Why is ENSv2 the new mainstream name service for Ethereum?

With NFT-backed domain names, the Ethereum Name Service (ENS) has been a cornerstone of Ethereum use cases since its inception in 2017.

Now, the protocol administrators at ENS Labs have just introduced their largest development proposal to date: ENSv2 .

The proposal will expand ENS to yet-to-be-selected Layer 2 networks to reduce costs, speed up transactions, and enhance functionality. Here’s a closer look at the basics of the system and why it marks a major leap forward.

Why migrate to Layer 2?

Of course, the main motivation for transitioning ENS to L2 is scalability.

L2 performs off-chain transactions while ensuring data integrity on the Ethereum mainnet, thereby speeding up transactions and significantly reducing gas fees.

Adopting L2 will make ENS more accessible to a wider user base and pave the way for new integrations, thanks to a significant reduction in gas fees for .eth name registrations and renewals.

However, it’s not just about cost and speed — ENSv2 is also a transformation opportunity. If approved, the system will introduce a new tiered registration system.

In other words, each .eth name will have its own individual registry rather than a single flat registry, allowing for greater flexibility and control over subdomains and ownership based on user needs.

Additionally, ENSv2 is designed to facilitate smoother integration between various blockchains. Through the combination of CCIP-Read gateways and compatible resolvers, .eth names will be able to be trusted across different networks in ways never before possible.

Layer 2 Migration Plan

The migration to ENSv2 will be done in phases to minimize disruption.

The initial phase involves deploying a new generic router interface, followed by new registry contracts on L1 and L2. Eventually, users will be able to migrate their names to L2 to enjoy lower costs and faster transactions, but migration is optional. Existing names will continue to operate normally on Ethereum.

The big question then is which L2 will the ENS community choose? The ENSv2 technical design document mentions “ENS Chain”, but this may just be a tentative alternative name until an official network is chosen.

That is to say, ENS can create its own L2, such as on Optimism's super chain, or deploy directly to Optimism, Arbitrum, Base, Starknet, etc.

We’ll see what happens, but ENS Labs has proposed a selection framework to guide this decision, covering ranking criteria such as Ethereum Virtual Machine (EVM) compatibility to strong developer tooling options. The ENS DAO will make the final approval decision here.

Outlook

By reducing gas fees and speeding up transactions, ENSv2 lays the foundation for .eth names to become more affordable and efficient, democratizing access to ENS services.

This shift, combined with the new tiered registry system and CCIP-READ, could lead to an explosion of new applications based on ENS and across a variety of different chains.

As the on-chain ecosystem grows, the ability to easily and affordably manage and resolve names across multiple chains will become increasingly valuable. ENSv2 can be a key component of this connected future, supporting everything from encrypted social networks to complex financial applications.

The upgrade looks set to mark the beginning of the mainstream era for ENS , paving the way for a host of newcomers in the coming years.