Ethereum Name Service: Nick Johnson’s Journey from Google to Ethereum, ENS Roadmap, and Cancel Culture

Today we are joined by the ma behind ENS – the Ethereum Name Service. Since we last chatted with Nick Johnson in 2021, he has made ENS a household name across the crypto industry and beyond. Nick and I get into the details behind the ENS roadmap, including the latest V3 announcement, what it was like for Nick to go from Google to the Ethereum Foundation to founding ENS, and the inside scoop on last year’s drama with Brantly and the current culture at ENS and so much more. But first, Nick is going to tell us the founding story of ENS and how he managed to go from Google to Ethereum to founding ENS.

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Listen to the Interview:

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Timestamps:

00:00 Intro
00:38 Founding Story
01:55 Early Days at the Ethereum Foundation
07:33 The Token Economics of ENS
15:26 The Importance of Setting Clear Rules and Principles in Building a Community
19:52 Exploring the Principle of ‘Code is Law’
24:07 ENS Name Wrapper
31:27 ENS Layer 2 Strategy
39:19 ENS v3 and A Sneak Peek at the Exciting Roadmap
45:10 Navigating the Competitive Landscape
50:08 ENS By The Numbers
52:44 Handling Controversy and Cancel Culture

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Now, onto the transcript:

7 Key Takeaways about ENS

ENS is a decentralized naming system built on the Ethereum blockchain. It aims to provide a better user experience in the cryptocurrency world and prevent domain name squatting.

ENS started off as a side project by Nick Johnson, who was working for the Ethereum Foundation at the time. The project eventually became his main focus and grew into a team.

ENS has developed a sustainable funding model by charging fees to prevent domain name squatting. These fees go into a wallet controlled by a DAO, and users who hold governance tokens can vote on how the fees are used.

ENS is focused on layer 2 supporters and has launched the ENS Name Wrapper, which allows owners of ENS names to limit what can be done with them. They are also working on making it easier to access IPFS sites through ENS names.

ENS has a clear constitution and principles that guide the community, including a focus on name ownership, using fees for regulating the system rather than profit, and integrating with DNS and the global ecosystem.

ENS is open source and encourages others to use their code to set up their own computer network. However, quality control can be an issue with these networks.

ENS has around 2.4 million active names and has developed a sustainable funding model. It has exceeded revenue expectations and is using the excess to fund grants and compensation for stewards.

Founding Story

Nick, tell us the founding story of ENS. What was it like going from Google to Ethereum and then ENS?

I started working for the Ethereum Foundation after a finance company offered me a job on Ethereum. I found Ethereum interesting and started writing code for it. Eventually, I was hired by the Ethereum Foundation, which meant taking a big risk by leaving my comfortable and well-paid job at Google for a less certain future as a contractor with less pay and no guarantees. But I was excited to work on this new platform. I began working on a project called ENS as a side project, but it eventually became my main project at the Ethereum Foundation. However, it got too big for me to handle alone.

Early Days at the Ethereum Foundation: Building a Decentralized Organization and Creating the ENS Team

Tell us a little bit about what it was like working inside the Ethereum Foundation in the early days.

It was an interesting experience, even though I felt like I was joining late to the party. The mainnet had been out for almost a year, and everyone else seemed like old-timers except the founders. The work was collaborative, and the teams were small, but we had ambitious goals. The organization was decentralized, so we had close communication with our team lead, but the rest of the organization felt a bit distant. This is a natural consequence of a distributed organization, where you work closely with the people you interact with daily, but don’t know much about those who are further away from you.

I started working on small projects part-time, but gradually moved to working on them full-time. When we realized that the work required more than just one person, we discussed the idea of creating individual teams and separating them from the main organization. The ENS team was chosen to be the first team to try this out.

They asked me to create a proposal for the ENS team as its own organization and to determine how many people we would need. After doing some calculations, I found we already had a few people who had been contributing for free, and I wanted to hire them at a good wage and make them the core of the new team.

