Just before the Ethereum Merge update, which is expected between Sept. 13 and 15, the Ethereum Name Service (ENS) has been highly trending and co-founder Vitalik Buterin has proposed ways to potentially restructure the fee plan for the system.
Citing figures from OpenSea, Buterin noted that about 40% of all five-letter word domains are for sale or have been sold on that platform alone at cheap prices.
In the blog post, Buterin argued, “The question worth asking is: is this really the best way to allocate domains? By selling off these domains so cheaply, ENS DAO is almost certainly gathering far less revenue than it could, which limits its ability to act to improve the ecosystem.”
‘Allocating ownership of domains in a better way’
Buterin suggested two ways to better price ownership of ENS domains. Firstly, he suggests somehow tying the level of market demand for the domain to the fees. And secondly, by offering a ‘strong time-bound ownership guarantee’ specific pre-payments could be calculated to unconditionally guarantee ownership for a minimum period of time.
Buterin finds, “Demand from external bids clearly provides some signal about how valuable a domain is (and therefore, to what extent an owner is excluding others by maintaining control over it). Hence, regardless of your views on what level of fees should be required to maintain a domain, I would argue that you should find some parameter choice for demand-based fees appealing.”
These solutions are suggested as the co-founder believes that “there is a fundamental tradeoff between [the] strength of property rights and fairness.” Relating the problem to Unstoppable Domains, Buterin noted, “Fortunately, ENS charges not just a one-time fee to register a domain, but also a recurring annual fee to maintain it. Not all decentralized domain name systems had the foresight to implement this; Unstoppable Domains did not, and even goes so far as to proudly advertise its preference for short-term consumer appeal over long-term sustainability.”
As per the Unstoppable Domains website, the platform charges no renewable fees as it provides universal domain names for websites and wallets.
Speculators and sales volume of ENS
In addition, Buterin highlighted how speculators impact the domain sale, stating, “speculators can easily make the market worse than a well-designed mechanism in the protocol that encourages domains to be directly available for sale at fair prices.”
With $1.61 million in trading volume over the past 24 hours, ENS is currently among the non-fungible token collections on DappRadar. The crypto statistics portal also showed that, slightly behind Axie Infinity, the number of traders had climbed by 5.86% over the previous day for ENS.
Meanwhile, data from NonFungible also revealed surging sales over the past week. The number of sales peaked at 26,610 on September 6 at $1.4 million in sales volume. Up until press time on September 9, the sales volume surpassed $333,000 with over 4200 sales. However, with 3000 primary sales and close to 1000 secondary sales, the figures are trending lower than the week’s average.
Additionally, the token has increased by about 6.5% over the past week due to the rapidly approaching Merge upgrade for Ethereum expected for next week. As per CoinGecko,
Ethereum is maintaining a 24-hour range of $1,607 and $1,714.
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