Curiosity pays off! The “Ethereum Name Service” (ENS), which allocates .eth domains via smart contract, is becoming a Decentralised Autonomous Organisation (DAO). The governance tokens that coordinate the decision-making of this DAO will also be distributed among those who once purchased a .eth domain. You can pick up a nice bundle of ENS tokens.
Sometimes it pays to just do what we write about here. Like when we introduce the .eth domains from ENS to Ethereum. You can secure a domain in a namespace via smart contract and also create a website via the Interplanetary File System (IPFS). This is fundamentally practical, as the domain can replace the address. Instead of a complex Ethereum address, you can pay me at bitcoinblogde.eth, for example.
But most importantly, anyone who has bought such a domain can now consider themselves lucky to be able to participate in the ENS Aidrops.
ENS, the group that manages the smart contract and offers an interface to it with the website ens.domains, is giving you tokens. They are worth several thousand euros. All you have to do is claim them with the wallet you use to manage an .eth domain.
ENS breaks up the entity of the company
“We are excited to announce the launch of $ENS, ENS’s governance token,” writes ENS’s brantly.eth. Because while ENS is “decentralised and self-powered at its core (no one can take away another person’s .eth name, for example)”, there are one or two things that require human intervention. Therefore, ENS is setting up a DAO, a “Decentralised Autonomous Organisation”, in which, following the classic model of “The DAO”, the owners of “governance tokens” vote on important decisions.
More concretely: ENS holders can and should vote on protocol parameters, such as the prices for domains, the source of prices (the oracle) and more. They can also determine what money from the DAO treasury is used for, and they should also be remunerated for this in the future, for example through shares in the fees.
ENS has set up a foundation in the Cayman Islands, which will legally represent the DAO, for example in matters of a fiscal nature. The foundation has a kind of constitution that stipulates that the token holders – i.e. the DAO – can appoint and remove the directors and instruct them to take actions in the real world.
By claiming the tokens, DAO members – at least last week and probably this week – are committing the first act of DAO government: electing a delegate to help decide on a DAO constitution on their behalf.
This is all interesting, of course. We are now also seeing the transition at ENS to a new, decentralised, automated, highly transparent way of organising, which breaks down the unity of the construct “firm” or “company” and replaces it with investors and appointees welded together by a smart contract. But I’m sure something else interests you more:
What’s the deal with tokens? How do I get them, what are they worth, and what can I do with them?
The ENS tokens of the two-class DAO
Another post from brantly.eth explains the details of the new token. The first piece of good news is that there’s no need to rush. You have until 4 May 2022 to claim your tokens.
But who will get some now? For that, the team at ENS has taken a snapshot on 31 October 2021. Every address that has ever had an ENS domain by that date – even if the owner has sold it – is entitled to ENS tokens. The formula by which they are distributed is not quite trivial, but not so audacious that we don’t want to present it here:
For each day the address or account owned the first ENS domain, it receives 0.27 ENS. In addition, 0.062 ENS are paid for each day until the domain entry expires. If someone has set a “Primary ENS Name”, the amount doubles. Example: I bought the ENS domain bitcoinblogde.eth in mid-2020. I have now received just under 100 ENS tokens for this. That’s a nice retroactive reward for testing ENS for an article.
Subdomains don’t count, neither do more domains per account. If you have ordered two domains with one account, you will get less than if you manage two domains with two accounts.
There will be a total of 100 million ENS tokens. Of that, 25 per cent will go to .eth domain owners and as much to “contributors”, which means more than 100 people and organisations “who have contributed to ENS in a significant way over the past four years, including the core team at True Names LTD, external collaborators, significant integrations, translators, key holders and more.”
There is a clear two-tier society in ENS: here are the more than 137,000 accounts that own or have owned ENS domains, and there are the just over 100 individuals. Both groups each get 25 per cent of all ENS tokens, which is why a contributor gets about 1,000 times as many tokens as the domain owners.
The king of this two-tier digital organisation is clearly the DAO itself. Half of all tokens – 50 million – go into its treasury.
At least, the team praises itself, no money goes to investors. “Because there are none”. This distinguishes the ENS-Aidrop from comparable models, such as the Uniswap-Airdrop or, a little further afield, the creation of compound tokens.
Happy ENS Constitution Day everyone! 📜🎆
The ENS Constitution has now been ratified. This is a critical step in the founding of the ENS DAO. Thanks to all frENS who participated!https://t.co/04ckAZKRKE pic.twitter.com/YI4RvxFvi5
– ens.eth (@ensdomains) November 16, 2021
Saturated gifts and a full treasury
The ENS tokens hit Uniswap with a price tag of a little under or a little over $30. For a gift, the 100 ENS tokens that dropped into my wallet had a nice value. The price went up to around $80 after that and now stands at around $50. That’s a decent reward for trying something once.
The more than 100 contributors to ENS thus receive more than a billion dollars, on average a good 10 million, which can again be called a nice reward for having worked on ENS more or less full-time for the past four years. With twice that amount, about 2.5 billion dollars, the DAO now has a bulging treasury with which, in principle, no project is unaffordable any more.
There is no telling how clever the distribution of these governance tokens is. They are an essential pillar in decentralising a previously centralised project by solving the problem of decision-making. At the same time, they provide the decentralised organisation with a hefty budget, pay those who previously volunteered or paid to work on the project, and still reward users for having used a product.
We have one of those strange win-win-win situations that always exist in “crypto”: Everyone involved wins, no one loses. At least there’s no way to tell who loses in the airdrop.
