The ENS Referral System: Adding an Affiliate Program to ENS Protocol

In this post, we‘ll take a look at the upcoming “marketing & sales” force in ENS- Referrals and explore some of the ways you can use it.

The Rapid Growth of the ENS Market

Before we dive in, let’s look at some of the recent statistics of the ENS market.

Similar to the scarcity of domain names in Web2.0, the value of ENS is driven by utility & discoverability. ENS registrations spiked over 200% in the past few months while trading in millions on the secondary market.

OpenSea marketplace saw $85,010,261 (218,111.169 ETH) worth of ENS domains trade in July 2022.

As per NFT Stats, ENS NFTs were sold 5100 times in the last 7 days, with the total sales volume being $1.8M. The average price of one ENS: Ethereum Name Service NFT was $353.4. There are 573,575 ENS domains owners, while the total number of domains is 2,548,619 (so far).

The Addition of the ENS Referrals

Referrals are an excellent marketing plot & strategic deployment that allows companies to leverage their existing & loyal user base to meet sales goals. In recent times, we’ve heard the news about companies like Starbucks and Nike exploring blockchain technology to leverage their existing loyalty programs.

ENS referrals have been a topic of discussion for a while, with the “ENS Affiliate Marketing – Affiliate Program” topic opening on the ENS forum this past April. The referral systems within the ENS ecosystem opens up the possibility for increased engagement, utility, conversions & visibility within the Web3 space. While these are excellent tools to utilize, what is even more critical is the added mix of revenue generation for brands, investors & ENS members in the space.

In September, the ENS community voted and created new modifications to the ETHRegistrarController, the TestETHRegistrarController, and the IETHRegistrarController, which facilitates lower gas fees (up to 40% on registrations & 75% on renewals)

Now for the improvements. First of, they have implemented a referral function. On every sale, a percentage (set by the DAO) of every sale is redirected to an address set by the frontend. Meaning that if you build an app that registers and renews names, you have a business model. pic.twitter.com/do6MQVoKyN

— Alex Van de Sande (avsa.eth) (@avsa) September 20, 2022

The “ETHRegisterControllerV2” ENS Feature

The ETHRegisterControllerV2 feature is set to render power to influencers and registrar apps. A referral program creates lasting support for creators (yes, till competitive payouts), enabling their business to drive ENS awareness into referrals for ENS.

 The ENS Referral Use Cases

1. Revenue
   The protocol will share its service fees with the referrer.  What this means is a third-party/dApp that redirects users to purchase/register ENS names, will be given a service fee for onboarding the user.
   This will essentially create an important revenue stream for users in the space and unlock an exciting new business opportunity. It’s not something we’ve seen done in Web2, and this is where blockchain technology is leading the way.
2. SEO Rankings
   In the current scenario, .ETH is the dominant force, however unstoppable domains or UD have been gaining their fair-share of users in the space. The ENS Referral System could be a breakaway point as it will create more presence and opportunities for ENS domains to thrive and be used by brands, businesses and users. By incentivising on-boarding of users, the ENS Referral System will strengthen the network effects.
3. ENS Awareness
   The program would drive users to create content related to the ENS ecosystem, the content pipeline would be the funnel through which potential users learn more about the ENS ecosystem and in-turn creators can utilise the referral system to convert their audiences into potential ENS users (while generating revenue from the sales of ENS domains). This’d allow both creators & users to benefit and create a lasting demand for the ENS ecosystem.

How Would ENS Referrals Work?

So, let’s talk about how it will eventually work. Front-end apps could be built to access ENS services and their domains. This will allow you to leverage the increase in engagement and gamify the onboarding process. In the current state, the register function requires over 8 inputs, the renew function works with 2 parameters, while the referrer would make it 3.

• address referrer;

The referral option will take a share of the ENS profit and send it to the referrer. If there’s no referer provided, the protocol will not share the revenue fee. This means, there’s a possibility for the commission price to range from 0.1 to 100% (pretty neat in some cases). This would also mean that you could leverage this business model and create a thriving system that onboards users and generates referral fees for each successful completion.

Honestly, the referral system will allow operators to generate revenue and sustain themselves. The even more intriguing aspect of this is to incentivize more users to onboard the Web2 audience into Web3. We all know we are early, but by onboarding more users, we’re enabling and often driving the world to a better place.

Next Steps for the Referral Code

What’s next? First the team needs to have multiple code reviews and audits. Then the governance process would need to start. In order to add new features to the core ENS, the DAO will need to “grant the new contract the powers of being a controller”. This is an encouraging first step for the ENS referral system being added to the protocol.