ENS Labs has introduced ENSv2, a major 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 core functions from the Ethereum mainnet to a Layer 2 chain, according to ENS Labs. This transition is anticipated to lead to decreased transaction fees for users.
The specific stack or Layer 2 network for the migration has not been chosen by ENS Labs yet. Once determined, this network will serve as the new platform for user interactions with ENS.
Additionally, the upgrade includes a new hierarchical registry system for improved management of .eth domain names. This system will offer advanced capabilities for handling subdomains and setting up resolvers.
Nick Johnson, the lead developer and founder of ENS Labs, stated, “ENSv2 will introduce a hierarchical registry system for .eth name management. Nameholders will have access to a unique name registry, allowing them to manage subdomains and configure resolvers.”
ENS primarily provides the .eth name service, which simplifies lengthy Ethereum addresses. Over two million .eth names have been registered on the mainnet to date.
The ENSv2 upgrade could boost multi-chain interoperability, expanding the usefulness 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 key driver for the ENS upgrade.
Eskender Abebe, head of product and strategy at ENS Labs, commented, “The release of EIP4844 has significantly reduced costs and improved scalability for Layer 2 networks based on Ethereum, which was a major factor in the ENS proposal.”
ENS is among several Layer 1 protocols planning to transition to Layer 2 networks after the Dencun upgrade, which lowered fees throughout the Ethereum ecosystem.
The migration to Layer 2 will occur in stages to minimize disruptions. Initial phases will concentrate on modifications 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.
To support the development and implementation of ENSv2, ENS Labs is seeking additional funding from the ENS DAO. The proposal includes a request for a yearly budget increase of 4 million USDC, primarily to cover hiring more developers and infrastructure expenses.
Following the announcement, ENS experienced a more than 3% increase within 2 hours; however, the token was trading 5% lower at the time of writing.
ENS Labs has presented the proposal to the ENS DAO and is presently assessing Layer 2 networks for the migration.