- 08 Jul, 2018
I am sure many of you have accidentally sent Ethereum (ETH) to the wrong address as a result of mistyping one character in the address. Fortunately, the time of typing out long wallet addresses is over. The Ethereum Name Service (ENS) is a novel network that takes after the Domain Name Service (DNS) in allocation of naming rights. However, the similarities adjourn abruptly thereafter. The ENS allows for a compression of the typical wallet addresses into a more secure, decentralised and human friendly words such as company/store titles. For instance, if a customer is shopping at a store called xmart, they would be able to pay the store by sending ethereum to ‘xmart.eth’ instead of going through the hassle of typing out the address or scanning a QR code. Furthermore, sub addresses can be created to specify transaction addresses. This means that if you would like to pay a clerk by the name of Ethan at Xmart, you would be able to send ethereum to ‘Ethan.Xmart.eth’.
The purchasing process for these addresses is a unique smart contract unlike the typical DNS auctions we are all familiar to. It takes after a closed auctioning system. This means that buyers submit their bids into the ENS and add some ETH as a security to conceal their true bidding addresses. Once the 72 hour’s bidding period comes to a close, a 48 hour’s revealing period follows directly after. In this time, users reveal their bids and are returned their security deposit. Those who fail to reveal a bid forfeit all of their ETH. The highest bidder has their ETH locked into the contract at the price of the second highest bidder while all others are given back their full amounts less a 0.5% transaction fee that is burned. Ergo, users guess as to what the highest price shall be. The winners ETH is locked for a minimum of one year at which they may choose to terminate the contract and have their deposits returned or extend their ownership further.
Currently, Ethereum Name Service has released 100% of names that are more than six characters for public auctioning. Over half a million auctions have been initiated by over 13,000 bidders participating. Over three million ETH has been deposited into the system with bids ranging from the minimum 0.01 ETH to a record setting 184,761 ETH. At the current ETH price of $293.30, this is well over $54 million dollars locked in on such an address. The system does have any errors still; at times of large Initial Coin Offerings, bids and reveals often do not go through causing the potential for massive loss in deposits.
The potential for scalability and reselling is astronomical as bids may be transferred between different addresses. However, a formal site for the reselling of addresses has yet to be established. Advocates of the Ethereum Name Service (ENS) believe that once the network is fully established and names below seven characters are released, then the potential for mainstream usage of ethereum is imminent.
My advice to all readers is to visit https://registrar.ens.domains/ as soon as you can and lock in any names of relevance to you before someone else does. There are virtually endless character combinations that have yet to be bid on that might be of great value one day. Happy bidding and don’t get squatted on!