ENS: The Rise of Crypto Domains in Web3

ENS was launched in May 2017 just before Crypto Punks. 5 years forward ENS has the largest community, most use-cases, and integrations and makes up more than 99% of crypto domain trading volume. ENS reached the 1 million domain milestone on its 5th birthday (May 4, 2022 ). Just 2 months later there are more than 1.7 million ENS names registered!

ENS resembles conventional domain names such as hope.com (or hope.eth in the case of ENS). People are somewhat familiar with Web2 domains and also the importance of cool username handles. There are similarities between .com & .eth domains, but additional use-cases and value propositions make ENS domains even more interesting. While Web2 domains are mostly for companies, crypto domains are mainly used by individuals to replace long crypto wallet addresses with human-readable names: 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045 → vitalik.eth

Domains are intuitive. It’s fairly easy [without any prior crypto knowledge] to understand that “john.eth” is cool, but “bad-example-420.eth” is not.  Domain value is often based on its occurrence and linguistic meaning in society. But don’t worry, it doesn’t stop there! You can actually make use of your ENS domains:

• Payments (use your ENS domains to receive almost any cryptocurrency)
• Website (host decentralized, secure, free IPFS website on ENS)
• User profile (store your avatar, bio, email, socials etc.)
• Identity and flex (owning cool ENS means you are either rich or early)
• Naming infrastructure (Decentraland is using subdomains of dcl.eth as their in-game tradable usernames)
• Tickets or access tokens (ticket-69–2022.festival.eth)

ENS has been around for 5 years, has many use-cases, and is embraced by celebrities and brands (Puma, Coca-Cola, Gucci, Chipotle, and others), but there had to be something else for them to really take off.

Fixed Supply ENS Collections

Interestingly enough short digit & letter ENS domains were still available for registration before May 2022. The main reason is the high annual fees for 3 & 4-character ENS domains ($640 & $140/year). It’s a lot cheaper to hold 5+ character domains which are only $5/year.

The one thing that ENS lacked in comparison to most other NFTs is fixed supply collections. There can be an infinite number of character combinations and valuing them correctly is not an easy task to do. There was a need for rarity and liquidity in ENS secondary market. As there are no 1 & 2-character ENS domains, the most obvious fixed supply collection is 3-digit combinations from 000–999. Funnily enough, vitalik.eth, the creator of Ethereum, saw the value of 3 & 4-character ENS domains almost a year before others really took off.

With more awareness coming to ENS, 3-digits got registered, and soon after there was an active secondary market for The999 Club. It was finally possible to have liquidity and floor price for ENS domains. The concept of fixed supply was crucial for new market participants to appraise ENS domains and speculate in the secondary market.

After the success of The 999, all 4-digits were quickly registered. Soon after new clubs were born such as 3-letter, 5-digits, Pokemon, Harry Potter, and even other exotic digit clubs such as Arabic 999 Club. These newly made clubs allowed for any type of investor to buy in and join like-minded individuals. In the meanwhile ENS community saw record-breaking sales in a short period of time.

ENS Awareness

Major sales and volume made headlines. While most cryptocurrencies and NFTs were in a bear market, it was easy to notice the success of ENS. Despite the uncertainty in financial markets early investors rejected multiple 6-figure offers (420.eth / 100.eth / porn.eth) and even 1 million $ offers (coin.eth / amazon.eth). On July 4, 2022, ENS ranked as the number one NFT collection by volume.

New members = new innovations! The recent digit and club craze were largely fuelled by ENS VISION – an amazing tool that helps to search and browse ENS domains. They also just launched the first ENS dedicated marketplace. There are other ENS tools out there (Esteroids, Skiff, Nimi) or soon to be launched.

Fundamental improvements are coming to ENS subdomains (subdomain.domain.eth / john.gucci.eth for example). It will be possible to register subdomains for virtually free and also sell them as individual NFTs. The underlying technology opens a lot of possibilities for individuals and companies to build on.

We are still early so buckle up frENS!