In a recent community call, the team behind the Ethereum Name Service (ENS) revealed plans to adopt a Layer-2 platform in light of increasing gas fees on the mainnet. In response to this planned move, ENS prices climbed roughly 10%, floating higher with increasing trading volumes, evident in the daily chart.
The Ethereum Name Service
ENS is a decentralized naming system on Ethereum. It provides an easy-to-use and human-readable naming system that allows users to rename mainnet addresses, smart contracts, and other resources. This system permits users to create and employ memorable domain names instead of complicated addresses.
The team behind the ENS believes their solution makes it easier for everyone to interact with the pioneer smart contracting platform, and is handy, especially in sending and receiving transactions. In this arrangement, the platform maps a user’s domain, the human-readable address, with their original address or deployed smart contract on the Ethereum mainnet.
However, since ENS maps all addresses on the Ethereum mainnet, transaction fees apply, a concern considering the fluctuating gas fees on Ethereum. In Ethereum, all transactions, including transfers or smart contract deployment, must be paid for. The amount paid depends on the level of demand in the network, and the value tends to be volatile. Over the past few weeks, Ethereum gas fees have been rising.
Fluctuating Gas Fees
According to YCharts data on June 30, the average gas fee for sending a transaction stood at $34.62, down from $42.77 recorded on June 5. As of May 12, it stood at $77.88. The only time gas fees on Ethereum fell was on June 25, when it was at $16.58. At this level, the gas fee is relatively high compared to other networks. For example, the average transaction fee in Bitcoin was $2.383 on June 30, down from $9.018 on May 12.
Meanwhile, in layer-2 platforms, transaction fees and smart contract deployment costs are relatively lower, according to trackers. As an illustration, gas fees on Optimism, a popular Ethereum layer-2, is $0.03 as of July 2.
Considering the high gas fees on Ethereum, ENS, via two improvement proposals, ENSIP-10 and EIP-3668, will further expand to a Layer-2 platform as a relief for users sensitive to high gas fees on Ethereum as part enhancing interoperability. During the call, the team said this would scale the platform and open the service to more people.
In response, ENS prices are up 10% on the last trading day, changing hands at $9.42 at the back of increasing trading volumes. Still, it remains to be seen whether prices will continue edging higher once the platform migrates to a Layer-2 platform. For now, ENS has registered over 2.73 million names owned by more than 697,000 entities.
Featured image from Canva, chart from TradingView