🎙 Nick Johnson of ENS: "We Want to be the Naming System for Every Digital Resource in the World"

In this week’s episode, I speak with Nick Johnson, founder and lead developer of Ethereum Name Service, or ENS. Nick talks about the journey of ENS, from an internal project within the Ethereum Foundation, to spinning off to become a public good for Ethereum and other blockchains, and recently decentralizing and becoming a DAO controlled by token holders.

In this week’s episode, I speak with Nick Johnson, founder and lead developer of Ethereum Name Service, or ENS. Nick talks about the journey of ENS, from an internal project within the Ethereum Foundation, to spinning off to become a public good for Ethereum and other blockchains, and recently decentralizing and becoming a DAO controlled by token holders. 

He goes into why a DAO was in the plans from the start of the project and what the transition was like to get to a point where it became safer for token holders to control the protocol, instead of a more centralized group of managers. Nick discusses ENS tokenomics, and the initial lessons after distributing the token about a month ago.

Nick talks about the big vision of ENS, which is to become the naming service for every digital resource in the world. ENS is not just about naming Ethereum addresses as it already works with other blockchains and it’s not just about resolving content, like with IPFS sites, which you can also do.  The big vision is to become a decentralized identity system, which will work across multiple platforms. In the future, your blockchain wallet will become your login, not just for DeFi and Ethereum dapps, but for web2 websites as well.  Nick says this future is not too far away.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Samuel Haig.

🎙Listen to the interview in this week’s podcast episode here:

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👀 Only paid subscribers have access to the full interview transcript below.

Camila Russo: Nick is the founder and lead developer of Ethereum Name Service or ENS, which is Ethereum’s version of domain names. But Nick will clarify that and get into all the specifics later on in the talk. What ENS allows is for Ethereum users to link human-readable names to their Ethereum addresses, which makes sending and receiving crypto a lot easier. And that’s just the start of ENS’s roadmap and goals going forward. Basically, all the doteth names that you see on crypto Twitter are all thanks to ENS. So, Nick, before we get into all of ENS’s story and goals, I’d love to hear about you — what brought you to founding ENS in the first place?

Nick Johnson: Back in about 2016, I was working at Google as a software engineer, and a well—known financial services company reached out to me and said: ‘hey, do you want to come work for us on Ethereum?’ And I went ‘no, not really, but this Ethereum thing seems interesting.’ And I started playing around, firstly in writing some code, and then a couple of libraries. And next thing I know I’m getting called from the Ethereum Foundation, ‘would you like to come work for us on Go Ethereum or on Swarm?’ And that sounded much more exciting, albeit rather a leap into the deep end as I’ve never done work remotely or done contracting work before. But I took the plunge and never looked back. 

One of my first projects was working on Swarm, they needed a naming service for naming decentralized content such as that you see on Swarm and IPFS, and so forth. So I started just as a side project building what is today ENS, and it rapidly evolved from a small side project into my full-time job at the Foundation, and then we spun it out into its own organization, and it became what it is today.

CR: Can you backtrack a little bit and just explain what Swarm is?

NJ: Swarm is a decentralized content store similar to IPFS. It’s designed to be Ethereum native and has an incentivization system built on top of it. They recently launched a token drop, and they’ve been working on it for a long time but it hasn’t had nearly the traction as say IPFS has.

Ethereum Foundation Backs ENS

CR: Was ENS initially funded and bootstrapped by the Ethereum Foundation?

NJ: Yeah, it was initially an authorized side project of mine at the Ethereum Foundation (EF). Then when it became too big for one person to do on their own, they suggested that rather than forming a team inside the EF that we spun out into our own organization, and they gave us a very generous grant to get us started, which enabled me to hire the first people to work with me on ENS, who were largely people who had either volunteered or done some paid work for me on ENS while it was inside the Foundation, and then we grew from there, and these days, we have registration revenues to rely on. 

CR: Is that common in the foundation, having an internal project spin-off and become its own independent company?

NJ: It’s a passion that I think they wanted to encourage but I haven’t seen it happen since. For some things, it would be difficult because there’s core infrastructure like Go Ethereum where it’s difficult to see how they would benefit from being a completely separate organization. For other things, it perhaps makes more sense. For us, the EF’s generous initial funding allowed us to get our feet under ourselves and get things going, and also make significant progress in our first couple of years. 

