Old trees blossom anew when the timing is right.
Yesterday, Vitalik confidently announced the release of ENS V2, the new version of Ethereum Name Service that has been silent for a while. Taking advantage of the recent 60% token price increase of ENS due to the anticipated approval of ETH ETF, it is a logical choice to launch a new product during this favorable market trend.
What benefits and impacts will the support of ENS domain names on Layer 2 (L2) bring? We have delved into the new technical whitepaper of ENS in an attempt to find the answers.
Why support L2?
ENS has clearly recognized the decrease in activity on the Ethereum mainnet and the rise of L2. This is one of the main reasons for its decision to move to L2. Additionally, ENS has accumulated technical expertise over the years and has already supported CCIP-Read, which allows querying off-chain data during the name resolution process. This means that name resolution is not limited to on-chain data and can retrieve data from other systems, including L2 and external databases.
In simple terms, CCIP-Read gives your domain name more possibilities and choices. You can freely decide where to resolve and manage your domain name, no longer confined to the Ethereum mainnet. From a technical standpoint, it makes sense to handle L2 domains, especially considering the trend of user migration.
Furthermore, the Ethereum mainnet (L1) has become a bottleneck for ENS expansion due to its high transaction fees and limited processing capacity. Every registration, renewal, and update operation on ENS requires high gas fees, increasing the burden on users and limiting the widespread adoption and application of ENS.
With ENS V2, users can delegate domain name resolution to L2 or other external systems, allowing them to enjoy the low fees and high speed of L2 while choosing the most suitable solution according to their needs.
ENS V2: Lower fees and more flexible domain name service
To understand how ENS V2 works, we need to have a general understanding of its components.
ENS allows you to map complex Ethereum addresses (such as 0x1234…abcd) to simple and memorable names (such as alice.eth). This way, when you want to send cryptocurrency to someone or interact with decentralized applications (dApps), you only need to remember a simple name instead of a long string of addresses.
But what supports all of this behind the scenes?
Registry: This is where all domain names are recorded. It tells you who the owner of a domain name is and the resolver address responsible for resolving that domain name.
Resolver: When you enter a domain name, the resolver converts it into the corresponding Ethereum address or other resources (such as IPFS content hash).
Registrars: These entities are responsible for allocating and managing domain names. They ensure that domain names can be registered, renewed, and updated.
In ENS V1, all these components run on the Ethereum mainnet, meaning that every registration or update of a domain name incurs high transaction fees (gas fees). This not only increases the cost for users but also limits the widespread adoption of ENS.
ENS V2 brings multiple improvements to these key technical components, aiming to address the issues in V1 and improve the flexibility and scalability of the system.
New layered registry architecture
In ENS V2, the registry is designed as a layered structure. Each domain name has its own registry, responsible for managing its subdomains and resolvers. This design has several benefits:
Support for name expiration: When a domain name expires, it immediately disappears from the registry, reducing management complexity.
More efficient subtree management: Entire subtrees can be recursively replaced or deleted, making it more efficient to manage multiple domain names.
Universal resolver
ENS V2 introduces a universal resolver that simplifies the domain name resolution process. Users only need to call a “resolve” method, and the resolver handles all the logic internally. This not only simplifies the implementation on the client side but also provides a convenient migration path for existing users to transition smoothly to the new system.
Support for L2
ENS V2 allows users to delegate domain name resolution to Layer 2 (L2) networks or other external systems. This means that users can enjoy the low fees and high speed of L2 while choosing the most suitable solution according to their needs. This change significantly reduces transaction costs and improves the system’s processing capacity and user experience.
In summary, ENS V2 offers a smooth migration path for users to transition to the new system and enjoy lower fees, faster speed, and more flexible domain name management.
How to migrate to V2?
Clearly, the launch of ENS V2 provides users with a more efficient and cost-effective domain name service, which may lead to a new wave of domain name registration frenzy on L2.
To benefit from these new features, existing ENS users need to migrate their domain names from V1 to V2.
According to the technical documentation provided by the official team, the first step is for the ENS team to deploy all ENS V2 contracts on both L1 and L2. These contracts will initially be granted temporary permissions, such as disabling the registration and renewal functions, to ensure a smooth migration process.
After the initial deployment is completed, the first synchronization operation will take place. This will create entries for existing .eth second-level domains (2LDs) on L2 and transfer the ownership of these entries to the migration contract.
Then, users can choose to migrate their domain names to either the L1 or L2 system of ENS V2:
Migrating to L2: Users transfer their ENS V1 names to the system contract, which will then create or transfer the ENS V2 names to the users on L2. During this process, the domain name resolver on L1 will continue to reflect the status of the names that have not been migrated, ensuring uninterrupted resolution.
Migrating to L1: Users have the option to keep their domain names on L1 for stronger security and availability guarantees. The migration process is similar, and the system ensures that the resolvers and registration information on L1 are synchronized and updated.
Through these steps, ENS V2 provides a smooth migration path for users to transition to the new system and enjoy lower fees, faster speed, and more flexible domain name management.
However, the current migration roadmap is still in the planning stage, and the specific execution timeline will depend on the official information provided.
Finally, domain name services themselves are not a hot market. The recent price increase of ENS is more influenced by the narrative of ETH ETF. But with product updates and more collaborations with L2, there is another reason to extend this beta phase.
Migrating ENS to L2 will lower the cost of domain name registration and increase speed, which may trigger a new wave of domain name registration frenzy. With reduced registration costs, more users and developers may rush to register the domain names they are interested in, thereby expanding the user base of ENS.
Furthermore, the launch of ENS V2 may act as a catalyst for an increase in the price of ENS tokens ($ENS). Lower transaction fees and higher system efficiency will attract more users and developers to use ENS services, increasing the demand for $ENS. Additionally, as ENS expands on L2, more use cases and integrations will add more value capture effects.
