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ENS exploded against the market, what logic is hidden behind it?

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What is it that promotes the trend of ENS that cannot be dissipated for a long time?

Original title: " ENS exploded against the market, what logic is hidden behind it? "

Original author: 237

This article comes from the WeChat public account: Old Yuppie

In June 2022, the monthly sales of the NFT market fell below $1 billion for the first time in 12 months , The number of monthly independent buyers in June also fell by nearly 50% from a high of over 1 million in January. This is the first time since July 2021 that the monthly sales of the NFT market have fallen below 600,000.

However, this data is not surprising. Since April this year, the entire encryption market has been exhausted under the impact of the Fed's interest rate hike. At the beginning of May, the release of Yuga Labs’ Otherside series of land NFTs has squeezed out the last trace of liquidity in the NFT market.

At the same time, the chain impact of a series of black swans, such as Luna/UST thunderstorm, STEPN shoe price plummet, and many institutional thunderstorms, made investors panic. Fearing that the projects in their hands would be involved in the vortex, they began to sell a large number of various risky assets in their hands. Of course, NFT cannot be immune to it.

However, under this kind of market, ENS is unique, continuing the trend of the bull market.

Enrollment (renewal) revenue for ENS hit $7.83 million in April 2022, second only to previous all-time monthly high of $7.93 million in November 2021 income.

In May 2022, the ENS protocol revenue reached $9.6 million, a record monthly revenue. Additionally, May was also the month with the most ENS domain name registrations, with 365,652 domain names registered.

Although under the impact of the series of thunderstorms in June, the revenue of the ENS agreement plummeted to 3.3 million US dollars, but just a week after July, the newly registered The number of ENS domain names has surpassed the number of registered ENS domain names in June. In addition, the unit price of ENS domain names sold in July is also very eye-catching.

On July 4, the "000.eth" ENS domain name was sold at a price of 300 ETH, which is about 320,000 US dollars, second only to the previous "paradigm. eth” with a price of 420 ETH, ranking second among ENS domain names.

On July 5th, the ".eth" ENS domain name was sold at a price of 100 ETH, which is about 115,000 US dollars, ranking fifth among the transaction prices of ENS domain names .

On July 13, the ENS domain name nike.eth was sold at a price of 60 ETH; on July 18, the ENS domain name hermes.eth was sold at a price of 50 ETH , On the same day, the ENS domain name coke.eth was sold at a price of 40 ETH; on July 20, the ENS domain name sony.eth was sold at a price of 48 ETH. It is worth noting that the several high-priced ENS domain names from July 13 to 20 were all purchased by the same person, and the purchasers were all sunnybay.eth.

I have to say that this series of data and high enthusiasm can be said to be a spectacle in today's bear market, which can't help but make people Doubts abound, what is driving the trend of ENS that can't go away for a long time?

ENS - DNS for Web3

ENS, the full name of Ethereum Name Service, is a distributed domain name service based on Ethereum, which provides a secure and decentralized way to resolve simple human-readable domain names into Address resources on and off the chain, and sold as NFT, can be linked to one's cryptocurrency wallet.

On May 4, 2017, it officially landed on Ethereum's ENS. Through its unique bidding mechanism, any user can bid for their own Ethereum through the bidding process Register one (or more) Ethereum domain names ending in ".eth" with your Fang address.

Simply speaking, ENS can map the long and hard-to-remember Ethereum address starting with "0x" to a custom short address, such as satoshi.eth , vitalik.eth. In this way, in wallets that support ENS, users no longer need to copy and paste long addresses, and can directly use ENS domain names to bind various cryptocurrency addresses and receive cryptocurrency payments.

At the same time, ENS can also be used with its own DNS domain name. Currently, ENS supports many DNS domain names, such as ".com", ".io", ". xyz" and so on.

In addition, ENS is built on the ERC-721 protocol, that is, each ENS domain name is actually an NFT, so after the registration is completed, the holder can Select a certain price to list on the NFT trading market such as OpenSea, and then continue the auction transfer.

To some extent, the Ethereum address and other long numbers and letters (generally 42 digits) are not acceptable to the vast majority of users. Being friendly is also not conducive to the popularization of encryption. Every year, huge losses caused by incorrect address input are often reported in the newspapers.

The ENS replaces the Ethereum address with characters that are easy for human memory, which is a key step in the popularization of encryption. Users can choose a more friendly user address for memory , making it easy to send and receive encrypted assets, reducing the probability of transferring to the wrong address when transferring money.

For example, when users need to transfer money, they only need to enter XXX.eth to transfer money without entering complicated wallet addresses. When using a wallet such as MetaMask to connect to a website, the user's ENS domain name will also be displayed directly on the front end.

ENS's domain name service is priced and paid according to the character length of the domain name, and the charging gradient is as follows:

< p>1) 5-character domain names: pay $5 per year;

2) 4-character domain names: pay $160 per year;< /p>

3) 3 character domain name: $640 per year;

ENS build Based on Ethereum's smart contracts, it is more secure, private, and more resistant to censorship than the Internet's domain name service (DNS). The team behind ENS sees the Internet's naming infrastructure as a fundamental building block and as such should be open, decentralized, community-driven, and not-for-profit.

