ENS Labs has unveiled ENSv2, a significant upgrade to the Ethereum Name Service that involves moving to a Layer 2 network. The goal of ENSv2 is to enhance scalability and reduce gas fees by transferring essential functions from the Ethereum mainnet to a Layer 2 chain. This transition is expected to lead to decreased transaction costs for users.
The specific stack or Layer 2 network for the migration has yet to be determined by ENS Labs. Once chosen, this network will serve as the new platform for user interactions with ENS. Additionally, the upgrade will introduce a new hierarchical registry system for improved management of .eth domain names, offering users enhanced capabilities for handling subdomains and configuring resolvers.
Nick Johnson, the lead developer and founder of ENS Labs, stated, “ENSv2 will bring forth a hierarchical registry system for .eth name management, granting nameholders access to a distinct name registry where they can manage subdomains and configure resolvers.” ENS primarily provides the .eth name service, which simplifies lengthy Ethereum addresses, with over two million .eth names already registered on the mainnet.
The ENSv2 upgrade has the potential to enhance multi-chain interoperability, expanding the utility and reach of ENS across various blockchain ecosystems. ENS Labs pointed to the release of Ethereum Improvement Proposal (EIP) 4844, which made Layer 2 networks more cost-effective through blob transactions, as a significant factor driving the ENS upgrade.
Eskender Abebe, head of product and strategy at ENS Labs, highlighted, “The release of EIP4844 has significantly reduced the cost and improved scalability of Layer 2 networks based on Ethereum, which played a crucial role in the proposal for ENS.” Following the Dencun upgrade that reduced fees across the Ethereum ecosystem, ENS is among several Layer 1 protocols planning to migrate to Layer 2 networks.
The migration to Layer 2 will be executed in phases to minimize disruptions, initially focusing on changes to the resolution process to ensure a seamless transition. Users will have the option to transfer their names between the Layer 2 network and the Ethereum mainnet, selecting the ideal balance between cost, security, and functionality.
ENS Labs is seeking additional funding from the ENS DAO to support the development and implementation of ENSv2, proposing an annual budget increase of 4 million USDC primarily for hiring more developers and covering infrastructure costs. After the announcement, ENS experienced a 3% increase within two hours, but the token was trading 5% lower at the time of writing.
The proposal for the migration to Layer 2 networks has been submitted to the ENS DAO by ENS Labs, who are currently evaluating various Layer 2 options. In a related development, ENS has partnered with GoDaddy to connect domain names with crypto wallets.