ENS was never built with revenue in mind, the registration fees exist to reduce the amount of spamming and squatting we see, but it brings in more than enough income to help pay for ongoing development and so on, almost as a side effect.

CR: Interesting. How big was the EF grant to get you started?

NJ: They gave us a million dollars. Basically, they said write up a proposal for a grant for your own organization. And I put my numbers together and do the math on how many people I knew I could hire and what I needed, and how much they should be paid, and so on. And I came back with a figure of $500,000 the first year’s operations, and apparently, that went all the way up to Vitalik who said: ‘that’s not nearly enough, give them a million dollars.’

I’m glad they did because we did go through some lean times, as we found our feet, and if they hadn’t done that, we probably wouldn’t be where we are today. They also gave us a follow-up grant later on with specific goals in mind, which has also been extremely valuable.

CR: Amazing. So does the EF now own a stake in ENS?

NJ: No, they were purely grants. The EF is also a not—for—profit Foundation. And simply, they gave us the money in order to make sure that ENS became reality.

The Economics of ENS

CR: Regarding the business model, revenue based on registrations, can you talk more about that? You mentioned that when you spun ENS off, it wasn’t with revenue in mind, but you still have this revenue-generating company? What’s the vision there? Do you want to build it out into something that is self—sustaining and produces more income going forward? And also if you can go into how much you’re actually getting in revenue at the moment? 

NJ: My vision for ENS has always been as a public good — the goal is to build a naming system that is maximally useful to the most people, and not as a for-profit company, or as a source of revenue. But, one of the first problems you need to solve when building a naming system is how to make sure that all the names that are interesting and useful to people don’t get immediately snatched up by speculators who then resell them on the secondary market. 

While you’re building a neutral system there’s no way to eliminate that entirely, but what you can do is impose a few costs to make it cost-ineffective to grab them all, and force them to focus on what they think is most valuable. We’ve seen other systems like Namecoin kind of be choked up by speculation to the point where they’re very illiquid — it’s very difficult to get a name that is meaningful to you because speculators are trying to resell them all at extreme premiums, and the secondary markets are very inefficient. So we wanted to try and avoid that while being minimally invasive. 

The first version of ENS had an auction-based system where if you won the auction, your bid was locked up in a deposit for as long as you held the name. And the idea was like there’s no need to generate revenue there, it’s simply a cost to keep the name and a constant incentive to release as if you don’t need it — which was good in theory.

But the problem is that squatters and speculators know they’re going to sell the name on and get their deposit back. Whereas anybody who has a long-term project in mind has to treat that as spent because they’re never going to give up the name — so it actually perversely incentivized squatting in some ways. So we’ve pivoted to a much more mundane fee-based model where you pay per year of registration. And the fees are really quite nominal. For five-character-plus domains, they’re $5 a year — these days, the Ethereum transaction fee actually outweighs that several times over. But they do help ensure that sort of behavior is limited, that names that aren’t used go back into the pool for registration. And they’ve also provided much more revenue than we anticipated. 

At the moment, depending on the price of Ether today, ENS as in the multisig and soon, the DAO, has about $40 million US dollars worth in US Treasury. About 20 million of that is what I would call already earned funds. So if somebody registered for two years, a year ago, I would treat the first year’s registration as earned because it’s for the past. And the second year is unearned income. So about half of the treasury is earned, and the other half is effectively future revenue. And then, of course, was the launch of the DAO, the DAO itself also has a bunch of DAO tokens that it can use to reward governance involvement and projects that are aligned with the ENS ethos and future.

CR: So that 40 million is purely on revenue based on registration fees, and that’s separate from ENS token treasury?

NJ: Yes, that’s right. About 10 million of that is in USDC, and the remainder is ETH at the moment. But of course, once the DAO takes that over, which will be very soon now, they will be able to do whatever they see fit with managing that.

The Path to Decentralization

CR: Very cool. Can you go into the vision or the goal of creating a DAO?

NJ: Tight from day one, our goal was ENS was to build a decentralized system, and that means a couple of things. One is minimizing the amount of human control required, which I firmly believe is the best way to build a decentralized system where it’s viable. That means minimizing the systems that require trusted parties to execute. We’ve done that by building a system that is largely administered cryptographically through your credentials and by progressively removing permissions that are no longer needed. So, even the ENS root key holders who currently control ENS as administrative functionality, can’t affect existing dolly registrations — because their power has been entirely revoked. And the DAO, once it’s transferred to them, won’t be able to do that either. 