I presented my figures to the team, but they thought it was too low. They gave us a million dollars to start, which allowed us to hire our first contributors and get started right away.

Do you have any advice for someone who wants to transition from working in big tech to working on a protocol but is unsure of where to start?

When you’re starting a project, it’s important to decide whether you want it to be a public good or a for-profit venture. Many people automatically assume that they have to go the for-profit route, but that’s not always the best option. If you want to build something that benefits everyone, being a public good might be a better choice, even though it can be harder to attract funding. If you do choose to be a public good, you need to think about where you can get funding and how you can sustain your project. This might involve getting grants or finding organizations that support your goals. While this path can be more difficult than selling products and getting investors, it can lead to a better outcome for everyone. For certain things, like basic infrastructure, it’s better to focus on serving users instead of maximizing profit.

The Token Economics of ENS

You actually chose not to take any investor money. You went the grant route and then you developed token economics around ENS. Can you talk to us a little bit about that?

I believe that things like ENS should be public goods, but they charge fees to prevent people from buying up all the names and reselling them at high prices. These fees are necessary to make sure that names remain available, and luckily they also provide a sustainable funding source. ENS started off being grant funded and only later introduced the fee system. Now they are self-sustaining and building up a treasury. They recently launched the ENS DAO by air-dropping governance tokens to users who have shown a long-term commitment to using ENS and have been involved since the beginning. They used a complicated scheme based on users’ commitment levels to prevent token farming.

Tell me a little bit more about the token economic model around the governance token. Like why a governance token, and then where do those fees go?

In simple terms, the governance token model is a way for people to vote on how a network is run and what happens to the fees collected. All the fees go into a wallet controlled by a DAO. This is all done through on-chain governance, meaning everything is done using the blockchain. One token equals one vote, and a majority is needed to pass a proposal. There is no need to complicate things, but there is a challenge in keeping high participation in governance. One way to encourage this is by staking or locking tokens, which will give a reward for showing commitment to governance. However, it is important to structure this system in a way that prevents people from gaming or automating it, and encourages people to make a conscious decision about who they delegate their vote.

I think a16z has a chunk of the tokens. Have they been active in voting? How did they get those tokens? Did they purchase them after that airdrop?

As far as I know, they must have bought the tokens because they didn’t receive any allocation from the team. They haven’t been involved in governing the organization. Coinbase has some of its own tokens and also acts as a delegate for others who delegated their tokens to them. They’ve been moderately active but have missed some votes. There are a few other entities like Coinbase in the DAO.

The Importance of Setting Clear Rules and Principles in Building a Community

Looking back, what would you say is the most surprising on how Ethereum has evolved since you joined seven years ago?

When you build a community, if you don’t set clear rules from the start, people will have different opinions on what the community should be. For example, the DAO attack on Ethereum showed that. To avoid this, it’s important to have a clear goal and rules when building a community. This helps to direct the community and make sure everyone is on the same page. When launching the ENS DAO, they had a short constitution that outlined the basic principles they believe in. This helped to keep the community on track and focused on what was important, while still allowing for debate on other topics.

And what are those principles that you set out?

Name ownership shall not be infringed.

Fees are an incentive mechanism for regulating the system, not for profit.

Income earned from fees is used to further ENS and other public goods.

ENS is a good global citizen and integrates with DNS and the rest of the global ecosystem.

Exploring the Principle of ‘Code is Law’ in Ethereum: Why it may Limit Progress and the Importance of Consensus

In the context of Ethereum, some people believed that “code is law,” meaning that the rules of the network should be determined solely by the code running on it. However, in the case of the DAO hack, if this belief had been followed, it could have limited Ethereum’s potential in the future. So, what are the principles that should guide the Ethereum network, and why would they not be controversial?

Code is law has always struck me as a sort of a poorly defined thing, and I think it also misunderstands what these systems are built on. The idea of “Code is Law” means that the rules of a computer program control how a system works.

