Exploring the Key Use Cases and Sustainability of Ethereum Name Service (ENS)

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The blockchain is, at its core, a powerful digital registry—and one of the most valuable digital assets to register is a domain name. Traditionally, domain names map complex IP addresses (like 13.57.64.34) to human-readable web addresses (e.g., Messari.io). Since the inception of Bitcoin, numerous projects have attempted to bring domain systems on-chain. Among them, Ethereum Name Service (ENS) has emerged as a leading solution, blending usability, ownership, and decentralization.

What Is ENS?

Ethereum Name Service (ENS) is a decentralized domain registration protocol that maps readable names—such as yourname.eth—to Ethereum addresses. It simplifies interactions in Web3 by replacing long wallet addresses with easy-to-remember names.

ENS supports two types of domains:

This dual support allows entities like Google to use Google.com not just as a website, but also as a wallet address and decentralized identity—bridging Web2 and Web3 seamlessly.

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Core Use Cases of ENS

Web3 Identity and Username

ENS serves as a foundational identity layer in Web3. Instead of relying on centralized login providers like Google or Facebook, users can leverage their .eth domain as a self-owned username across platforms.

This concept mirrors “single sign-on” but without intermediaries. Your ENS name becomes your persistent, portable identity—owned and controlled solely by you.

Over 447,623 ENS domains have been created to date, with 72% being .eth domains. As more dApps and services integrate ENS logins, its role as a universal Web3 identifier strengthens.

Native Crypto Payments

An ENS domain functions as a native crypto wallet. Users can send and receive various cryptocurrencies—including ETH, BTC, DOGE, and others—using a single .eth address.

For example, instead of sharing a long hexadecimal wallet address, you can simply say “send it to alice.eth.” This reduces errors and enhances user experience across wallets and exchanges.

Moreover, integrating DNS domains into ENS enables businesses to accept direct crypto payments through their existing web presence—eliminating the need for third-party payment processors.

Enhanced Domain Ownership Rights

Unlike traditional registrars such as GoDaddy or Verisign, ENS operates without centralized control. Once you own an .eth domain, no entity can revoke it—unless you fail to renew it.

This model empowers true digital ownership. You control your domain via your private keys, aligning with blockchain’s ethos of self-custody and censorship resistance.

Decentralized Websites

ENS pairs seamlessly with decentralized storage networks like IPFS, Arweave, and Sia Skynet. By linking your ENS domain to content hosted on these platforms, you can create fully decentralized websites resistant to takedowns.

For instance:

alice.eth → IPFS hash → website files stored across a peer-to-peer network

This combination enables truly free speech online—ideal for journalists, activists, and developers building uncensorable applications.

The ENS DAO and Token Airdrop

To further decentralize governance, ENS launched its own token and transitioned to a DAO (Decentralized Autonomous Organization) model.

Fair Token Distribution

The ENS airdrop was widely praised for its fairness. Unlike many DeFi projects that reward capital-heavy users, ENS prioritized community participation over financial investment.

Key distribution breakdown:

A total of 137,689 wallets qualified for the airdrop. The median recipient received 180 ENS tokens, worth around $10,000 at current prices.

Notably, active users—those who set a primary ENS name (reverse record)—received a 2x multiplier, incentivizing real-world usage over speculative hoarding.

Despite high claim rates (>60%), about 40% of tokens remain unclaimed. This could lead to future sell pressure but also reflects long-term holder confidence.

Governance Principles

ENS token holders govern protocol parameters such as pricing models and oracle feeds. The ENS Foundation—legally established in the Cayman Islands—acts as a legal representative for the DAO in traditional jurisdictions.

Crucially, recipients must agree to the ENS Constitution when claiming tokens. This document enshrines core values:

These principles ensure ENS remains public-good-oriented rather than profit-driven.

DNS and ENS Integration: Why It Matters

Unlike alternative naming systems like Handshake (HNS), which aim to replace ICANN’s root zone, ENS integrates with existing DNS infrastructure.

ICANN maintains the centralized root database that ensures no two parties claim the same domain (e.g., only one Messari.io exists). By aligning with ICANN-registered domains, ENS avoids naming conflicts and enables smooth adoption.

For example:

In contrast, HNS creates a parallel naming system—a bold vision but one that risks fragmentation and limited real-world adoption.

ENS takes a pragmatic approach: enhance existing systems with blockchain benefits like programmability and native payments, while maintaining compatibility.

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Is ENS Economically Sustainable?

ENS generates revenue through domain registration and renewal fees:

Domain LengthAnnual Fee
5+ characters$5
4 characters$160
3 characters$640

Shorter domains cost more to deter squatting. Notably, DNS-integrated domains incur no additional ENS fees, since they’re already paid for via traditional registrars.

Revenue Growth and Financial Health

ENS has earned nearly $20 million in lifetime revenue, with significant acceleration in recent months:

The protocol has accumulated approximately 13,000 ETH (~$25M at current valuation), with over 4,000 ETH held in its treasury post-decentralization.

With a fully diluted valuation of **$5.5 billion** (at $55 per token), ENS trades at a high price-to-sales ratio (~334x). However, given its early stage and growing ecosystem utility, the market appears to be pricing in long-term potential rather than current cash flows.

Frequently Asked Questions (FAQ)

What is the main purpose of ENS?

ENS simplifies blockchain interactions by replacing complex wallet addresses with readable names like yourname.eth. It supports identity, payments, and decentralized websites.

Can I use my .com domain with ENS?

Yes. If you own a DNS domain (e.g., mywebsite.com), you can link it to your Ethereum address via ENS without paying extra fees.

How does ENS prevent domain squatting?

Through tiered pricing: longer domains are cheap ($5/year), while short ones (3–4 characters) cost hundreds annually—discouraging speculative hoarding.

Who governs ENS now?

The ENS DAO, powered by $ENS token holders. They vote on protocol upgrades, funding proposals, and parameter changes.

Is ENS only for Ethereum?

While built on Ethereum, ENS supports multiple blockchains and crypto assets. Your .eth name can receive BTC, DOGE, and other integrated tokens.

What happens if I don’t renew my ENS domain?

After expiration, your domain enters a grace period. If not renewed within ~90 days, it becomes available for others to register.

The Future of ENS

ENS isn’t the only player in decentralized naming—but its strategy of interoperability over disruption gives it a clear path to mass adoption. By working with existing internet standards instead of against them, ENS lowers barriers for individuals and enterprises alike.

As more apps adopt ENS for login and payments, its utility—and revenue potential—will grow exponentially. Beyond Ethereum, ENS could become the universal naming layer for the entire decentralized web.

While its current valuation may seem high relative to earnings, early internet protocols were similarly misunderstood. ENS isn’t just selling domains—it’s building the foundation for a new digital identity layer.

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In a world increasingly moving toward self-sovereign identity and user-owned data, ENS stands at the forefront of redefining how we identify ourselves online—securely, permanently, and freely.