But then the second thing is moving from our initial model where we have a group of 70 holders drawn from the community. to a more decentralized model, where the DAO has direct input into how things are run. So this should be fairly light touch, basically […] there are these treasury funds that have been raised in excess of what’s needed for ongoing operations, and those ideally should be put to good use funding public goods and other things in the Ethereum ecosystem. And secondly, there are upgrades and administrative tweaks, and so on, that need to happen from time to time on ENS to keep it functioning optimally. 

When we launched, DAOs were still extremely new — we launched not long after The DAO had spectacularly crashed and burned, so I didn’t feel like the space was mature enough or safe enough to hand over ENS into a really early DAO. But since then, even just in the last six months to a year, the ecosystem has matured enormously. There’s excellent tooling, there’s existing best — practices that we’re trying to build upon. There are smart contract systems — we’re using the OpenZeppelin Suites, which is based on the compound model of DAO, and that combined with the fact we’ve successfully removed the human control from some of the most dangerous aspects of the administrative functionality, meant that we felt confident in handing that control over to the community.

CR: It’s interesting for a founder to feel confident enough to entrust this great organization that you’ve built over the years to a group of decentralized token holders — you’re saying we’ve removed the administrative ability from management, and that to me actually sounds a little bit scary, not having control over how ENS is run. How would you balance those risks, and how do you think you got to a point where delegating this control seemed like the right call?

NJ: Partly, it’s not been the case since day one. Since launch, we’ve had those seven key—holders, which is insufficiently decentralized — but certainly a lot better than me just having the big red switch myself. And it’s not your typical multisig drawn from employees of the same company or something like that. These were myself and six other people drawn from the wider Ethereum community — particularly trusted and respected people. 

And the expectation that was explicitly stated was that if somebody, and it doesn’t have to be me, proposes an upgrade or a change to ENS, they view it with a critical eye and they assess whether they think it’s a good idea. It’s not just a mechanism against compromise of somebody’s keys. It’s actually governance control of its own. It’s a critical committee or board who look at proposed changes and make sure that they have the best interests of the Ethereum community in mind. 

So, to a degree, moving to the DAO is just another step in that same direction. I already didn’t have direct control over it, and I already had to convince other people that this was a good idea. It’s just now there’s more people, and people will be more involved. It’s still a little intimidating because, of course, there’s potential for things to go horribly wrong, as there always is. And just seeing other DAOs function and flourish and make a success of decentralized governance, and trying to learn from them, gave us the confidence that we weren’t putting things at risk by doing this.

The worst case in my mind is that some funds get misallocated and misspent. That in my mind is much less important than preserving the safety of the people using ENS, and the fact that the names work the way they should and that they can’t be misappropriated.

CR: Can you guide me through your thought process on the ENS token distribution? Why did you design it the way you did?

NJ:  That was really crucial too in pursuing and furthering this goal we have, that ENS is first and foremost intended as a public good for the community and to build a system that’s maximally useful, rather than has the most value to speculators. The straightforward way would have been we hand out tokens in proportion to the number of names registered, or a number of years that you’ve registered names for, or something like that. But that would be handing disproportionate governance power to the people who have — abuse is perhaps a strong word, but they’ve been manipulating the system for their own gain, rather than those who have been using the system as it was intended. 

So we really tried to come up with a set of parameters that would recognize the people who had been using the system as it wasn’t ended with the most governance power, and distribute that as widely as possible amongst all the people who did have actual use of mind. So we identified some things which were preferably hard to forge, and where they’re not hard to forge, they are at least strongly correlated with activity. 

So we divided the airdrop in half. Half of it was based on how many days that accounted had owned a name for in the past. So if you’d owned the name since day one and every day since, you’d get the maximum airdrop. If you only registered the day before the snapshot, you’d get very little. That’s extremely difficult to forge, you would have had to be thinking about an airdrop the day when ENS launched four years ago in order to have any chance, so that was a really good measure. 

But it also doesn’t really recognize people who have come to the community recently and are still very sincere about ENS and interested in it. So the second half was allocated according to how far into the future your last expiring name is registered for. And we thought that was a good indication because if you think ENS doesn’t have much longevity, you probably haven’t registered your name for eight or 10 years or whatever — you’ve probably registered for one or two. So registering for a long time, amongst other things, signals that you believe that name is actually going to be useful for that long. We thought that was a good indication of commitment. And we did have to cap that at eight years because there is one person who has registered their name until the year 4220 or something like that, and we would have just been handing over the entire DAO to him if it was just unlimited, or at least something approaching that. 