However, this can be a misunderstanding because the most important thing is what people agree on. When people agree on a new version of a system, like Ethereum, it becomes the “true” version because everyone believes it’s the right thing to do. When there are disagreements, people can “fork” and create a new version of the system that follows the rules they want. This can be a good way to make decisions because it allows people to choose the system they prefer.

Things can get complicated with DeFi because other systems, like Chainlink, can affect which version of a system is considered the real one. The idea of “Code is Law” can also limit progress because it suggests that we should never improve or upgrade a system. Instead, it’s better to have people independently decide what version of the system they want to use and to make changes that enough people want to use. This is why hard forks are a good way to upgrade a system, rather than soft forks that can force changes on people who don’t agree with them.

Why are you passionate about decentralized naming? Why did you choose this to be such a large chunk of your life?

I’ve always been interested in internet infrastructure and naming systems like DNS. Building the foundational structures that support other technologies is what excites me. When I learned about ENS, I saw the need for a better user experience in the cryptocurrency world and I had the skills to make a difference. I’ve built many things that never took off, but ENS was different. It’s an important part of my life and I believe it’s genuinely useful and necessary.

ENS Name Wrapper: Enabling Trustless Systems and Addressing Squatting in Web3

Let’s talk a little bit about the roadmap. So the ENS name wrapper, can you explain what that is?

The ENS Name Wrapper is a recent upgrade to ENS, which allows owners of ENS names to limit what can be done with them. This is important for non-custodial assets and immutability, which are the goals of web3. With the Name Wrapper, you can create subdomains that cannot be modified or deleted, and then sell or give them away to others, who can use them without worrying about being cheated. The Name Wrapper also has expiration dates and other features that allow you to build trustless systems on top of ENS. This means that people can rely on your resources without having to worry about the details of a smart contract or the ethical behavior of a DAO.

How are you addressing the squatter problem?

Basically, there are two types of buying and selling domain names: squatting and speculation. Squatting is buying up names that obviously belong to someone else, like buying Google.eth or Microsoft.eth, while speculation is buying up names that could belong to many people, like Teagan.eth or Nick.eth.

Squatting is bad because it makes people pay for something that rightfully belongs to them, but speculation is inevitable and can be managed. The goal is to design a system that works best for the end users, not the speculators. For example, instead of a one-time fee for a domain name, there is an annual fee so that speculators have the incentive to sell the names to other users. The system is designed to benefit the end users who want to use the domain names for their own purposes, not those who just want to make money off them.

ENS Layer 2 Strategy: Enhancing Security and Interoperability

I wanna talk a little bit about your layer 2 strategy and the ability to resolve ENS off-chain, and what we expect from the protocol in 2023. What can we look forward to? And then what have you been doing with specific layer 2 integrations like Optimism and Coinbase’s Base?

In 2023, we’ve focused on layer 2 supporters. We launched the wrapper, which makes layer 2 connections more secure and reduces the need for trust. Our primary focus is CIP rail, which we launched in January of last year. This allows users to move their names and subdomains to any external system like layer 2 or an external database. No additional trust is needed beyond what the external system itself requires.

CIP rail is agnostic to which system it interfaces with, making it a powerful tool without adding extra trust assumptions. Coinbase has already used this protocol to launch “cb.id” and set up user profiles for every user on that platform. They are now moving everything to Base, which is based on the Optimism codebase. We’ll be building official integrations and officially supported repositories containing all the code needed to host your own name on something like Optimism or another layer 2. We’ll also be deploying gateways that you can use without having to deploy your own. We’re mostly focused on Optimism and Arbitrum, but also on zkSync, and plan to expand to other systems as we build more support.

And on the gateway piece is that open source where anyone can run a gateway, and then how do you control quality?