On a technical level, ENS can leverage the existing Ethereum ecosystem, which means it is highly programmable and can be integrated with interact with other smart contracts.

In terms of the underlying technical framework, ENS is mainly composed of two smart contracts. The ENS registry records all domains and subdomains, along with details of the owner and a link to a resolver, another smart contract that handles translation from names to addresses or other types of resources.

ENS operates like the Internet's DNS, with a hierarchical system that allows domain owners complete control over any subdomain. So the owner of XXX.eth can create wallet.XXX.eth and email.XXX.eth.

Data Analysis

Provided according to NFTGO According to the data from the ENS protocol, the current total number of domain name registrations has reached 1.77M, and the actual number of users is close to 480,000. With historical revenue of approximately $67M, ENS is highly profitable.

Different from other agreements, the ENS agreement only generates revenue when the user first purchases or renews, and according to the above charging gradient, nearly 90% of players spend as little as $5 a year on ENS.

From the above table, it is not difficult to find that the revenue data of ENS has two big explosions, respectively It's November 2021 and April 2022. The two correspond to the period when ENS announced the airdrop, a large number of users launched the airdrop, and the period of ENS domain name hype that began in April 2022.

Since ENS announced the airdrop, its revenue data has begun to show explosive growth. In the past year, its revenue has increased by more than eight times, and it has continued Over 180w USD in 11 months. According to the current situation, the revenue data for July will most likely be quite impressive.

From the wave of ENS domain name transactions in April, we can find that giant whales have appeared frequently in recent transactions, and some giant whales have begun to register in large quantities and Buying a domain name, and some people even started buying and selling domain name malls.

For example, baoyou.eth, a large ENS domain name holder, holds 2,781 ENS domain names, most of which are Chinese pinyin domain names, such as zhacai.eth, hanfeizi.eth, etc.

Another example is the giant whale whose account name is goodnames.eth, currently holds a total of 1123 ENS domain names. It opened a domain name store called GoodNames. The account profile shows that GoodNames provides high-quality domain names on Ethereum, "Welcome to buy your future name."

In fact, this situation is very normal. As early as the birth of Web2 domain names, many well-known entrepreneurs made their first bucket of money by reselling domain names Jin, for example, Yao Jinbo, the founder of 58.com, once founded the domain name trading website Yiyu.com, and made his fortune by selling domain names.

Cause Analysis

In the industry It seems that compared with traditional website domain names, ENS domain names have multiple practicability. In addition to serving as blockchain addresses, they can also be used as NFTs with identities, which can store personal data and other information, which is equivalent to an on-chain NFT. Digital identity card.

There are even communities built around ENS domain names, the most famous being 10k Club, members of this community hold four-character domain names and three-character domain names, Many of them also hold blue-chip NFTs, and they use ENS as a medium to gather together to conduct Web3 investment research and so on.

As for why ENS is so popular, I think the main reasons are as follows:

1. Scarcity of resources

Digital domain names are scarce resources in the ENS system, and digital domain names are short and easy to remember, and can also give holders a social culture label;

2. Community support

The hype of digital domain names is caused by Initiated by 10k Club, there are many BAYC bosses in the community, and it has received responses from hundreds of thousands of fans on Twitter, and there are even big capital and chaebol operators, so the community consensus is very strong. It is easy to set off an upsurge in a short time;

3. Flexible gameplay

The number of ENS domain names is Unlimited and thus extremely malleable in terms of hype.

After the 3-digit speculation, there are still 4 digits; At this time, you can also speculate on concepts, such as the recent nike.eth, sony.eth, etc.

This kind of almost endless gameplay can fully mobilize the fomo sentiment of the market, and as long as the project does not explode, theoretically it will continue to attract attention.

Thinking after the explosion

Even though ENS has become extremely popular recently, I still think You can't invest blindly. Many hidden details are worth pondering, and there are still some problems with the ENS domain name itself.

First of all, although the digital domain name is a scarce resource of ENS, it cannot be denied that it is still a product of community promotion, in other words, it lacks official endorsement. If one day the community cannot reach an absolute consensus on digital domain names, the scarcity attribute of diluting digital domain names will undoubtedly be diluted, and the construction of its social culture will also be hindered.

Besides, the cost of hoarding short domain names is still quite high based on the actual cost, which means that investing in ENS domain names can only be a short-term speculation to a large extent. Because the longer the time front is stretched, the more likely uncontrollable risks will appear. However, the liquidity problem in the NFT market has long been regarded as a persistent disease, so the risk of this transaction may be unbearable for ordinary people.

Although we have compared traditional .com domain names with ENS domain names before, there is still a big difference between the two.

.com website domain name is just needed for brand owners, but the current blockchain market is still a market that only focuses on the back end, and few brand owners will consider optimization The front-end user experience, so the current demand for brand domain names in Web3 is slightly weak.

And the current Web3 domain name can not solve the needs of cross-chain scenarios, from ENS to TNS to unstoppable, the domain name suffix includes .eth, .ust, . bit, .crypto, .coin, etc. As an entry-level product of Web3, the cross-chain demand of domain names can be said to be the first to bear the brunt, but it is still difficult to draw a conclusion on which suffix will eventually become a phenomenon-level product at the .com level.