And then the final thing was whether you’ve set your name as a primary DNS name, meaning that when you log into an Apple, when you vote on something, or whatever, it shows up instead of your address — and that was a very strong signal that you were actually using this name somewhere rather than just sitting on it. And if you’ve done that, then we just doubled the amounts from the other two parts of the airdrop.

CR: How much of the total token supply was distributed to users, to ENS name holders?

NJ: 25% was distributed to name holders via the airdrop, and 50% is in the DAO treasury — which will be controlled by token holders as a whole.

CR: How does ENS’ tokenomics work? How does the value accrue to the token?

NJ: The token is really designed purely as a governance token. The DAO can choose to add additional functionality as time goes on if they wish, but our primary goal was to give a voice in governance to the people who have helped ENS succeed, and make sure that they can be the ones to help administer the system. So it’s a pure function is that if you acquire ENS tokens, you can delegate the voting power to somebody, and then that person can vote on proposals both for how to use the treasury to fund other public goods and so forth, and also what changes to make to the system.

CR: How are tokens in the treasury distributed, going forward? Is there some inflation mechanism? What’s the plan?

NJ: The DAO has immediate access to 5 million tokens that are in the treasury as soon as it wants to use them, and the remaining 45 million — which is 45% — vests to it over the next four years just so that some early proposal doesn’t allocate all 50 billion to something. The token has built-in support for a maximum of 2% inflation — so the DAO can vote anytime from next November to allocate to an address up to 2% of the total supply, and they can do that once a year. 

CR: So there’s a built-in 2% annual inflation?

NJ: A maximum of 2%, yes, they can choose to exercise it or not.

CR: And then token holders choose how much of that should be issued at any time?

NJ: Yes.

ENS Airdrop

CR: It’s been a month since the airdrop?

NJ: We announced it on the first of November, and the airdrop was on the 8th, and it’s now the 24th, so about three weeks since we announced it.

CR: In that time, what are some interesting governance proposals you’ve received?

NJ: It’s been really interesting to see things starting to gear up. The ones we expected, there was some discussion prior to the launch about an ‘Article Zero’ for the constitution — basically, a preamble explaining what the intent of the constitution and of the ENS DAO was outside of the strictly enforceable rules. And that just went forward to a draft proposal today, which I’m excited to see how the community engages with. And we expected to see a proposal to hand over the treasury from the multisig to the DAO. So that’s a formal proposal, basically petitioning the multisig key holders. 

But there were others we didn’t really expect. For instance, there was a subtlety in the way the airdrop was calculated for the multiplier, where the way the airdrop worked is if the account that was receiving the airdrop had a primary ENS name set, it got the multiplier. But other people pointed out that some people had a name owned by one account that was another account’s primary ENS name — I know that was a common security practice. And so, those people were excluded from the multiplier, despite being heavily involved with ENS. 

So there’s a proposal going through at the moment, which looks quite popular, to use about $200,000 worth of DAO tokens to send an additional airdrop for the multiplier to those users — which was about 2,000 users that were affected out of 137,000 that were airdropped to. 

And then there’s a few other bits and pieces. There’s a draft or a temp check for whether the DAO should take over the bug bounty for ENS — which would seem to make sense going forward. There is a number of people who have accidentally sent funds to the token contracts and would like them back basically. And I guess some of these are a bit mundane, but it’s going to be an interesting practice of how the DAO gears up and gets started, and so on. 

And what I’m excited about next, is how we establish working groups, and give those working groups their own budget, so that you don’t need the entire DAO’s approval to fund 5 ETH grant for building some proof-of-concept software or something like that, because it’s just not manageable to run everything through the whole DAO.

CR: Interesting. And so what will your role be?

NJ: I continue to run True Names, which is the development company that’s been building the majority of the ENS’s infrastructure, and at some point, we’ll be asking the DAO for a budget for continuing operations. But that continues to be my main day stay—focus, but also dipping my fingers in governance and trying to make sure things move smoothly through the process, and that people can be heard, and that people can get proposals to votes, and that they get executed, and so on. 

And I’d like to see that as decentralized as possible, but I also know that having put the process together and probably being the person most familiar with how it’s going to function in practice, although all that will evolve as we try it out. So I guess governanceship for a while, and just trying to keep things moving.

