The Ethereum Name Service (ENS) is a type of an Ethereum-based decentralized application (dApp). Smart contracts are the underlying features that build ENS. It lets users get a domain name to use for their wallet addresses. Thus, users can then transfer their funds directly to a name instead of searching for an address. However, that feature is still under development.
The ENS can be used for IPFS and Swarm content hashes together with many other identifying processes. It enables users to easily browse and gain access to files on these networks. They can do all that while simultaneously supplying metadata-concerning names like Whois-like info for users and ABIs for contracts.
Difference between DNS and ENS
ENS somehow does a similar job to the Internet’s Domain Name Service (DNS). However, ENS has an entirely different structural design due to the limitations and abilities provided by the Ethereum Blockchain. The same security concerns that affect DNS do not affect ENS in any way because it runs on Ethereum smart contracts.
Why is an ENS Name Important?
ENS eliminates the need to copy or type long hexadecimal addresses. With ENS, users can send funds directly to domain names instead of the long addresses. Also, it enables users to interact with their smart contract at mycontract.eth and also check out swarm-hosted sites listed at swarmsite.eth.
After a user gets an ENS domain, they can point it to any type of funds that they want. Also, they can create sub-domains and assign them as they deem fit. ENS is a wholly decentralized system. The creation of new domains under the “.eth” top-level domain is achievable through an auction process hosted on the Ethereum blockchain. Furthermore, anybody can procure a domain for themselves by participating.
How Name Auctions Work
Brand new identities are assigned using an auction process that is wholly based on a Vickery auction model. Auctions feature three stages:
- A user opens an auction targeting a name that they wish to buy and places a bid. A three-day timer starts. During that period, other users can bid on that same name. However, the details of the bids remain hidden in this stage. Nobody gets to know how much users bid, or even the name that they choose to bid for.
- Once the three-day period elapses, a two-day “reveal” period launches. During this step, all bidders must disclose the details of their bids. Anybody who fails to disclose the required information loses the entire bid. If one’s bid does not rank as the highest, the system refunds their money without a 0.5% fee that gets ‘burned.’
- Once the ‘reveal’ period is over, the individual with the highest bid automatically becomes the winner. Nonetheless, they pay the amount of the second-highest bidder. That amount gets included in a contract and remains constant provided that the winner has control over the particular name. It is mandatory for the winner to send a ‘finalize’ transaction to get a refund of any extra funds and also get the ENS name.
After the ENS auction is won, the winner takes the name with the interval of the chief registrar. Nonetheless, the winner may release the name after a year and recuperate the entire sum of the original deposit.
Please note that not every ENS name is available for bidding. Some of the names get released for auction on a steady basis over an eight-week period. They undergo this release style since the system requires scaling up and bugs need proper identification. All identified bugs should be fixed within this time.
How to Acquire a Name
Currently, several user-friendly interfaces enable you to buy ENS domains:
- My Ether Wallet – the open-source solution runs wholly in a user’s wallet. It needs the user to use their wallet’s credentials in the case that they want to use it.
- ens.domains – This one is known as the “official” dApp. It needs a blockchain-enabled browser (Parity with the browser plugin, Chrome with the MetaMask extension, or Mist).
- ETHTools’ ENS integration – the closed-source solution guides users through the entire buying process.
Users should always note that whenever they place a bid, they must reveal it in the set forty-eight-hour reveal period. Should they fail to reveal their bid during that time for any reason whatsoever, they are liable to losing the entire amount of their bid. Disclosing involves offering access to their private key/account together with other important supplementary information.
It is also quite important for interested parties to back up their bid details in the case that their solution of choice demands it. Failure to back up, users may not have the ability to reveal their bid when needed consequently resulting in the loss of the entire bid.