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The cold thinking behind the explosion of the ENS digital domain name market

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Talk about the remarkable points and some hidden worries of this wave of ENS domain name NFT community hype

Original title: "Cold Thinking Behind ENS Digital Domain Name Market Explosion"

Original Author: Hao Tian, Chain View

The wind suddenly picked up and wrinkled the spring water in the NFT market. No bragging, the next thread, based on my in-depth observation of the @ensdomain digital domain name market in the past few days, combined with the objective reaction of the on-chain data on @duneanalytics, I will talk about this wave of ENS domain name NFT community The remarkable points and some hidden worries of the hype:

This is a typical NFT community action flash show. In just one week, not only 3 , 4-digit domain names have become popular, and the floor prices have reached above 10ETH and 2ETH respectively, which also created a record-setting revenue for @ens.eth officials for several consecutive days. The revenue of 3 million US dollars is close to the level of the whole month of March. In addition, it also stimulated a wave of doubling of $ENS. The actual economic benefits are very successful!

There are three main reasons why it became popular:

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1) The digital domain name is the ENS system Absolutely scarce resources, easy to NFT. As a portal-level strategic entry to web3, ENS’ original practical-oriented domain name value discovery is too slow, and once the 3- or 4-digit domain name is locked, there are only 11,000 in total, and the digital domain name is short and easy to remember, which can give the holder a kind of social interaction. Cultural labels, like avater NFTs, can quickly gain momentum;

2) In the NFT world, the power of the community is terrifying, and it can build tall buildings against the trend. The wave of digital domain name hype was initiated by @10kclub. There are many BAYC bosses in the community, and they have received responses from hundreds of thousands of fans on Twitter. The most important thing is that there are big capital and chaebols. The consensus is strong, and it is easy to set off a boom in a short time;

3) Unlike other NFTs, the quantity is locked, and the best time to enter the market is missed, either high-level takeover or can only wait and see , The ENS digital domain name has great extensibility. If you miss 3 digits, there will be 4 digits, and if you miss it, there will be 5 digits. In addition, it can be extended to letters with 3 or 4 digits. This style of play can maximize the emotional follow-up participation of fomo, so it will continue to receive attention.

However, through some data observation on the chain, it is found that there is actually a hidden mystery behind this wave of digital domain name hype:

1) The head holder controls more than 30% of the scarce domain name resources: for example, through on-chain data tracing, it is found that the 3-digit domain name holds the first address starting with 0xed02912 and the 4-digit domain name ranks first The address starting with 0x270e962 is owned by the same chaebol, and some of the header holders are already making profits;

2) Although the digital domain name is a scarce resource of the ENS system, it lacks official endorsement: this makes It is difficult for the community consensus to be twisted into a single rope, from 3 or 4 digits to 5 digits and then to three or four letters. Obviously, this deviates from the original intention of the 10k club and is heading for the 100k club. If the community cannot reach an absolute consensus on digital domain names, it will undoubtedly dilute the scarcity attributes of digital domain names, which will ultimately be detrimental to the establishment of NFT cultural attributes;

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3) Hoarding short domain names requires high annual expenditure Taking a 3-digit domain name as an example, a renewal fee of 0.2 ETH is required per year, which makes investing in ENS domain names only short-term speculation, and the possibility of selling them when the timeline is too long . This means that ENS domain name NFT has a strong demand for transaction depth, and this is precisely the weakness of the lack of liquidity in the NFT market;

4) What we hype about NFT is not numbers It's not JPG, but the expected development value of the cultural parent company behind it, just like investing in BAYC a year ago, and owning yuga labs' APE airdrop, land airdrop and other cultural added value a year later. However, what is the expected value of investing in the Ethereum public chain digital short domain name now? The airdrop has already been sent out, even if there is any more, it is impossible to favor the digital domain name market;

5) The domain name is a better NFT cultural target, but it is not the same as the traditional .com website domain name Similarly, website domain names are just needed for brand owners, but the current blockchain market is still a market that only focuses on the back end. Few brand owners consider optimizing the front-end user experience, so the current demand for brand domain names is also very weak. Therefore, We cannot fully invest in products in the web3 era from the perspective of the Web2 era;

6) At present, domain names cannot meet the needs of cross-chain scenarios. From ENS to TNS to unstoppable, the domain name suffix There are also .eth, .ust, .bit.crypto, .coin, etc. As an entry-level product of web3, the cross-chain demand for domain names is naturally the first to bear the brunt. Which suffix will eventually become a phenomenon-level product at the .com level? For the time being, it is not conclusive;

Overall, the flash show of the NFT community for the ENS domain name market is quite successful, at least let everyone know The charm of cultural output after domain name NFTization provides another NFT track for the currently popular PFP market, but as for how long this direction can last, it is for the NFT community, for every practitioner of web3, and even It is a test for every developer in the Crypto industry. Because the NFT tone in the Yuga labs era is that everyone is led by the project party, and the NFT tone in the domain name era is jointly defined by every web3 practitioner.