Skip to content

What is ENS (Ethereum Name Service)? How Does It Work?

What is Ethereum Name Service (ENS) and ENS, its native cryptocurrency?

If you’re new to the world of cryptocurrencies and decentralized finance (DeFi), the sheer complexity of the terminology and technology can be overwhelming.

One such example is the Ethereum Name Service (ENS), a powerful tool designed to simplify interactions with blockchain addresses and decentralized websites.

In this guide, we’ll provide a comprehensive yet accessible overview of the ENS, its purpose, and its impact on the crypto industry. By the end of this article, you will have a better understanding of ENS and its potential in the ever-growing crypto ecosystem.

What is ENS?

In a nutshell, ENS is a name and search platform built on the Ethereum blockchain.

Source: ENS

Its primary function is to help crypto users convert complex, machine-readable addresses into more user-friendly ones.

By doing so, ENS serves as a “nickname creator” for public Ethereum addresses, making it easier for people to interact with the world of cryptocurrency.

For instance, if a friend wants to pay you back for dinner using cryptocurrency, they would typically need your Ethereum public address.

This address can be a string of up to 42 hexadecimal characters, like “0xDC25JK3F5B8A184949585338A2ABD80195FAB2D395E”. Sharing this address is similar to giving someone your bank account number, allowing them to send crypto to your wallet.

With ENS, you can create a "nickname" for your public address, such as "Sarah.eth", which is linked to your public address. This makes it much easier for your friend to send you crypto without having to deal with a complicated string of characters.

Source: cryptopotato

With ENS, you can create a “nickname” for your public address, such as “Sarah.eth”, which is linked to your public address. This makes it much easier for your friend to send you crypto without having to deal with a complicated string of characters.

ENS doesn’t just provide simplified addresses; it also offers human-readable domains for various purposes, including crypto wallets, websites, content hashes, and metadata.

Its ultimate goal is to be a Web3 username that connects all your addresses and websites under a single name. This allows you to receive any type of cryptocurrency or NFTs using your ENS domain.

The ENS protocol is a “distributed, open, and extensible naming system” that provides domain naming and lookup services secured by the blockchain, as described in the ENS Documentation. The decentralized nature of ENS prevents any single entity from controlling it, making it more secure than centralized naming services, as there is no single point of attack.

How Does ENS Work?

ENS relies on two Ethereum smart contracts to function:

  • ENS Registry: This contract records all registered ENS domains and stores three key pieces of information about each domain: the owner, the resolver, and the cache lifetime for all records associated with the domain.
  • Resolver: This contract is responsible for translating human-readable domain names into machine-readable addresses and vice versa. It matches each domain with the respective user, website, or address.

If you want to create your Web3 username, follow these steps:

  • Go to the ENS app and search for an available domain name.
  • Complete the registration process, which includes two wallet confirmations and a yearly fee of US$5 for names with more than five characters.
  • Connect your new ENS domain to your cryptocurrency wallet, website, or multiple subdomains, such as email.sarah.eth or website.sarah.eth, all under the same ENS domain.

As there are a limited number of ENS domains, many crypto enthusiasts are trying to secure their preferred nicknames, similar to the early days of DNS names.

Some people have even started trading ENS domains as a side hustle. For example, exchange.eth was sold for 6,660 ETH (US$609,000 at the time) and weather.eth for 300 ETH (US$27,000).

ENS supports a wide range of DNS names beyond .eth, including .com, .org, .io, and .app.

What is the Purpose of the ENS Token?

As an open-source and decentralized protocol, ENS operates without a central authority.

Instead, it is governed by a decentralized autonomous organization (DAO) managed by the community.

The ENS Token: A Utility and Governance Token

The ENS token is both a utility token and a governance token. It is used to submit proposals and vote on the protocol’s future developments within the ENS DAO.

By holding ENS tokens, individuals can participate in the decision-making process and have a say in how the ENS system evolves.The ENS token serves as the key to this unique governance structure.

ENS Token Market Position and Supply

Currently, the ENS token is among the top 110 cryptocurrencies.

This ERC-20 token has a maximum supply of 100 million coins, with 19.6 million coins in circulation. The distribution of the total ENS supply is as follows:

  • 25% was given away to ETH holders in an airdrop
  • 25% went to contributors who helped develop and maintain ENS
  • 50% was allocated to the ENS DAO for future governance decisions

What sets ENS apart?

The Ethereum Name Service is a decentralized adaptation of Domain Name Service, otherwise known as DNS.

It provides a safer option than the current DNS in use on the web due to its lack of a single point of failure.

Because ENS is constructed on Ethereum, it offers increased safety and cannot be censored.

Additionally, the two smart contracts that make up the protocol allow for maximum compatibility with other smart contracts and the full Ethereum environment.

ENS is the first of its kind in the market for crypto and blockchain addresses. It is different from other services that are attempting to replace the old DNS for the internet, as it provides users with human-readable nicknames that can function on all of their wallets, dApps, and decentralized websites.

By turning difficult strings of characters into shorter and more memorable, easy-to-read links, ENS makes crypto transactions more understandable and accessible for blockchain novices.

While other services may appear in the future, ENS is not yet faced with any contenders that can do what it does.

What’s the implication of ENS to the crypto sphere?

The introduction of the Ethereum Name Service (ENS) has the potential to significantly transform the crypto and Web 3.0 landscape.

By simplifying complex blockchain addresses and making cryptocurrency transactions more user-friendly, ENS can help overcome some of the barriers that often deter newcomers from exploring the world of crypto.

Making Crypto More Accessible

One of the main challenges facing the cryptocurrency world is its complexity, which can discourage novice users from delving into its potential.

ENS addresses this issue by converting long, machine-readable public addresses into shorter, memorable names. This makes it much easier for users to send and receive cryptocurrencies, interact with decentralized applications (dApps), and manage their non-fungible tokens (NFTs).

Unifying Wallets, Websites, and Subdomains

ENS aims to consolidate all of a user’s wallets, websites, and subdomains under a single link.

This will greatly simplify the user experience, reducing the technical barriers to entry and making the crypto space more approachable.

ENS and similar initiatives will play a crucial role in breaking down the psychological barriers that hinder widespread crypto adoption.

Gaining Popularity and Market Recognition

When the ENS DAO was launched on November 9, 2021, it attracted significant attention, as it distributed 25% of the total token supply. The ENS token quickly gained popularity among investors, reaching a market capitalization of over US$1 billion the very next day.


While the current ENS roadmap ends at 2021, plans are underway to integrate the entire DNS namespace into ENS. This will enable internet domain owners to claim their domains on the ENS network, effectively making ENS a counterpart to the traditional DNS system.

This development will pave the way for cross-platform Web 3.0 usernames that support decentralized identity, making it even easier for newcomers to enter the crypto space.