The Ethereum Name Service (ENS) is undergoing an upgrade to transition its services to a Layer-2 network. The proposed upgrade, ENSv2, is designed to improve scalability and reduce gas fees by moving essential functionalities from the Ethereum mainnet to a Layer-2 chain.

ENSv2 introduces a registry system for the management of .eth domain names. Lead Developer and Founder of ENS Labs, Nick Johnson, explained that nameholders will gain access to a unique name registry where they can handle subdomains and set up resolvers.

The migration to Layer 2 will be conducted in phases to limit disruptions. The initial phases will concentrate on adjusting the resolution process to ensure a seamless switch. Users will be able to transfer their names between the Layer-2 network and the Ethereum mainnet, enabling them to select the most favorable balance between cost, security, and functionality.

For the advancement and deployment of ENSv2, ENS Labs is looking to secure additional funding from the ENS DAO, including an annual budget increase of $4 million. In response to this development, the ENS token observed a 2.95% increase, trading at $25.84 at the time of reporting.