What Will ENS Do With All That Rent Money? Here’s What You Need to Know
The Ethereum Name Service (ENS) is upgrading! Come May 4th, .eth names will have instant registrations, will become NFTs for easy trading, and, yes, will have yearly rent. (Note that this does not apply to DNS TLDs supported by ENS.)
In the current model, the ETH you pay for a name is locked in a contract and is returned to you when you release the name. The purpose of having people pay for names at all is to discourage name squatting, but over the last two years we’ve learned that our current method doesn’t do this very well. We are changing to a yearly rent model to better solve this problem.
For most names, the yearly rent will be USD$5, payable in ETH. We chose that number since it’s about half of the cost of most DNS domains, and we think it’s low enough to not discourage normal users from having names, but high enough to discourage squatters from owning thousands of names. Current .eth name owners will get their first year of rent for free after migrating to the new registrar, so we don’t expect significant rental income to be produced for more than a year.
But when it does come, what will happen to all that ETH paid for yearly rent?
Who controls the ETH from ENS rent
The first thing to know is the ETH from yearly rent will not go to True Names LTD, the Singaporean non-profit responsible for ENS development. Instead, it will go to an Ethereum account controlled by the ENS root key multisig holders.
The ENS root key is a four of seven multisig that allows us to make fixes (in case of catastrophe) or upgrades (in case of need for improvements) to the ENS system. Since we view ENS as a public good critical to the Ethereum ecosystem, the seven ENS root key holders represent an array of the Ethereum ecosystem, only one of whom works on ENS.
They are listed at the bottom of our website, and they are Aron Fischer (Colony & Swarm), Dan Finlay (MetaMask), Nick Johnson (lead developer of ENS), Jarrad Hope (Status), Piper Merriam (Ethereum Foundation), Taylor Monahan (MyCrypto), and Vlad Zamfir (Ethereum Foundation).
What this means is whatever four of these seven people can agree to do with the ETH from the yearly rent is what will happen to it.
The ENS root key holders could do a number of things with the ETH, including giving some to True Names LTD for continued ENS development, grants to other projects, giving some back to the Ethereum Foundation (which has been ENS’s primary financial supporter thus far), using it to pay gas costs for the creation of ENS domains and subdomains in approved wallets, burning it, or simply doing nothing at all.
Some people have even wondered whether ENS yearly rent could solve the problem of long-term protocol developer funding, though we don’t expect to raise enough money for that anytime soon, if ever. But you never know!
To give you an idea of the kind of numbers we’re expecting, there are currently ~300k .eth domains registered, but only ~50k of them have resolvers set (indicating they are likely not just held by a squatter). If all 50k of those domains started paying rent after their first rent-free year, then that’s only $250k a year, starting sometime in 2020.
We plan to propose to the ENS root key holders the following:
First, give ETH to True Names LTD for the ongoing development and promotion of ENS, to wean us off the need for grants from other organizations. Please note again that True Names LTD is a non-profit. We don’t have shareholders, token holders (we never did an ICO!), or investors we need to repay, and we are not looking to personally get rich off ENS.
Second, offer excess ETH as grants to other projects working in the ENS ecosystem. We’d like to explore the use of decentralized ways of distributing these excess funds, such as a DAO.
If at some point in the future the income from ENS yearly rent gets to be a very large sum, then we’d recommend offering grants to other Ethereum projects or the Ethereum Foundation.
Join the conversation
But the ENS root key holders have final control. And we’d like to open the conversation to the greater Ethereum community!
What do you think of our proposal in this post? Do you have other ideas of how the ETH should be used?
You can join the conversation in this thread on our forum.