CR: Do you foresee your development company will be the only organization building ENS going forward? Or now that it’s a DAO, could another development company even maybe compete against your company or ENS work?

NJ: Yeah, I certainly hope we won’t be the only ones. I’d like to think that as long as we’re doing a good job, it’d be more productive for other people and other companies to build complementary things rather than competing things. But if we did a poor job, I would certainly hope somebody else would step up and say, I can do better. And I hope regardless, that other people will step up and say, ‘look, if you give us a budget, we can build this awesome thing that just isn’t within the current scope.’

CR: So interesting. I love these emerging business models from DAOs. I know it’s only been three weeks since the airdrop, but are there any lessons or initial takeaways that you’re seeing from adding a token to ENS?

NJ: I guess there has been this predictable noise around people who are more interested in speculating on things than engaging with them. But I’ve been encouraged by the amount of pushback on that, the people who are focusing on the actual importance of ENS as an ecosystem permissive. 

Our Chief of Operations, Brantley tweeted something that’s become an internet meme. He said, “You weren’t airdropped free money, you were airdropped responsibility,” which I thought was hilarious, and also immediately resonated with people, and people were putting out fake price charts with ENS holding steady, like ENS still equals one responsibility, and so forth. And I was joking that I think that one tweet has done more to educate people about the purpose of the ENS DAO than like all their other efforts put together. 

In terms of doing stuff with the token, I’ve been really encouraged by the high delegation rates. We built the claim flow to encourage people delegating, but I think we’ve had good engagement in terms of people talking about who they should delegate to, and what they expect from their delegates, and so on and so forth. Going forward, what happens with it remains to be seen, and it depends a little on what the DAO decides to do with the token, if anything, beyond governance.

CR: I posted on Twitter for people to give me questions, and there was a question ‘will there be staking for the token?’ But I would imagine it’s too early to say?

NJ: Yeah, I don’t have any concrete thoughts around that. I think it’s important to bear in mind what ENS is for and what the DAO is for, and staking is a mechanism that achieves some goal, so we should have some clear goal as to why we would want people to stake tokens. One of the more interesting proposals I’ve seen pop up as a temp-check for changing the voting mechanism so that it recognizes how long you’ve held votes for so that it would encourage people to keep their ENS to vote with and therefore let them have more of a voice if they’re a long term user of ENS, rather than somebody who just bought it to vote on one particular thing.

ENS as Digital Identity

CR: Stepping back a little bit, what’s the long—term vision for ENS?

NJ: I mean, the broadest possible version is that we want to be the naming system for every digital resource in the world. That’s a very broad vision. We’re building on top of and embracing existing technologies like DNS. We’re bringing our own decentralized flair to it and improving upon it. And we’re intending to make these things more accessible and more democratized and more decentralized in a way that makes sure the maximum number of people can use it in the most secure way possible. So it’s not just naming Ethereum addresses — you can already name other cryptocurrencies, and it’s not just resolving content like IPFS sites — which you can already do, it’s also serving as your decentralized identity, giving you a way to identify yourself across multiple platforms. We have this ongoing effort called Sign-In With Ethereum, which lets you use your Ethereum account as your identity on a site, and that integrates well with ENS in terms of showing a name and a profile picture, and so forth.

CR: So the vision includes naming any blockchain address out there, not just Ethereum addresses.

NJ: Yeah, we already support that with over 100 of the most popular blockchains.

CR: And tied to that is an effort to have ENS become your digital identity, so hopefully, replacing sign-in with Google or Facebook, and in the future, you would sign in with your blockchain address?

NJ: Exactly that. And unlike those systems, you actually control your identity through your own cryptographic keys rather than relying on a third-party service provider.

CR: How do you see this UX evolving? Do you think people will have their own digital profile where you have all your assets, and your NFTs, and maybe your history of interacting with different DApps? How will a blockchain user’s own profile look like?

NJ: We’ve released some pictures of the redesign of our manager a little while ago which incorporates a lot of that actually, and it’s very much like what you say — it’s structured around a user’s profile and the ability to update that and make that their own and manage it there. And it doesn’t quite have the whole history thing and so on yet, but just that is the core of what we’re looking at building for sure.

CR: I would assume the avatar is an NFT that is in the user’s wallet, right?

NJ: Yes. So you can use any image you want, but we were particularly interested in using NFTs. You can set an NFT as your avatar now, but as part of the redesign, we’ll be making that an awful lot easier.

