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ENS Tokens Explode After Vitalik's Endorsement - What's Driving the Rally?

2024-01-22 08:00:00

Vitalik Buterin enthusiastically endorsed Ethereum Name Service (ENS) on social media lately, highlighting it is "super-important".

The endorsement resulted in a 72% increase in the price of ENS tokens on January 3rd, reaching a peak of $26.95 on January 14th.

Image source: CoinEx market data for ENS tokens in the past month

What is ENS?

ENS, short for Ethereum Name Service, is a decentralized, open, and scalable naming system based on the Ethereum blockchain. The project aims to enhance the user experience in the blockchain space by mapping Ethereum addresses to easily memorable domain names, thereby promoting the development of a decentralized internet. Users can register Ethereum domain names through ENS and bind them to various cryptocurrency addresses, replacing complex address hashes with a more straightforward and user-friendly way of exchanging encrypted assets. For example, Ethereum founder Vitalik Buterin resolves his wallet address starting with 0x to vitalik.eth. ENS stands out in the blockchain field with its technological innovation and decentralized principles, becoming a crucial tool for managing digital identities and assets.

ENS has recently experienced a significant surge in token prices under the strong support of Vitalik Buterin. What factors have contributed to ENS's outstanding performance under Vitalik's support? Let's decipher the catalysts behind this upward trend.

Driving Force of Ethereum's Cancun-Deneb (Dencun) Upgrade

In 2024, Ethereum is gearing up for a highly anticipated upgrade: the Dencun upgrade. This upgrade is a crucial evolution within the Ethereum ecosystem, aiming to enhance network scalability, security, and usability. According to the official blog of the Ethereum Foundation, the upgrade is scheduled to activate on the Goerli testnet on January 17, 2024. Specifically, the Cancun upgrade is expected to lower gas fees on the Ethereum network, providing users with a more economical transaction experience and further encouraging participation in the Ethereum ecosystem.

Vitalik Buterin emphasizes that the Dencun upgrade may lead to an explosion of Layer 2 (L2). L2 technology is known for its low cost and high efficiency, and the Constantinople upgrade provides a better environment for its development. As part of the Ethereum ecosystem, ENS is likely to see more applications on L2, making the Dencun upgrade a significant opportunity for ENS.

Integration of ENS with Layer-2 Technology

Last year, ENS announced its plan to expand into the Layer 2 ecosystem, achieving interoperability with ENS domain names. Simultaneously, in November of the same year, ENS launched the EVM Gateway, the foundation of the next-generation L2 resolver. This gateway allows L1 smart contracts to efficiently and securely retrieve and verify states from other EVM chains (L2), aiming to enhance interoperability between L1 and L2 chains. The low cost and high efficiency of Layer 2 technology encourage more developers and users to participate in ENS, further improving the efficiency and availability of ENS domain services.

According to the ENS roadmap displayed on their official website, the ENS team is currently working on optimizations such as Gasless DNS Names (using ENS DNS names through CCIP-Read without gas) and L2 research. In the future, the ENS team plans to explore ways ENS interacts with the Layer 2 ecosystem, Sign-in With Ethereum, Favourites, and dark mode for the ENS manager.

Growth Potential

From market data, ENS's performance in December 2023 was particularly noteworthy. In that month, ENS registered 23.4 thousand new ".eth" names, bringing the total registration count to over 2.1 million. According to statistics from Dune Analytics, ENS's total domain registrations have exceeded 2.1 million to date.

According to Glassnode, it indicates that the number of Ethereum non-zero addresses has surpassed 100 million, with ENS registrations accounting for only 2%. This suggests that ENS still has significant room for development.

Identity Consensus

According to incomplete statistics from the ENS official website, there are currently over 500 applications integrated with ENS, including more than 60 wallets led by MetaMask and Coinbase Wallet, mainstream applications such as OpenSea, Uniswap, 1inch, and others, as well as Etherscan. In recent years, ENS has gained widespread popularity, almost becoming a symbol of user identity in the crypto community, with strong consensus. ENS domain names are considered a business card in the crypto world, representing individuals and companies. With the growth of the crypto market, ENS's adoption is likely to experience a substantial leap, becoming a focal point for investors seeking decentralization.

ENS Has Room to Grow,It’s a Crucial Factor for Ethereum's Future

With the support of Vitalik Buterin, ENS tokens have once again attracted market attention. The catalysts behind this surge include the Constantinople upgrade, integration with L2 technology, growth potential, and identity consensus. The integration with L2 technology, in particular, represents a crucial turning point for ENS's future development. The strategic collaboration with L2 technology demonstrates ENS's robust growth potential, not only driving its performance in the market but also helping ENS maintain competitiveness in the ever-changing crypto market. As a standout project in the Ethereum ecosystem, expectations are high for ENS to continue leveraging its potential in the crypto space, bringing forth more innovation and opportunities to the entire cryptocurrency market.

*The above content does not constitute investment advice.

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