- Ethereum Name Service (ENS) token surges by 64% after Vitalik Buterin praises its importance and calls for accessibility on layer-2 networks.
- Buterin’s proposal suggests a 3% tax on ENS domain names to prevent hoarding, aiming for wider adoption and decentralized ownership.
The Ethereum Name Service (ENS) governance token witnessed a 64% surge in its value on January 3, driven by Ethereum co-founder Vitalik Buterin’s endorsement on X(formerly known as Twitter). In a direct and impactful statement, Buterin hailed ENS as “super important” and emphasized the critical need to maintain accessibility and affordability for all Ethereum network users, particularly those utilizing layer-2 solutions.
All L2s should be working on (trustless, merkle-proof-based) CCIP resolvers, so that we can have ENS subdomains registerable, updateable and readable directly on L2s.
ENS is super-important, it needs to be affordable!https://t.co/Ice1lTttFE
— vitalik.eth (@VitalikButerin) January 3, 2024
Buterin’s Call for Layer-2 Integration
Vitalik Buterin’s endorsement extended to a call for layer-2 networks like Optimism, Arbitrum, and Polygon to facilitate the registration of ENS addresses. He emphasized the role that these networks play in improving Ethereum’s long-term usefulness and scalability. To facilitate the direct registration, updates, and readability of ENS subdomains over layer-2 networks, Buterin suggested the deployment of trustless, Merkle-proof CCIP resolvers.
This endorsement by Buterin immediately impacted the ENS token’s price, lifting it from its yearly low of $8.50 to $13.98, marking its highest point since April. Although the price has since stabilized at $14.57, it’s clear that Buterin’s support injected renewed enthusiasm into the ENS ecosystem.
The Ethereum Name Service provides “.eth” domain names to cryptocurrency enthusiasts. These domain names make it easier for users to send and receive money within the Ethereum network by acting as more approachable substitutes for intricate alphanumeric wallet addresses.
On November 28, 2021, ENS reached its all-time high price of $74.25, which coincided with the start of a wider crypto market decline and the ensuing bear market that affected the whole sector. The significance of Buterin’s recent endorsement and its beneficial effect on ENS’s valuation are highlighted by this historical background.
Buterin’s Tax Proposal for ENS Domains
In September 2022, Vitalik Buterin proposed a 3% tax on ENS domain names, commonly referred to as the “Harberger” tax proposal. This suggestion was to encourage broader adoption and decentralized ownership of ENS addresses by discouraging early users from retaining domain names solely for profit maximization.
Unlike the traditional Harberger tax model, where asset owners set their asset’s value and pay a percentage in yearly taxes, Buterin proposed a demand-based recurring pricing model. In this model, annual domain fees would increase in correlation with a domain’s valuation, which other users would determine through open bids. This innovative approach aims to establish a fairer and more dynamic pricing mechanism aligned with ENS domain names’ actual demand and value.
Growing Ethereum Name Service (ENS) Ecosystem
Currently, there are approximately 2.1 million registered ENS domains, boasting participation from 800,000 unique users, as reported by Dune Analytics. This thriving ecosystem indicates the growing interest in and adoption of ENS domain names within the crypto community.
The trading volume for Ethereum Name Service has experienced a remarkable 674% surge, reaching $328 million in the last 24 hours. This substantial increase in trading activity signifies a heightened interest in the ENS market, with investors and users recognizing its potential and utility within the Ethereum ecosystem.
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