Everything we build is open source. I’m a big believer in letting all your dirty laundry hang out. And so we open source our repositories as soon as we start. We don’t hide anything, even if it’s not perfect yet. Some people worry about when is the right time to share the code, but we think it’s better to do it as soon as possible. Even if no one uses it, the best outcome is that people might help improve it for us.

Anyone can use our code to set up their own computer network. However, there might be issues with the quality of the service they provide, such as how often it’s available or how fast it is. But, because no important information is stored on these networks, it’s easy to switch to a different one if you need to.

Will it ever be possible to type in a .eth domain name in a browser and access a webpage?

We’re working on making it easier to access IPFS sites through ENS names. There are two parts to this: the protocol itself, which is fully decentralized, and the gateways that allow you to access it through your web browser.

Eth.link was the first gateway we launched, but it’s now run by CloudFlare. We also have a second gateway called eth.limo, which is run by a community group and has been more reliable. You can already access .eth names in certain browsers like Brave and Opera, but we’re working on getting it to work everywhere, which is a big challenge. It’s a priority for us, but it’s a medium-term goal.

I remember that CloudFlare announcement, I think it was back in 2021. So is that just the gateway? And tell us a little bit about how that happened. Did CloudFlare reach out to you?

CloudFlare launched an IPFS gateway for RPC services and an ENS gateway. They collaborated with us to integrate ENS support directly into their IPFS gateway. They built their own implementation using their infrastructure rather than our existing code base.

ENS v3 and DNS Integration: A Sneak Peek at the Exciting Roadmap Ahead

ENS v3, can you tell us a little bit about that?

We are launching a new version of the ENS manager app, called V3, which is a complete rewrite from the ground up. We want it to be a user-friendly interface for most users, while still providing advanced functionality for those who need it. It will be a top-notch web3 app that allows access to all ENS functionality, with the advanced features not being a barrier for most users. We are giving it a week to bake on mainnet before officially rolling it out. Feedback so far has been outstanding.

Any other exciting roadmap items you want to share?

We have been working on integrating DNS with ENS for three years. At first, it was only available for “.xyz” domains, and it was expensive to use. But now, we have made it possible to use any DNS top-level domain as your ENS name, without having to spend gas to claim it. This is thanks to a new feature called CIP read, which allows for gasless transactions. We are currently doing a bug bounty audit and plan to roll it out in the next month to six weeks.

How big is the ENS team now?

We are 17 full-timers and one part-timer.

How big on the community side?

It’s difficult to determine the level of interaction in the ENS community, but there are a few dozen regular contributors and a larger group of occasional contributors. There are also many technical contributors who help with the project. The community is also working on changing the way names are normalized to allow for more emojis and other names. There is a significant following on Twitter of people interested in ENS, both for speculative and practical purposes, though the exact size of the community is uncertain.

Tell us a little bit about the project’s building on top of ENS any notable applications and what would you say are like the killer apps?

There are some interesting new projects emerging that use ENS.

One example is dm3, a messaging protocol for wallet-to-wallet communication.

Another is 1w3.io, which is like an instant website builder for the decentralized web.

Nftychat.xyz is another wallet messaging solution built by a member of the ENS team.

Org three is building an organizational management system on top of ENS.

There’s also a pod-based hierarchy system called Orca.

Navigating the Competitive Landscape in Open Source Naming Services

What do you think about competition? How do you approach the competitive landscape?

Back in the day, there weren’t many people interested in building a naming service like ours. But now it seems like there’s a new one every week, with varying levels of commitment and legitimacy. Some are making interesting technical innovations, like Handshake, which is building its own chain to replace the DNS route. But they got into governance trouble when they accidentally allocated a name that was already taken. Another example is Nomen on Fuel, which is experimenting with different fee mechanisms for its service.

It’s nice to see new services with actual innovations, instead of just copying our code and logos. If someone does it better than us, that’s the point of open source – we can learn from them and improve ourselves.