CR: Do you think this new user profile can integrate with Web 2.0 in the future? Can I have my Twitter login be through ENS? And then the profile picture will be my avatar? Can it integrate that seamlessly? 

NJ: That’s exactly what we’d like to see, and it’s a large part of what Sign-In With Ethereum is building around. As part of that, they’re building what’s called an OAuth gateway, so basically, the same sort of authentication provider that’s used for Google and Facebook and GitHub sign-in, which means that you’ll be able to deploy one of these and then just update your existing Web 2.0 app to use this particular gateway to sign in and integrate with all the existing protocols that use it without having to understand Web 3.0 natively.

CR: Oh, that’d be so exciting. So what are the implications of that? Continuing to use Twitter as an example, maybe sending crypto tips to other Twitter users?

NJ: Yeah. And just the idea of having a unified profile that is the same across all the services — so you set it up once and you identify yourself across them, and people who want to follow you can see what services you’re using. And for that matter, going the other way, Twitter could choose to offer profiles to their users automatically. So they could say your existing Twitter login is now usable as in ENS profile, it’s your username.twitter.com, and you can use that in any of these other services, and it automatically gets your Twitter avatar and everything.

CR: I’m so very excited for this to happen, I think that once you start using DeFi and Web 3.0, and just using your MetaMask or whatever Ethereum wallet to login to all these different DApps, the whole Web 2.0 login process really sucks. Having to give away your email and all your information and have that be compromised and your passwords be compromised, forgetting your password and having to recite it every time — it would be so much easier if we could all just log in with an Ethereum wallet or blockchain wallet.

NJ: Absolutely.

Integrating ENS with Web 2.0

CR: What about internet domains, website names — how does ENS work with that?

NJ: I guess there’s two different aspects to this. One is, with ENS today, you can host sites on IPFS and other content stores, and you point to them from your ENS name. If you’re using a browser that has MetaMask in it, for instance, you can just type in the doteth name, the ENS name with a slash after it and it will load it in your web browser just like any other DNS domain would And if you’re not using that, or if you want to link the words everywhere, you can just add dotlink or dotlambo to the end of the ENS name, and it will resolve via a couple of gateway services that provide this to anyone in the world. 

Going the other way around, ENS also integrates all of the DNS namespaces into it. So with the example I gave earlier of twitter.com, Twitter could claim twitter.com inside ENS and that would give them an ENS name of twitter.com, not twitter.eth, but twitter.com. And so they could then set that up with a wallet address, but more interestingly, they could host a website on it, and they could create subdomains for all the users. 

So each user can have their twitter.com address, or whatever other name they want to use. So we integrate all of these existing DNS namespaces into ENS because we believe that the best way to build the system of the future is to start by embracing and improving upon the existing naming services.

CR: So right now, any Web 2.0 domain name owner can go to ENS and set up their dotcom or dotorg or dotwhatever on ENS and have their existing domain name linked to a blockchain account?

NJ: That’s right, the vast majority of them. We rely on something called DNSSEC, and there are a few top-level domains, particularly country-code ones, that haven’t rolled it out yet. But for something like 97% to98% of domains, you can do that today.

CR: So I could go and use TheDefiant.io and search that in ENS and link that? I think I already have TheDefiant.eth email address.

NJ: You can have the best of both worlds.

CR: Oh, that’s so cool. When that’s linked in practice, what can you do with that?

NJ: Basically, you can do all the same things that you can do with native doteth names. You can point them at IPFS content. You can point them at your wallets. You can use contracts to issue subdomains so that you can give your users automatic subdomains of them. Or you can just manually issue your own for whatever purpose you have. 

Pretty much the one thing you can’t do that you can do with doteth names, is that with a doteth name, you can guarantee the ownership of names and subdomains. So if you want to issue subdomains of TheDefiant.eth to people, you can set things up so that even you can’t revoke or change them, which provides the users with a sense of security that their name belongs to them. And that’s one thing you can’t do with DNS names, because ultimately, it depends on the external DNS registrar and who owns the DNS name. But for every other application of ENS, you can also set up a profile on TheDefiant.io, and when you log in, it shows up as your profile, when you vote on something and snapshot it shows up as your name there, and so forth.

CR: So potentially, I could give all The Defiant subscribers their specific The Defiant ENS URL name, and that would just be there as a profile on TheDefiant.io?

NJ: Exactly. 

