The total number of names created on the ENS now exceeds 2 million
The demand for Ethereum domains seems to be rising, with almost 219,000 registrations in August. The spike appears to have come after the domain 000.eth was purchased for 300 ETH, or around $315,000, in July 2022. The highest ever sale measured in both ETH and USD, according to data from DappRadar.
July was a record month for Ethereum domains, with more than 378,000 ENS registrations. A figure that dwarfs June’s number of just over 122,000 registrations. With around a week of August left, the total registrations may exceed July as ENS sales have surged over 15% in the last 24 hours.
The stimulus for a surge in sales appears to be a perfect storm of low Ethereum gas fees for the first time in months and the sale of 000.eth’ for 300 ETH, which may have triggered a chain reaction of purchases causing a spike in registrations. The total number of names created on the ENS now exceeds 2 million, according to the ENS Dune analytics dashboard.
Looking at all-time data for ENS primary and secondary market sales, 000.eth is the highest ever sale of an ENS domain name in the dollar and ETH value. Looking deeper, we can see that the highest sales of all time, other than artdao.eth, which happened last year, occurred in 2022, many in the past few months.
Considering ENS launched in 2017, the surge some five years later is interesting to observe, as people scramble to secure their piece of Web3. 000.eth falls into the triple-digit ENS domain name category, of which only 999 were ever available for sale.
As the first edition in that collection of NFTs on Ethereum, 000 commands a high value, as have other 3-digit combos such as 420 or 999. Looking at ENS sales in the last seven days shows this more clearly as 8 of the 10 are for triple-digit domains with price tags around $40,000.
Zoom in further on the sale of ENS domain 933.eth, and we can see more clearly the trading history over the last nine months. An NFT minted originally for 0.171 ETH ended up with the last sale price of more than 26.75 WETH. Not a bad profit margin for an NFT with little utility outside its intended purpose of being a domain name.
The release of the triple-digit names turned ENS NFTs into a speculative asset overnight. It started a rush of interest in ENS domain names as the media started to pay attention, and speculators began to circle and place bets on which brand would need an ENS soon and hadn’t secured their name. In the top ten below, you can see opensea.eth, and it is still unknown whether OpenSea themselves purchased this.
DappRadar reported on speculators securing brand names such as nike.eth, tesla.eth, and more over a year ago and importantly before the ENS airdrop event, which made many people very happy as thousands of dollars were handed out to early adopters of ENS.
The Ethereum Foundation initially developed the ENS registry, but it became a separate foundation in 2018. As it gained popularity and the ENS ecosystem grew, it needed a new governance structure to maintain decentralization. So, in November 2021, the ENS Foundation launched the ENS token via an airdrop to all its existing domain registrants.
What is ENS?
The Ethereum Name Service, or ENS, is an open and distributed naming service and the domain name protocol built on the Ethereum blockchain, which allows users to create a simple username for all their wallet addresses and decentralized websites.
At a basic level, it allows users to replace hard-to-memorize blockchain wallet addresses with simple ones like Iankane.eth rather than 0xd6e7a25039EA9af1fF1968cd960E0024dBcA53c1. Furthermore, replacing wallet addresses with domain names also decrease the chances of input errors while typing the address. These names are similar to domain names on the internet and are sold as NFTs.
In a way, it is very similar to the Domain Name Service (DNS). DNS replaces IP addresses with human-readable tags we know as URLs. Before the invention of DNS, users had to remember complex, machine-friendly IP addresses to browse the internet.
What is happening to Ethereum fees?
In the past two years, Ethereum’s average gas fee has scarcely gone below $40, nearly touching $200 in May 2022. The gas fee had surged as a bull market rally gripped crypto markets, and the hype around NFTs and DeFi spiked. However, the narrative seems to be changing, and fees are reducing.
Another reason for the surge can be that ENS domains can function as URLs to a decentralized webpage. While there are certain limitations to .eth websites, holders can create an HTML webpage that people can navigate using your ENS domain. Furthermore, the subdomain feature is helpful if one decentralized website isn’t enough.
Subdomains enable registrants to add a prefix to their original ENS domain if I registered iankane.eth, I could create several subdomains, like crypto.iankane.eth or admin.iankane.eth. Subdomains allow registrants to use one ENS domain for multiple applications or sell subdomains.
Subdomains can help NFT projects combine the benefits of a PFP-based collection and a name-based project and, more importantly, do away with NFT theft by the right-click save naysayers. An image can be faked. A domain cannot. Simply put, it’s not easy to find all ape PFPs on Twitter, for example, and it’s pretty much impossible to find only the real ones.
Using hashtags like #apefollowape used to work when there were only a handful of collections but has become far trickier for users over the last six months. Following a domain is arguably far more accessible, and it will be interesting to observe if this trend catches on.
What drives the success of an NFT project?
The first thing to understand is what drives the success of an NFT project. It’s not tokens, airdrops, or passive income. It’s culture, which isn’t exclusive to NFTs. Culture is ingrained in human nature. People want to feel like they are a part of something special worldwide. Without creating that feeling, any NFT project is a non-starter.
In the early days of BAYC, Apes raided Clubhouse chats, Discord activity was rampant, and they were super active on Twitter. Moreover, a community is more than many people holding some tokens or NFTs. It’s a group of people representing a cause or brand, potentially wearing a badge to prove it. You could even say that a proper NFT community is like a family more than a community. When the price dips, they all feel the hit. When it pumps, they all celebrate.
These days, successful NFT projects focus on building a community around a common PFP. It’s tried and tested and appears to be a winning formula. However, what we see here with ENS domains has shown something interesting. PFPs aren’t the only way to build a community.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.