token. Token holders can submit proposals and vote on them, determining the future development of the ENS system. The DAO has a constitution containing a set of binding rules that decides what governance actions are legitimate for the DAO to make.

ENS Token Use Cases

ENS is the native ERC-20 governance token of the ENS DAO, it has the following utilities in the ecosystem:

Delegate: ENS token holders are required to delegate their voting rights to an address before voting or suggesting proposals. The DAO allows delegation to one address at a time, including the token holder's own address. Delegation doesn’t lock the tokens. 

Submitting Proposals: ENS token holders can submit proposals for changes and improvements in the ENS protocol.

Voting: Token holders get to vote and decide on which proposal should be approved. The more ENS a voter has in his wallet, the more weight their vote or delegation holds.

Economic Value 

ENS has a maximum supply of 100.00M ENS, out of which, 30.69M are in circulation. The ENS tokens were airdropped to early users of the ENS protocol. Its claiming process started on 8 November 2021, with 4 May 2022 being the last day to claim their allotted tokens. 25% of the total supply was distributed using the airdrop and the rest was kept reserved for future use.

Challenges

ENS protocol is based on Ethereum, meaning it has inherited Ethereum’s high gas fees and low transaction processing speed. ENS tokens also have a limited utility in the protocol’s ecosystem, meanwhile, many well-established governance tokens are offering more utilities and giving tough competition to ENS tokens.