Ethereum Name Service (ENS) registrations have increased by over 200 percent in the last week, and according to data from Dune research, ENS domains were traded on the OpenSea market for $ 85,010,261 (218,111,169 ETH). This phenomenon caught the eyes of various crypto traders in the retail trade, who are otherwise facing huge losses due to the ongoing crash in the crypto market.
According to data published by Ethereum developer Nick Johnson, it was estimated that during the last two days (Sunday and Saturday) around 64,000 ENS domains were registered, and in the last week 108,000 ENS domains were registered in total.
The next 2 are histograms of the names registered per address. One shows the total and another shows the last 7 days, but you can adjust the parameter.
Although 90% of addresses have only 1-5 names, there are more than 1000 addresses that contain more than 125 names.
3 / pic.twitter.com/2u14RyGyE5– matoken.eth | .lens (@makoto_inoue) July 7, 2022
So, what is ENS and why is it important for Web 3.0?
What is ENS?
ENS is an open source code, decentralized autonomous organization (DAO) whose primary function is to sell (register) abbreviated Ethereum (ETH) Blockchain addresses in long format to easy-to-understand, human-readable addresses.
A blockchain’s public address is a combination of 42 hexadecimal characters, and whenever someone needs to send or receive crypto or other assets, they must provide these 42 hexadecimal numbers.
ENS shortens these 42 hexadecimal numbers to simply ‘name.eth’, and this name can be something like 000.eth or 007.eth or Rahul.eth, and so on.
According to data published by Delfi Digital, the specific domain 000.eth was recently sold for 300 ETH, which is equivalent to $ 342,600 per hour. 11.20 July 11, 2022. (Current price of Ethereum is $ 1,142 according to Coinmarketcap data).
1 / Ethereum Name Service (ENS) is a decentralized domain name protocol on Ethereum.
Daily ENS registrations have increased recently, reaching over 30,000 new addresses on 4 July.
This peak may be due to the fact that the ENS address 000.eth was purchased for a record high 300 ETH. pic.twitter.com/CQUnfBP8Do
– Delphi Digital (@Delphi_Digital) July 5, 2022
Why the sudden interest in ENS domains?
Scarcity: While some companies, Web 3.0 developers and others buy ENS domains to register the business, website, applications and so on, the current top is not due to that.
Rather, the current trend is because crypto traders have understood that there can only be so many .eth addresses, and certain domain names are unique. This is what makes them valuable.
According to a Delphi Digital note, “traders attempted to exploit the hype (limited and unique .eth domains).”
FOMO: Delphi Digital also noted that the spike started right after the 000.eth domain name was sold for 300 ETH, and there may be a phenomenon with FOMO (fear of missing out) at stake here.
“This peak may be due to the fact that the ENS address 000.eth was purchased for a record high 300 ETH,” said Delphi Digital.
This is also not the first time this phenomenon has occurred. Back in April 2022, due to heavy speculation from market participants, three- and four-letter ENS domains increased on the secondary trading platform OpenSea. This was due to the fact that three- and four-letter ENS domains were rare and unique, and thus irreplaceable.
ENS names of three and four letters: they are a fixed asset * and * you can do things with them!
– vitalik.eth (@VitalikButerin) August 7, 2020
Ethereum co-founder Vitalik Butterin had previously said on Twitter two years ago in August 2020, “ENS names in three and four letters: they are a fixed supply unit * and * you can do things with them!”
Gas charges: Crypto Blockchain gas charges refer to the cost of making a transaction on the respective Blockchain. This fee is paid to Blockchain’s miners to include the user’s transactions to Blockchain’s block. The fees are not static, and concern various factors such as Blockchain’s quality, network load, types of transactions and others.
Earlier this week, Ethereum Blockchain’s gas charges fell below $ 2, the lowest in two years. In May 2022, the highest gas tax for Ethereum was $ 200. Traders are now trying to take advantage of Ethereum’s low gas taxes, collecting ESA domains at lower prices only to sell them later in the secondary market at a profit, CNBC reported.
What is the importance of ENS in Web 3.0?
ENS is a Blockchain domain naming protocol built specifically for Ethereum Blockchain. Using it, customers can create human-friendly and readable usernames for their Ethereum-based crypto wallet, and decentralized websites and apps.
Similar to Web 2.0 domains we call URLs ending in .org, .com, .net and others; ENS also aims to do so, but for Web 3.0, Blockchain sites and apps. In the Web 2.0 era, the IP addresses of a web page’s server or computer were converted into simple English or other human language texts, and domain name service (DNS) was used to register them, while Google and other search engines were used to index them.
Without this service, Internet surfing in the Web 2.0 era would not be as easy as it is today. Blockchain-based search engines (BBSE) and ENS Ethereum domain name registration services try to build the same technology but for the next iteration of the web.
And just like Web 2.0, each domain name must be unique. This is what creates a shortage of domains, and it is the only plausible reason why domain names like 000.eth are sold for hundreds of thousands of dollars.
