Ethereum Name Service has moved to Layer 2 to improve scalability and reduce fees.

ENS Labs, the research team behind Ethereum Name Service (ENS), has announced a significant upgrade, ENSv2, aimed at significantly increasing scalability and reducing transaction costs by moving to Layer 2 network.

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Important points of upgrading ENSv2

Since its establishment in 2017, ENS has simplified blockchain interactions by mapping long Ethereum addresses to human-readable names such as "Alice.eth". However, as the Ethereum network continues to grow, we are facing high fee issues and limited scalability. To address these problems, ENS Labs proposes to move to Layer 2 networks. This move promises to reduce gas fees and improve transaction speed.

ENSv2 introduces a new hierarchical registration system to manage .eth domains. Co-founder Nick Johnson said that this system allows for efficient management of subdomains and resolution configuration.

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ENSv2 will introduce a hierarchical registration system to manage .eth names. Name owners will have access to a single name registry where they can manage subdomains and configure resolvers. > > Johnson said.

The research team has developed a framework for evaluating potential L2 networks. Essential requirements include EVM compatibility, censorship resistance, scalability, and open-source availability. Other criteria include finality and state updates, security, scalability, developer experience, adoption, and customization.

ENS Labs is considering several L2 technologies, including Matter Labs' ZK Stack. The release of EIP-4844 has made Layer 2 solutions based on Ethereum much more affordable and scalable. Eskender Abebe, Head of Product and Strategy at ENS Labs, points out that this is a significant driving factor for ENS's proposal.

Benefits of Moving to Layer 2

The transition to L2 will take place in phases to minimize disruption. The initial phases will focus on changes to the settlement process, ensuring a smooth transition. Users will have the flexibility to move their assets between the L2 mainnet and Ethereum, allowing them to optimize the balance between cost, security, and functionality.

To support develop and implement ENSv2, ENS Labs seeks additional funding from ENS DAO. The proposal includes a request bridge increase the annual budget to 4 million USDC. This funding will primarily cover hiring additional developers and infrastructure costs.

This funding is crucial for ENS Labs to develop and successfully deploy ENSv2 and expand .eth to Layer 2 network.

ENS Labs group said.

After the news, the ENS notification code has increased by 2.2%, trading at 26.28 USD at the time of writing. The move to Layer 2 could significantly increase the position of the Ethereum Name Service market: developers will benefit from the flexibility of the new registration design, while users will enjoy improved performance and lower costs.

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