Any advice you would have to maybe say an entrepreneur who’s thinking about open sourcing, but on the fence, not sure at what point they should do?

When deciding whether to make your project open source, it’s important to set clear guidelines early on for production code, release candidates, bug bounties, and contributions. You should also consider your revenue model and why people would give you money instead of forking the project. Open source models can still be sustainable, with options like hosting a version of the platform or offering paid support and SLAs.

ENS By The Numbers: Active Names, Revenue, and DAO Earnings

Let’s talk a little bit about numbers. How many ENS names are there? How many are active? And how much are the protocol and DAO earnings?

Currently, there are 2.4 million active ENS names. In the past 14 days, there have been around 15,000 renewals and almost 20,000 new registrations. The revenue is split between the funds that go into the contracts and the income is spread out over the registration period. In March, the revenue was over 1,000 ETH, worth about $1.7 million, and the income was about 1,600 ETH, worth about $2.6 million.

This year, the income exceeded the revenue for the first time, which shows how many people were registering names in the second half of last year. These numbers exceed what is needed for ENS operations, and the excess goes to the DAO. The DAO has a little over $4 million in grants per year, which is enough to cover a quarter of the revenue or income for the year. The DAO also spends money on other efforts, such as grants and compensation for stewards.

Handling Controversy in the ENS Community: The Brantly Situation and Thoughts on Cancel Culture

I wanna shift gears and chat a little bit about the drama that went down with Brantly. I know you had to make a difficult decision in letting him go. Can you talk to us a little bit about that thought process and how you approached that situation?

It was difficult to handle Brantly’s departure from the ENS team. Although he made great contributions to the project, his personal opinions created conflict with many people in the community. Many people, including the core team, community members, and integrated projects, expressed their dissatisfaction with working with Brantly. Ultimately, a decision had to be made regarding the type of community ENS wanted to build and who they were willing to lose. Despite the difficulty of the decision, Brantly was let go in order to respect the opinions of others in the community.

Any second thoughts on how you might have handled the situation differently?

If I could go back, I would have taken more time to make decisions and not rush things. This would have allowed for more thoughtful consideration and input from others. Making decisions too quickly created the perception that everything was impulsive and didn’t give people a chance to provide feedback beforehand. Even though the end result may have been the same, taking time to listen and talk would have made the process better.

What are your thoughts on cancel culture and this kind of mob-like behavior on the internet kind of overall in hindsight, having gone through that experience?

Web3 allows for voluntary participation and gives people the freedom to choose which systems and communities they want to be part of. If someone doesn’t like a particular community, they can withdraw their consent and participation. This can be seen as cancel culture, but it also allows people to have a say in the direction of a community and what it stands for. If people’s opinions aren’t heard, they may choose to leave the community, or the people they’re expressing their opinions about may leave. This process is similar to the hard fork process for blockchains, and the social consensus system is quite similar. However, problems can arise when people jump on a bandwagon without fully understanding the situation, and when the perception of a situation becomes more important than the actual facts.

Can you talk a little bit about the culture of ENS now? What kind of culture are you cultivating?

We want to create a culture that values openness and building systems that benefit everyone. This applies to both the systems we create and how we treat each other. We aim to make people’s lives better and prioritize maximizing benefits for others over maximizing revenue or registrations. This principle guides our company culture.

There have been a lot of new faces joining crypto and web3. What values do you think those people that are new to the space really need to understand about the core ethos of crypto?

The main idea is that self-custody and decentralized systems are at the core of building collaborative and open systems that don’t require trust in centralized third parties. However, building such systems is often difficult, and sometimes we have to rely on trusted parties. The guiding principle is volunteerism, where individuals should have the choice to participate in systems and decide how their data is used and interact with those systems, rather than being forced into them.

The last question is: How are you defiant?

I strongly believe in the way I build and run the system, and I’m not willing to compromise on it based on other people’s opinions. This has caused conflicts with others, but I think having conviction in your work is important.