CR: And they could own that forever? And maybe I could attach specific functions and attributes to each profile, like maybe paying subscribers will get a specific name and they’ll access a paid content, and the website would recognize those names to allow them access and so on?

NJ: Yeah, absolutely.

CR: I was looking at [ENS director of operations]Brantley Milligan’s Twitter, and there was one tweet that I think caught a lot of people’s attention I wanted to ask about. He said: “I hope everyone understands that most of these crypto domain suffixes aren’t recognizing the global namespace and will be given to different people in the future on DNS and ENS. .ETH is already reserved and so won’t be, but everything else — .sol, .crypto, etc — will be.” Can you explain that?

NJ: So when we think of dotted domains, we’re mostly thinking about the existing DNS namespace — dotcom, dotnet, dotorg, but also the more than one—thousand new top-level domains. And those are all issued and administered by ICANN — the Internet Corporation for Assigned Names and Numbers. And the reason the ones that exist today exist is because a number of years ago they held an auction where bidders could bid for the right to register a new top-level domain, and they issued them to them. And it is practically certain that in the next couple of years, they’ll hold another one of these rounds.

These names are the de facto names of the internet — they’re recognized in every browser, every application in the US. And so, all of these other blockchain naming systems that are coming out with dozens of different top-level domains, sometimes many inside a single system, are going to have to deal with the fact there will at some point exist another thing by the same name that will not point to the same resource. So, particularly when it comes to things like .crypto, it’s going to be a very popular name for organizations to bid on for the internet — given the rise of cryptocurrency in the time since the last auction, it would now be a hot property. And there’s certainly no certainty that the owner of .crypto in a particular decentralized naming system will end up successfully bidding for the right to it on ICANN options.

.eth isn’t something of a fortunate position in that ETH is the three-letter country code for Ethiopia — which was more or less by accident —but the result is that there’s no plans to allocate those to any country or anyone else in the near or distant future. And we’ve also done our best to work well with the internet community to say, ‘look, we had to have some namespace, we’ve picked this, we’re trying to be good stewards of it, and we’re not trying to stomp all over the global namespace. In fact, we’re trying to do the reverse, we’re trying to integrate with it and use it, and make it more functional for people. So I think we’re in a uniquely good position when it comes to that.

CR: Okay, this is a bit confusing. So, while you were able to integrate all of the existing Web 2.0 names on ENS to link it to your addresses, and have regular DNS names linked to blockchain addresses, existing Web 3.0 names like dotsol and dotcrypto it doesn’t happen the other way around? While they exist on Web 3.0, it’s not certain that they’ll be able to exist on Web 2.0 because there will be another auction of these names? And it’s not for sure that if you do own the dotcrypto name on ENS? Do you own it?

NJ: So ENS is committed to issuing doteth names only, and in all other respects following the global DNS route. So if I can issue .crypto to someone, then that will become a top-level domain inside ENS administered by the same people who .crypto on the wider internet, and not by whoever else might have created a blockchain naming system that claims to have .crypto.

CR: Okay. So what does this mean for owners of .crypto, for example, today?

NJ: I mean, it means that they need to bear in mind that in the fairly near future, there are going to be potentially two competing things that both claim to have the same name, but they only operate on distinct services, and it’s going to lead to a lot of confusion. Potentially, it can lead to lost funds and so on when somebody thinks they’re using the same system as .crypto, but they’re actually using a different one. 

It’s dangerous to have that collision, and it’s also fairly foreseeable because there’s no plausible way that ICANN is going to go ‘somebody else has issued a bunch of domains on their own system called dotwhatever, we’re just not going to let anybody take dotwhatever’ — that creates a perverse incentive for people to basically try and reserve things by using them, and I think it’s something ICANN will try and discourage. So it’s overwhelmingly likely that at least some of these names will have more than one owner, one in DNS, and one in their own proprietary naming system.

A Fortunate Coincidence

CR: How are you able to have this special treatment for doteth?

NJ: More or less by coincidence, it is a three-letter country code and at the moment the only country codes that are used by many countries are two-letter country codes — dotuk, dotch, etc, dotnz — so those three little ones are reserved but not likely to be issued. And we would love to work with Ethiopia to come to some more explicit arrangement over what to do with doteth. But the short to medium-term result is that these names are set aside, and therefore there’s no real chance of a collision.

CR: Oh, interesting. Wow, that was very lucky.

