Ethereum Name Service is Going DAO, Coinbase Wants to Help Govern
Holders of ENS domains can claim governance tokens worth thousands of dollars, at any time between now and May 2022.
Blockworks exclusive art by axel rangel
key takeaways
- 137,000 Ethereum wallets are eligible to claim the airdrop
- Initial DAO members are asked to vote on an ‘ENS Constitution’ and select delegates
Ethereum Name Service, or ENS, calls itself “an open public utility that belongs to the community.” Today, that vision started coming into focus as the project is in the process of empowering a decentralized autonomous organization (DAO), starting with the widespread distribution of its ENS governance token.
Unlike many crypto/Web3 projects, ENS has received no venture capital funding, and fully 25% of the new tokens are earmarked for its users. Anyone who registered an .eth domain name prior to October 31 qualified to claim a variable number of ENS tokens — the precise figure depends on when and for how many years the domain was registered.
Some 137,000 individual wallet addresses are able to claim a median average of 180 tokens, ENS’ Director of Operations Brantly Millegan told Blockworks via Discord. The price of this newly-trading asset is naturally volatile, but at time of publication that average amount is valued at around $11,000.
What is an Ethereum name?
When you register a .com domain, you use a domain registrar, which updates the database of ICANN, the international organization that coordinates internet resources, such as top-level domains (TLDs). When you go to some address in your web browser, the domain name service (DNS) translates the name into an IP address that points to a server storing the website data.
ENS is partly the same: decentralized websites can be served from blockchain-based decentralized storage service IPFS and accessed via an ENS name, with a browser that supports it. (As an aside, ICANN gives .eth TLD rights to the Ethiopian government, so we may see some negotiations there in the future!) But that’s not actually the main point, according to Millegan.
“The primary use case for an ENS name is that it’s your portable cross-platform web3 username and profile…set it up right, and you’ll see it in dApps across web3,” he said.
You’ve likely seen them on Twitter profiles — especially those of Ethereum’s proponents, like Vitalik Buterin (Vitalik.eth) — adopting an ENS name is en vogue.
As the owner of an .eth domain, you have an NFT on the Ethereum mainnet that is recognized by dApps, much as your Google or Facebook account is across Web2 apps today. With ENS, a name can stand in for a clunky wallet address, allowing owners to receive a variety of digital assets, such as BTC and ETH, directly via the domain name.
You can also opt to register existing domains — say, example.com — using DNS within ENS, to enable much of the same functionality.
Kick-starting governance
The point of a DAO governance token is to enable a community of people to own the underlying project that they themselves use. The first order of business for the ENS DAO is to vote on a Constitution. This simple set of five Articles, which was drafted by ENS founder and lead developer Nick Johnson, outlines the basic principles that the founders hope the community will hew to. A supermajority vote of token holders over the coming days is required for passage.
“This is just the initial ENS Constitution,” explained Millegan. “There is an amendment provision, and we expect it to be changed and improved by the DAO going forward.”
The project is also accepting applications from potential delegates who will be empowered by the community to take on the responsibility of managing the ENS treasury and representing the interests of DAO members. Token holders can delegate their ENS stake to individual delegates whose judgment they value.
Coinbase wants a seat at the table
An interesting early development is that Coinbase Inc., as an organization, wants to be a delegate. That has raised some eyebrows, as the idea of a large public company being a delegate of an important piece of Web3 infrastructure cuts against the grain of decentralization.
ENS’ Millegan, however, welcomes the bid. “I think it’s great that Coinbase wants to get involved. ENS is the identity protocol of Web3, so we need a wide range of perspectives: average users, developers, companies, DAOs, etc. The key thing is Coinbase has no special insider advantage. They’re just like anyone else.”
Coinbase is currently in third place in the delegate vote count, right behind Millegan and Johnson, so they will very likely become an influential delegate. The process is open-ended, and ENS token holders can choose to delegate to any delegate, or to self-delegate and vote on governance issues directly.
Whatever you think about the Coinbase candidacy, the fact that they have signaled strong support is being interpreted as bullish for the ENS token price, which currently trades predominantly on Uniswap.
The token, now in 47,000 wallets and growing, peaked so far on its second day of trading at just shy of $68 per token, and stands at $62 at time of publication.
Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.
