Layer 2 scaling and Subdomains

At first I also believed that ENS supporting any L2 was the best option. As a solution it builds upon a stable secure foundation, which is the L1 ENS system, but when looking further into it, I came to the conclusion that supporting multiple L2s will not solve any problems, instead will only move problems to second-level domain holders, who in many cases will not be in a position to solve those problems effectively.

Second level domain holders will not be willing to migrate a domain to an L2 and burn their permission to move it back to L1. That means that second level domain holders will have a problem. If they want to issue subdomains they will either have to let their buyers know that the domains can be revoked at any time, or else they will need to establish a DAO and include all their subdomain holders, so as to determine what happens if the L2 fails.

For many applications, forming a DAO will be unrealistic. The uses of the subdomains can be so prosaic as to not inspire any community involvement, e.g. link shortening, naming a single NFT, naming a single smart contract, GPS location data, etc. If a user bought a subdomain for naming a single piece of data for example a GPS location, it doesn’t make sense to be in a DAO for that. That would mean that the second-level domain holder would most likely issue domains without it being trustless in almost all cases.

The benefits of ENS picking an L2 and moving are clear – immediately the gas fee problem is basically solved, second-level and third-level domains can be registered within a single interface. Buyers of second-level and third-level (subdomains) are treated equally, and everyone who owns a domain has the same risk.

While L2s add complexity, they should still provide the same level of security for on chain assets. That is the point of L2s, vs side chains. ENS is positioned better than anyone else in order to face the issues of migrating to an L2 and successfully onboarding millions of domain holders. Web3 is going to be a multichain world, where any particular side chain or L2 will need to be able to interact with other chains and L2s. If ENS stays on L1 it won’t make it any easier to interact with, because most users will be on L2s anyway, so they will be accessing ENS cross chain.

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