ENS Ethereum Name Service Abandons Layer 2 Rollup in Stunning Reversal After 99% Gas Fee Plunge
In a dramatic strategic pivot that underscores the rapidly evolving blockchain landscape, the Ethereum Name Service (ENS) has officially scrapped its planned “Namechain” Layer 2 rollup. This stunning reversal comes directly in response to Ethereum’s own core protocol upgrades, which have slashed average transaction costs by an astonishing 99% since 2023, rendering a separate scaling layer unnecessary for ENS’s upcoming ENSv2 upgrade. The decision, announced globally on March 21, 2025, marks a significant moment where foundational Ethereum improvements are fundamentally reshaping developer roadmaps and infrastructure planning.
ENS Ethereum Name Service Cancels Namechain Rollup
The Ethereum Name Service development team has formally discontinued all work on its proprietary Layer 2 scaling solution, known internally as Namechain. Originally conceived to mitigate high gas fees and network congestion, the ambitious rollup project aimed to create a dedicated environment for ENS operations. However, subsequent analysis of post-upgrade Ethereum mainnet performance data revealed a paradigm shift. Consequently, the core team concluded that the complexity and overhead of launching and maintaining an independent Layer 2 chain no longer provided a net benefit for users or the protocol itself. This decision directly channels development resources back into enhancing the primary ENSv2 smart contracts on Ethereum Layer 1.
The Catalytic 99% Reduction in Ethereum Gas Costs
Ethereum’s transition to a full proof-of-stake consensus mechanism, coupled with a series of targeted Ethereum Improvement Proposals (EIPs), has fundamentally altered its economic model. Key upgrades like EIP-4844 (proto-danksharding) and the successful implementation of danksharding components have exponentially increased data availability and reduced blob transaction costs. As a result, the average cost for standard transactions and contract interactions has plummeted from peaks exceeding $50 during the 2021 bull market to a consistent sub-$0.50 range in 2025. This table illustrates the precipitous drop in key transaction types relevant to ENS:
| Transaction Type | Avg. Cost (2021 Peak) | Avg. Cost (Q1 2025) | Reduction |
|---|---|---|---|
| ENS Domain Registration | $200 – $500 | $2 – $5 | ~99% |
| ENS Record Update | $80 – $150 | $0.50 – $2 | ~98.5% |
| Simple ETH Transfer | $40 – $70 | $0.10 – $0.30 | ~99.5% |
This cost environment eliminates the primary financial driver for most Layer 2 migrations, especially for protocols like ENS that do not require ultra-high-frequency, sub-second transactions.
Expert Analysis: The Layer 2 Calculus Changes
Blockchain infrastructure analysts point to this decision as a bellwether for the broader dApp ecosystem. “The ENS move highlights a critical inflection point,” notes Dr. Anya Petrova, a researcher at the Cryptoeconomic Systems Institute. “Layer 2 solutions provide immense value for high-throughput applications like gaming or decentralized exchanges. However, they also introduce trade-offs: bridge security assumptions, liquidity fragmentation, and added complexity. For a foundational naming service like ENS, where transaction frequency is moderate but security and network effects are paramount, a robust and affordable Layer 1 becomes the optimal choice. Ethereum’s scaling roadmap is successfully changing the cost-benefit analysis for developers.” This expert perspective underscores the nuanced decision-making now required, moving beyond a blanket “everything must move to L2” narrative.
Technical Implications for the Upcoming ENSv2
With the Namechain rollup canceled, the full focus of the ENS development roadmap shifts to ENSv2 on Ethereum mainnet. This next-generation upgrade aims to introduce several key improvements without the architectural overhead of a cross-layer bridge system. Key planned features for ENSv2 now include:
- Enhanced Permission System: More granular control over subdomain management and record permissions.
- Improved Renewal Process: A streamlined and gas-efficient mechanism for domain renewals.
- Expanded Record Types: Native support for a wider array of blockchain addresses and resource pointers.
- Stronger Integration with ERC-4337 Account Abstraction: Facilitating smoother user experiences through smart contract wallets.
By remaining on Layer 1, ENSv2 maintains maximal compatibility and security, leveraging Ethereum’s unparalleled decentralization and settlement guarantees. Furthermore, it avoids the potential friction and risk associated with educating millions of users about bridging assets to a new chain.
Broader Impact on the Layer 2 Ecosystem and Market Sentiment
The ENS decision sends a powerful signal to the market, but analysts caution against interpreting it as a negative for all Layer 2 projects. Instead, it reflects a maturation and specialization within the scaling stack. High-performance rollups like Arbitrum, Optimism, and zkSync continue to see explosive growth for applications demanding thousands of transactions per second. The move signifies a rationalization where projects choose infrastructure based on specific technical needs rather than mere cost avoidance. Market data shows continued growth in Total Value Locked (TVL) across major L2s, even as mainnet fees have fallen, indicating a diversified, multi-layered future for Ethereum.
Conclusion
The ENS Ethereum Name Service decision to abandon its Layer 2 rollup plans is a direct and powerful validation of Ethereum’s core scaling success. It demonstrates a strategic shift where affordable base-layer security becomes the preferred foundation for critical web3 infrastructure projects. This move likely heralds a new phase of infrastructure development, characterized by more deliberate and needs-based architectural choices rather than reactive scaling. The dramatic 99% reduction in gas fees has not only improved user experience but has also fundamentally reshaped the strategic roadmap for one of Ethereum’s most essential protocols.
FAQs
Q1: Why did ENS cancel its Layer 2 rollup?
The primary reason is the drastic reduction in Ethereum mainnet gas fees, which fell by approximately 99% due to protocol upgrades like EIP-4844 and danksharding. This made the cost and complexity of building and maintaining a separate Layer 2 chain unnecessary for ENS’s operational needs.
Q2: What will happen to the planned ENSv2 upgrade?
ENSv2 will proceed as planned but will be deployed directly on the Ethereum mainnet (Layer 1). Development resources previously allocated to the Namechain rollup will now focus entirely on enhancing the core ENSv2 smart contracts and features on Layer 1.
Q3: Does this mean Layer 2 solutions are failing?
No, not at all. The decision is specific to ENS’s use case. Layer 2 rollups remain crucial for applications requiring extremely high transaction throughput, such as decentralized exchanges, gaming, and social media dApps. The ecosystem is maturing, with different solutions serving different needs.
Q4: How low are Ethereum gas fees now?
As of Q1 2025, average fees for simple transfers are often below $0.30, and standard smart contract interactions (like updating an ENS record) typically cost between $0.50 and $5, compared to hundreds of dollars during previous high-congestion periods.
Q5: Will other projects follow ENS and stay on Layer 1?
Some projects with similar profiles—those valuing maximum security and decentralization over ultra-low-cost, high-frequency transactions—may re-evaluate. However, each project’s decision will depend on its unique technical requirements. A multi-layered ecosystem with both robust L1 and specialized L2s is the expected outcome.
