Since 2023, ENS (Ethereum Name Service) has been on a roll, making big moves. In November 2023, they launched the EVM gateway showing they are pushing the envelope in Web3, which elevates interoperability between Layer 1 and Layer 2 chains. Soon after they even reached out to Unstoppable Domains with an open letter, sparking conversations across the crypto community regarding patent issues.

This week, they have teamed up with GoDaddy, making it super easy for folks to connect their domain names with the Ethereum blockchain. They took it a step further by getting someone to pen a song about it. Yes, you heard that right—a song! And not just any tune, but a catchy anthem that's been making the rounds and turning the blockchain buzz into a musical hit.

ENS (the asset) zoomed by 40% post this announcement and has retraced some of the gains since.

Let us try to understand why this integration with GoDaddy is important.

• Simplified process: Users can now easily associate their Ethereum addresses with GoDaddy domain names, enabling direct access to a wide range of Web3 applications, including wallets, block explorers, and NFT marketplaces, without the need for technical expertise or incurring additional fees

• User-Friendly Access to Web3: This partnership is positioned as a step forward in making Web3 more accessible and user-friendly, by leveraging DNS names for blockchain-based applications.

This is the first such integration that maps current Web2 websites to the Web3 world in a seamless way.

How do ENS and DNS differ?

The Domain Name System (DNS) is the most well-known example of a naming service. It translates user-friendly domain names (like "google.com") into IP addresses that computers use to identify each other on the network.

Here’s a simplified explanation of how it works:

1. User Request: When you type a web address into your browser, the request is sent to a DNS server

2. Lookup: The DNS server looks up the domain name in its database to find the corresponding IP address

3. Response: The DNS server responds to the request with the IP address of the web server hosting the website

4. Connection: Your browser uses this IP address to connect to the web server and load the website

In the blockchain ecosystem, naming services like ENS provide similar functionality by mapping readable names to blockchain addresses. These services enhance the user experience by simplifying interactions within the blockchain space.

Here’s how they typically work:

1.  Registration: Users register a human-readable name (like "mywallet.eth" for ENS) through the service’s platform, often involving a transaction on the blockchain

2.  Association: The registered name is associated with a blockchain wallet address or other resources (such as smart contracts or IPFS hashes)

3.  Usage: Instead of using complex addresses, users can send and receive crypto assets, access decentralized websites, or perform other transactions using the registered name

4.  Resolution: When a name is used, the naming service resolves it to the associated wallet address or resource, facilitating the intended transaction or access

Key differences between DNS and Web3 Name Services are summarized below

There are 4 key solutions competing in the Web3 Name Service space currently

• ENS (Ethereum Name Service): In December, ENS has registered 31.7k new names. ENS, the asset, has shown remarkable resilience and growth and is now trading at more than double its price on January 1 this year.

• Unstoppable Domains: Unlike ENS, Unstoppable Domains does not have a native token. However, the value of its domains, represented as NFTs on the blockchain, can vary significantly based on factors like name desirability, domain extension, and overall market interest in NFTs. They have seen a 61% surge in transaction activity in the past month.

• Lens Protocol: Lens Protocol, powered by Aave, is making waves in the Web3 social media scene with its innovative V2 upgrade and a $15 million fundraising to enhance social media on the blockchain. Additionally, the launch of "Momoka," an optimistic layer-3 solution, addresses scalability by reducing costs and speeding up transactions on the Polygon network. The protocol boasts an active community of more than 125K users.

• SNS (Solana Name Service): Just like ENS, the mission of Solana Name Service is to find a decentralized and affordable way to map domain names to on-chain data. The low gas fees, scalability, and high transaction speeds associated with Solana further contribute to the attractiveness of SNS domains.

The outlook for ENS and other Web3 name services is promising

• Layer 2 Integration: ENS is exploring expansion into Layer 2 solutions to enhance scalability and reduce transaction costs. This means that in the future, registering and managing ENS domains could become faster and cheaper, making the service more accessible to a wider audience

• User Experience and Adoption: Integrations like ENS are becoming essential for user-friendly experiences in Web3. They simplify the interaction by replacing complex wallet addresses with human-readable names

• Utility and Applications: Beyond serving as wallet identifiers, blockchain domains can be used to launch decentralized websites immune to censorship and to store digital assets like cryptocurrencies and NFTs

• Market Interest and Value: The increasing popularity of blockchain domains has caught the attention of not only individual investors and crypto enthusiasts but also significant brands that are acquiring domain names. This interest from established companies indicates a recognition of the potential value and applications within the Web3 domain

In essence, ENS and similar blockchain name services are at the forefront of simplifying the Web3 experience, offering a decentralized approach to identity and asset management, and integrating with existing internet services.

Now how can you, the investor, benefit?

Investing in Name Services is essentially investing in the story of Web3 adoption and growth. If you believe in the story, there are three possible ways to benefit

• Invest in rare or distinguished domain names: Domain listings are big digital opportunities since the 2000s with some domains going for millions. Similar appetite for Web3 domain names may benefit the early punt taker. If you can own a Web3 domain that you know for sure will be in demand – go for it.

• Invest in ENS type crypto assets: They are making their strides in the Web3 space and feel modestly valued compared to other fields like gaming and AI.

• Claim one domain name in each service to benefit from airdrops: ENS famously airdropped a good chuck of its tokens in November 2021 for existing users. It may be worthwhile to buy one domain name for each service. You may thank yourself in the future or, at worst, have a domain name you can actually use in Web3.