Why is the airdrop distribution of ENS so focused on decentralization in comparison to UNI and GTC?

This article is authorized to be reprinted from ChainNews, written by Pan Zhixiong

ENS is a prototype for building a blockchain-based identity system, and for it, the degree of "decentralization" determines how high its ceiling is.

As the underlying basic protocol in the Ethereum ecosystem that is closest to the decentralized identity DID form, the Ethereum Name System (ENS) is one of the few innovative projects that can be compared with Uniswap or Gitcoin. What's worth mentioning is that because it chose a subscription fee model early on, it has continued to operate without the support of venture capital.

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Moreover, these three projects have similar characteristics, such as:

• They have been running for over 3 years and did not introduce tokens early on;
• The role of tokens is mainly in the governance of the protocol, and all support a delegate governance model;
• They have deep ties with the Ethereum Foundation and are a core part of the Ethereum ecosystem;
• The protocols are relatively low-level, with significant composability advantages: Uniswap solves liquidity issues, Gitcoin addresses public goods funding challenges, and ENS provides users with decentralized domains and identities.

In addition, all three consider the "decentralization" of the protocol itself, so they have adopted airdrop mechanisms to distribute governance tokens for free to early users of the protocol. Moreover, these three projects have allocated over 60% of the total token supply to the community, early users, contributors, or the protocol's treasury DAO. Although they are not as decentralized as DeFi protocols like Yearn YFI that adopt completely fair distribution, these three protocols are relatively fair. ENS, in particular, has not received VC investments and does not distribute tokens to any institutions that only provide financial support.

Horizontal Comparison

Overall, among these three protocols, ENS is the protocol with the longest operation and relatively more decentralized. It also has a large user base. However, since these three are in completely different tracks, their financial situations cannot be directly compared.

Looking at the timeline, it can be seen that ENS was the earliest to go live on the mainnet and the latest to launch its token, going through over 4 years in the process. In comparison, Uniswap seems a bit rushed, perhaps due to being pressured by Sushiswap and had to retaliate, otherwise they might have launched their governance token even later.

In terms of early user numbers, although ENS has only about half the number of users compared to Uniswap, it can still be considered one of the protocols with the most users in the Ethereum ecosystem. Gitcoin, on the other hand, targets developer communities, so its user base is definitely not as large as the other two.

Another aspect is how these protocols sustain long-term maintenance through iterations and updates. All three can rely on a large amount of native tokens in their treasuries to support protocol development and operational activities. In addition, Uniswap can rely on potential trading fees that are currently inactive, Gitcoin can rely on additional income from community donation fees, and ENS, adopting a subscription model, has become an independent entity shortly after incubation by the Ethereum Foundation, using these revenues.

Token Distribution Comparison

Uniswap

The total supply of UNI tokens is 1 billion, with a 2% annual inflation rate after a 4-year unlock period. The initial distribution is as follows:

• 60% allocated to the Uniswap community and users, with 15% of the total amount distributed through retroactive airdrops and liquidity mining
• 21.266% allocated to employees, with a 4-year unlock period
• 18.044% allocated to investment institutions, with a 4-year unlock period
• 0.69% allocated to advisors, with a 4-year unlock period

For more details, see link

Gitcoin

The total supply of GTC tokens is 100 million, with the initial distribution as follows:

• 15% for retroactive airdrops
• 50% for Gitcoin DAO, with a linear 2-year unlock
• 35% for existing stakeholders, including employees, investors, partners, etc., with a linear 2-year unlock

For more details, see link

ENS

The total supply of ENS tokens is 100 million, with the initial distribution as follows:

• 25% airdropped to .ETH holders
• 25% allocated to ENS contributors
• 50% allocated to the DAO treasury

For more details, see link

How Important is Decentralization to ENS?

When the ENS team decided to launch the ENS token, they summarized why they did it in one sentence:

ENS has always been an open public utility for the community. The core of ENS is decentralized and self-running (e.g., no one can take away another person's ENS name), but there are also some things that require human intervention for resolution.

Due to being one of the few projects in the Web3 protocol stack that can generate continuous income, ENS has the confidence to not require any financial support from investment institutions. This characteristic is particularly valuable for a decentralized infrastructure component.

However, this does not mean that selling tokens to VCs is always the worst choice, as many innovations have been realized with their help, such as the V3 version designed by Paradigm and Uniswap together, significantly improving the capital efficiency of AMM.

But for a protocol like ENS, which is a more fundamental public utility compared to Uniswap, where "trading" can be considered an application layer task, ENS is a prototype for building blockchain-based identity systems. For such protocols, the level of decentralization determines how high their ceiling can be.