ENS domain names have grown significantly in popularity. You’ve probably seen .eth names on Twitter, with over 100,000 ENS owners now using their domain names in their Twitter profiles.
Unfortunately, many of the address buys come from a concentrated group of investors looking to spin corporate or celebrity names for profit. But all that could change.
What happened: Vitalik Buterinthe co-founder of Ethereum ETH/USD, offered to charge an annual fee of 3% based on the highest bid for a domain name. So, if the holder of Drake.eth has a million dollar offer on the address, then the holder must pay a fee of $30,000 per year to retain ownership of the address. This would motivate more holders to sell the address to those who would actually use it.
This could also potentially benefit ENS token holders, as funds from these products would flow back to the DAO. Since buying domain names is relatively inexpensive, it could become a more consistent and sustainable revenue model.
Why is it important: Although this seems unfair to investors who have already made good purchases on ENS addresses, it would be a big step forward in broadening adoption.
Address hoarding is a practice that has slowed brand adoption. Ethereum transactions would become much easier if brands, celebrities, and nations had their own domain names.
That 3% annual fee could help move inactive addresses into the hands of big players. It would also further decentralize ownership of ENS addresses.
Finally, if the fees were allocated to DAO cash, this could be a bullish move for ENS token holders. After all, ENS is a governance token and with more money in the vault, the DAO can explore more opportunities to expand the protocol.