In a recent community phone call, the team behind the Ethereum Name Service (ENS) revealed plans to adopt a Layer-2 platform in the face of rising gas rates on the mainnet. In response to this planned move, ENS prices rose about 10%, floating higher with increasing trading volumes, as shown by the daily chart.
The Ethereum name service
ENS is a decentralized naming system on Ethereum. It provides an easy-to-use and human-readable naming system that allows users to rename mainnet addresses, smart contracts, and other resources. This system allows users to create and use memorable domain names instead of complicated addresses.
The team behind the ENS believes their solution makes it easier for anyone to interact with the pioneer smart contract platform, and is convenient, especially when sending and receiving transactions. In this setup, the platform maps a user’s domain, human-readable address, to their original address or deployed smart contract on the Ethereum mainnet.
However, since ENS maps all addresses on the Ethereum mainnet, transaction fees apply, a concern given the fluctuating gas costs on Ethereum. In Ethereum, all transactions including transfers or implementation of smart contracts must be paid for. The amount paid depends on the demand in the network and the value is often volatile. Ethereum gas costs have increased in recent weeks.
Fluctuating gas costs
According to YCharts facts on June 30, the average gas fee for sending a transaction was $34.62, up from $42.77 recorded on June 5. On May 12, it was $77.88. The only time gas costs fell on Ethereum was on June 25, when it hit $16.58. At this level, the gas fee is relatively high compared to other networks. For example the average transaction costs in Bitcoin was $2,383 on June 30, up from $9,018 on May 12.
Meanwhile, in layer-2 platforms, transaction costs and implementation costs of smart contracts are relatively lower, according to trackers. like a illustrationgas cost on Optimism, a popular Ethereum layer-2, is $0.03 as of July 2.
Given the high gas costs on Ethereum, ENS will further expand to a Layer-2 platform through two enhancement proposals, ENSIP-10 and EIP-3668, as a relief to users sensitive to high gas costs on Ethereum as part of improving the interoperability. During the call, the team said this would scale up the platform and open up the service to more people.
In response, ENS prices are up 10% on the last trading day, changing hands at $9.42 due to increasing trading volumes. Still, it remains to be seen whether prices will continue to rise once the platform migrates to a Layer-2 platform. For now, ENS has registered more than 2.73 million names owned by more than 697,000 entities.
Featured image from Canva, chart from TradingView
