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Understanding The Basics of ENS


The ENS or Etheruem Name Service is a system that was created to provide shorter, more human-friendly names in place of long addresses, such as ethereum addresses or Swarm hashes that are often used in the ethereum ecosystem. The ENS is an Ethereum-based dapp built on smart contracts. It allows users to register a unique domain name for their wallet address, allowing the transfer of funds to be made directly to a name instead of an address.

ENS is built on Ethereum smart contracts. Since smart contracts are completely decentralized – it does not suffer from the same lack of security the DNS system does. Anyone can register a .eth domain name for themselves by participating in an auction process, mediated by the blockchain. Users are required to wait for the name to become available, then they must bid on the said name and reveal their bid later.

The highest bid will win the name and sees the auctioned ETH locked in a smart contract for a one-year period during which he will be able to add extra data, create subdomains, lease, loan, sell it or do anything with another smart contract.

To learn more about Ethereum Names: click here


ENS is not a domain system

In the sense of internet domains, as managed by ICANN, ENS is not a domain system. While it can be used in a similar fashion on apps that replicate browser functionality, like Mist or Metamask, there is no claim on the “.eth” top-level domain system, which can only be managed by ICANN.

ENS does not grant a trademark or any sort of claim on ownership: registering an ENS name is a fully automated process and does not indicate ownership of any given trademark, copyright, brand name or any other kind of intellectual property.

This process is not a sale

ENS names are not sold or leased by any party or entity. While the process of claiming a name involves locking and/or burning funds, these processes were created to disincentive spamming and try to it make so that names are only claimed by users who will make use of them. All ether spent on the process is either given back to the bidder after some time, sent to a burn address or sent to a miner.

Names are not purchased.

Each name registered requires depositing some amount of ether directly into its respective registrar contract for a minimum duration of one year, thus no central entity receives the funds. All ether deposited to contract deeds are then temporarily locked until the end of the auction.

How The Process Works 

The process of claiming a name takes five (5) days and requires multiple transactions that are time sensitive and often irreversible, so it will be important for you to fully understand the process to ensure you do not irreversibly lose your ether.

Users start the process by opening a public auction for the name they want, which will send an alert that can be seen by anyone watching the blockchain for that specific name. After the auction is opened anyone who knows how to spell that name can bid on it in the next five days, by sending a transaction with the maximum amount they are willing to pay for the name. Bids are accepted until 72 hours after the initial auction opens. After that time, a 48 hour reveal phase starts during which, anyone who bids must reveal their bids (failing to do so will result in irreversible loss of funds).

The bidder who was willing to pay the most for the name will be the registrant, but they will only pay an amount equal to the amount of the second highest bid.


Recap: There are three possible outcomes for bidders:

  1. The desired name can be requested. Once a name is requested, a period of 72 hours begins in which anyone can put a sealed bid for it and send the necessary funds (minimum of 0.01 ether). This period is followed by a 48 hour one (the “Reveal Period”) in which bids must be revealed. Note: Any bid that is not revealed during Reveal Period results in the loss of its related funds.
  2. During the designated “reveal” period, your bid is revealed to be the highest one and you win the auction. In this case, a deposit equivalent to the value of the second highest bid will be used to secure your name, and the remainder is returned to you.
  3. During the designated “reveal” period, you reveal your bid, but you are not the highest bidder so you do not win the auction. In this case, your entire deposit will be returned to you, minus a 0.5% fee that is burned. Note: If for any reason you failed to reveal your bid during the designated “reveal” period, your entire deposit is burned.


The highest bidder after all bids are revealed during this Reveal Period becomes the registrant of the name, and the ether they sent to the contract will be refunded immediately, minus the value required to outbid the second highest bidder. The remaining funds are kept locked in a contract for at least a year, after which they can be withdrawn by the registrant upon releasing rights of use of the name. Names of registrants are controlled only by their registrants, who can transfer or release the name until it needs to be renewed.


What Happens After The Auction Process Is Complete? 

Once the auction process is finished, the user needs to finalize their name to complete the auction, after which they will be able to transfer rights of use to someone else, add a subregistrar (eg. mysubdomain.mydomain.eth) or add record types associated with the name (ethereum address, bitcoin address, swarm content, etc).

After one year, the registrant can release the name back to the market and retrieve the ether they deposited to the contract if they so wish. After two years, it is expected that an updated version of the registrar will be deployed, which might require some sort of recurring fee, deposit or some other way to encourage unused names to be released back in the market.


As names are hashed during the auction process to increase privacy, any name, string or file could, in theory be owned via this process. At this time, names that are shorter than seven (7) characters are reserved until the system is more mature. If a user proceeds to registered, the name can be invalidated, which would result in irreversible loss of funds by the registrant.


Names that use any character outside of alphanumeric, hyphen and underscore, while valid, are not guaranteed to be resolved by the wallet or client software.


The minimum amount required for a bid is 0.01 ether. When bids are revealed, any extra ether that was sent to mask the bid value will be returned in full. The auction registrar will apply some fees that are proportional to the bid value, in order to discourage spamming.

See the following fees below:

  • Non-winning bid: 0.5% is burned, 99.5% is returned.
  • Once the auction is over, the winning bid is locked for at least one year: 100% remains in the contract until released.
  • Bids that are not revealed during the 48-hour reveal period will be completely and irreversibly burned. The extra ether sent to the contract in addition to the bid amount, such as ether sent to mask the bid value, and an extra 0.5% of the bid value will be returned.
  • Bids not revealed for more than 4 weeks are by definition invalid and can be cleared by anyone, even if the bid is still anonymous. In this case, the user doing the clearing will get 0.5% of the full deposit of the bid, and the remainder will be burned.
  • Note that anyone can invalidate a name. If a name gets invalidated, 50% of the deposit will go to the user doing the invalidation, and the remaining amount will be returned to bidder.


Ready To Register An Ethereum Name?

The original app for registering Ethereum Domains has been deprecated, new users can start here.


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