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Ethereum Name Services: Vitalik Buterin criticizes fee model



 Interest in the Ethereum Name Service (ENS) is growing just before the Ethereum merge, which is scheduled to take place between September 13 and 15, 2022. Vitalik Buterin suggested several ways in which the fee system of the ENS system could be revised.


Ethereum co-founder Vitalik Buterin wrote in a blog post that about 40% of all 5-letter ENS domain names on the NFT platform OpenSea are for sale or have already been sold at bargain prices. Buterin criticized the way the domain names have been assigned so far:


“The question to ask is: Is this really the best way to give away domains? By selling these domains so cheaply, the ENS DAO is almost certainly taking in far less revenue than it could. This limits their ability to help improve the ecosystem.”


Vitalik Buterin recommends new models for Ethereum domains

Vitalik Buterin suggested two ways to improve the pricing structure for ownership of Ethereum name service domains . On the one hand, one could link the level of market demand for the domain to the fees . In addition, by offering a “strong time-bound guarantee of ownership” it would be possible to collect certain upfront payments that unconditionally guarantee ownership for a minimum period of time . Buterin explained:


“Demand from external bids is a clear indication of how valuable a domain is (and to what extent an owner excludes others by maintaining control over them). Therefore, regardless of how one thinks about the level of fees for holding a domain, I would argue that one should find some (predetermined) parameters for on-demand fees attractive.”


The Ethereum co-founder proposes this solution because he believes that “there is a fundamental conflict between the importance of property rights and fairness” . Regarding Unstoppable Domains (one of ENS's biggest competitors), Buterin noted:


“Fortunately, ENS not only charges a one-time fee to register a domain, but also a recurring annual fee to continue the domain. Not all decentralized domain name systems have had the foresight to implement this. Unstoppable Domains did not do this. The project even goes so far as to proudly advertise that it favors short-term consumer appeal over long-term sustainability.”


According to the official website, Unstoppable Domains does not charge any recurring fees because it offers high-demand domain names for websites and wallets.


"Speculators can easily make the market worse than a well-designed mechanism in the protocol that encourages domain providers to sell at fair prices."


With a daily trading volume of $1.61 million, ENS is currently among the most traded NFT collections on DappRadar . The crypto statistics portal also shows that the number of ENS traders increased by 5.86% from the previous day. Currently there are only Axie Infinity Traders on the platform.

Data from NonFungible also shows that the number of ENS sales has surged over the past week. On September 6, the number of ENS sales peaked at 26,610 with a trading volume of $1.4 million. As of press time (September 9, 2022), sales volume has surpassed the $333,000 mark with more than 4,200 sales. However, with 3,000 primary sales and almost 1,000 secondary sales, the numbers tend to be below the weekly average.


Furthermore, the ENS price rose by about 6.5% in the past week. The surge may be due to the upcoming Ethereum merge . The Ethereum course was also able to gain something this week . In the last 24 hours, Ethereum price has traded between $1,607 and $1,714.


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