There’s a crypto land grab going on, but this time it doesn’t involve expensive JPEGs of simian lowlifes, shiba inu themed meme piecesor virtual real estate in the metaverse. This speculative boom is, in a sense, something Internet entrepreneurs have been doing for decades: buying domain names to make money. This type of domain name does not end in .com or .org, but in .eth.
Administered by the Ethereum Name Service (ENS), .eth domains serve as a public profile to showcase an individual’s transactions and holdings on the Ethereum blockchain. If you’ve been on Twitter, you’ve probably seen them on crypto-focused user profiles.
Typing an .eth domain into your web browser will not bring up an account, but doing so on the Etherscan database or a third-party website such as block chair will display a user’s assets and transactions, including non-fungible tokens, or NFTs.
Once an ENS domain is registered, it can be sold on the secondary market, for example on OpenSea, because it is in itself an NFT.
The price of Ether, the native cryptocurrency of the Ethereum blockchain, is down more than half from its high of around $4,500 in November 2021. So why are ENS sales increasing now?
Sales of ENS domain names explode
ENS registrations have increased since the service began in 2017, but jumped in 2022. In July, ENS reported record numbers: 378,804 .eth domain names were registered, 25,000 names were renewed, and it has been about $3.9 million in net income.
Over the past 30 days, ENS has been the ninth most popular Ethereum based NFT collection on OpenSea, the largest peer-to-peer NFT marketplace, having handled approximately $9.5 million in trading volume during this period. ENS sells individual domains and, like all NFT creators, receives a share of secondary sales on platforms like OpenSea.
But ENS is not a limited supply NFT collection like CryptoPunks Where Bored Ape Yacht Club, which have floor prices equivalent to hundreds of thousands of US dollars. With ENS, there are an unlimited number of .eth domain names, but only some are extremely valuable.
Personal sites for the web3
For many people interested in crypto, buying an ENS domain is like buying a personal website. If I own scottnover.com to represent myself on web2, why not also buy scottnover.eth for crypto-focused web3? (I still haven’t.)
At the company Rally, an online auction house for buying and selling fractional shares in collectibles such as baseball cards and NFTs, co-founder Rob Petrozzo noticed that many of his colleagues were changing their usernames in the company’s Slack workspace to their personal ENS domains.
Then big brands started registering or buying their ENS domains in the secondary market, he said. “In the last 24 hours, nike.eth just sold for $60,000,” he said during our chat in July. “Chanel.eth and hermes.eth, which are privately owned, both had offers in the last 24 hours, I think, of $50,000 to $60,000.”
But some of the most important ENS domains are those with three digits, such as 123.eth or 456.eth. The cheapest three-digit ENS domain listed on OpenSea is currently selling for around $38,000. Nick Johnson, founder and lead developer of ENS, told Quartz that much of the new signups and secondary sales of ENS have been driven by interest in the Club 999 or Club 10konline social clubs for owners of three- and four-digit ENS domains.
Rally also got in on the action, recently, listing 105.eth on its platform. The offering, which is split into shares, sold out in 10 minutes, Petrozzo said.
What is an ENS domain used for?
The domains of the ENS are both very private and very public. It can be pseudonyms – a way to identify oneself in crypto transactions – or one’s real name.
They also display a record of that person’s assets and transactions, which would be a confusing concept in traditional banking or finance. But ultimately they show that, despite growing speculation, there are features in the ENS domains that go to the heart of how people represent themselves in what is called web3.
“What’s interesting is that the person behind this domain name might actually be using other domain names when interacting in other contexts,” said Al Morris, founder of decentralized publishing protocol Koii. Network. “So he could use one for, maybe, a consultancy or for some other business, and so you could see how someone might actually want to use ten of those domains and have each one of them be designed to preserve its underlying identity.”