NJ: It was, yes. I think the best path for a naming system is to try and minimize these conflicts and collisions. And in some cases, you may be stuck between a rock and a hard place. L I don’t expect people not to innovate because ICANN owns everything, but I also think that going ahead and issuing dozen or so different top-level domains on popular words is very much the opposite and is starting a war that you really don’t want to have with one or the internet juggernauts.

CR: On another topic, you mentioned earlier in the conversation that gas fees on Ethereum right now are many times over the actual registration fee of ENS. So what are the plans there, are you looking at Layer 2?

NJ: Yes, we have some plans around Layer 2 which were started in some meetups and some contributions from Vitalik and have since been expanded on and extended. The basic idea is that we want to allow delegating any name to the L2 of your choice — rather than ENS picking one Layer 2 that is the L2 for ENS and everyone must use it, it’ll be possible to take any second-level name like TheDefiant.eth, and say all of ‘the records for this and all of the subdomains of this are managed on Optimism or Arbitrum or whatever network suits you,’ and then you can make the updates there much more affordably. 

In the longer term, we’re going to look at ways to move doteth itself, so the registering of new second-level names to L2s. But in the short—term, we’re focused on making it easier to manage things and create subdomains and so forth, and we expect that a lot of users will be getting subdomains provided by the wallet provider or third parties through L2s, rather than registering their own second-level domain themselves.

CR: Related to that, what are the very next things that we can expect from ENS? What’s in development right now that you’re excited to see launch in the near future?

NJ: Naturally, there’s this L2 work, which we’re hoping to have out in the very near future for at least private deployments, and then for probably Optimism first. We’ve got our big rewrite of the manager which is going to improve the UX massively and provide new functionality. And we also have a big suite of smart contract improvements — and I detailed all the details of this on the ENS discussion board just the other day — which is going to allow something called the Name Wrapper, which makes it easier to issue subdomains and so on with restricted permissions, like I talked about earlier. And a bunch of changes to other core contracts that improve usability that make it easier say to [inaudible 48:37] primary name at the same time as you register a name, that reduce the gas overhead on these things as well, and just generally a whole bunch of things plug together to improve the UX of registering and managing names to ENS.

CR: When do you think we’ll see this future of universal Web 3.0 logins everywhere?

NJ: I hope we’ll start to see the first signs of it in the next two or three months as Sign-In With Ethereum is rapidly approaching maturity and sites will start adopting it and using it. And I’ve heard some promising murmurs that we may see some large web 2.0 companies start to adopt and deploy it, which would be amazing and will do a great deal to onboard a whole lot of new people to us. As with anything else as with ENS itself, the path to 100% adoption is naturally going to be a bit of an uphill battle. But I think we’re going to see an amazing start, and I think that’s going to create a bit of a snowball effect as it becomes more prominent and easier to implement and more efforts are directed in that direction.

CR: Awesome, so exciting. That reminded me of this tweet by the Discord COO hinting that there might be an Ethereum login and then the whole backlash that happened, curious to hear your thoughts on that backlash?

NJ: I was really encouraged by the initial tweet and I think we were in the process of reaching out and saying, ‘hey, check out Sign-In With Ethereum rather than creating another proprietary version.’ And the backlash was disappointing, it’s become very fashionable to hate crypto if you’re in the right circles, and that comes now from a self-reinforcing view and it’s almost like an in-group indicator — like you must have crypto in order to participate in this conversation and trying to say the opposite just gets you ostracized. And it’s a shame because I think there are legitimate things to criticize about crypto communities and about cryptocurrency and so on, but I also think they have a lot to offer and it’s disappointing to see people get sucked into this vortex of ‘I don’t like this thing, therefore, all of it is evil and pointless.’

CR: I agree, it was really disappointing, I wish more people could see it as a tool of empowerment — taking control of your identity like we were talking about. And then to wrap up, and this is also a question from Twitter that I really like, ‘what is the most misunderstood or underestimated thing about ENS?’

NJ: I think probably the most misunderstood thing is that people think that ENS names are only doteth, when in actual fact they could be any DNS name as well. And also that they only name wallets, when in actual fact you can use them for IPFS content, you can use them to profile information and all user discovery and digital identity and so forth.

CR: Awesome. Hopefully we cleared that up in this podcast, and more people will understand about ENS.

Nick, this was amazing. Thank you so much for joining me, really excited about your vision and future for Web 3.0 and ENS.

NJ: Was my pleasure. Thank you.

The Defiant is an information platform focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Spread the word and share!