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ENS Domains are the Next Wave of NFTs

NFT

cryptoknowmics.com 22 September 2022 10:00, UTC
  
Reading time: ~5 m

Ethereum Name Service (ENS) is reportedly leading the NFT market in total volume traded during the past week with $9.38M, up a significant 192.07%. Accumulated across 20.49K aggregate sales, up around 48%. On September 8, 2022, the trading volume of ENS domains surpassed $2.6M, making it the highest trading volume in the last 30 days, and notably became the top of the NFT market trading volume. Over 8.93K unique owners have reportedly acquired an ENS name, a trend which has become increasingly popular thanks to leading crypto and NFT influencers adding their ENS (.eth) names via social media apps like Twitter. Notably, the price of the ENS Index token, ENSDOMAIN, which was introduced by MEXC, surged by over 300% with the rise in popularity of ENS Domains.  MEXC splits 4-digit ENS Domain NFTs (or non-fungible tokens) into 26,000,000 ENSDOMAIN index tokens (1,000,000 ENSDOMAIN for each NFT). The ENSDOMAIN index offers clients the option to trade unique, blue-chip NFTs at an affordable cost. If a trader owns a considerably large percentage of the index, then they are able to exchange their index holdings for any one of the 26 ENS Domains NFTs. MEXC will reportedly expand the collection based on market demand, and MEXC’s total position will not surpass 10%. MEXC is notably the first CEX that introduced NFT Index Token, which is being backed by blue-chip NFTs bought by MEXC. NFT will be "off-chain fragmented" in order to boost liquidity, without having to destroy the ERC-721 protocol.  MEXC acquires various NFT artworks, and then splits them into 1,000,000 tokens for every NFT, and lists the corresponding NFT Index. Customers simply have to trade like a spot in order to obtain a share of the NFT Index, so they can benefit from related NFT rights. This helps with  lowering participation requirements and investment risks for clients.

The “Skyrocketing” 3 to 5 Digit ENS Game

Among the overall ENS Domain trading activity, the most widely-used domains are 3 to 5 digits domains. Some 3-digit domains have sold for over 60 ETH, and the price of 5-digit domain names is approximately 0.06 ETH at the time of writing. ‘000.eth’ has been traded with 300ETH in the past 90 days, making it the second-highest  ENS domain trading record. The most expensive domain yet is ‘paradigm.eth’, with a trading price of 420 ETH.  Other 3 to 5-digit domains also led to a considerable surge in trading volume. Because the minimum length of the ENS domain is 3 digits, it is more costly. Notably, ’022.eth’ had sold for 69 ETH, and ’073.eth’ had sold for 47 ETH. Meanwhile, 5-digit domains are significantly cheaper and have greater volumes. It’s worth noting that ’52708.eth’ and ’54734.eth’ were sold for about 0.06 ETH.

Why are ENS Domains Becoming Popular?

The total number of 3 and 4-digit END domains are approximately 11k. The scarcity along with the trend of collecting a number set may have led to a sense of FOMO in the nascent market. Since the craze around 3 and 4-digit END domains began, the collectors have been quite eager to own one of the 10K different combinations. This has led to ENS domain sales reaching all-time highs with floor prices of 3 ETH for 4 digit ENS. This led to minting of all possible 3-digit and 4-digit ENS in the past 7 days. Although the floor price of ENS keeps rising, only time will tell how long this trend will last. Unlike other NFTs or digital collectibles, the total supply has been capped. If the ideal time to enter the market is missed, then traders may purchase at a high price or simply wait. The digit ENS domain has considerable scalability. If users happen to miss 3 digits, there are 4 digits, and also 5 digits. As noted in the announcement, it may also be extended to 3 or 4 letters. This type of gameplay may heighten FOMO, so it could continue to gain attention from traders.

Transitioning from Web2 to Web3, the Value that ENS Offers

During the early days of Web2, the URL had been a really long series of numbers ,like 132.583.23.7. But if you wanted to promote a website, then an easy-to-remember domain name had to be created, just like ENS domains in the Web3 era. The ENS domain name aims to cater to the requirements of Web3 users by making it easier for people to remember. With this type of naming scheme, more distinctive unique domains may have considerably higher value. When compared with typical domain names, ENS domain names also have a range of applications or use-cases: - A receiving address, ENS domains may receive various digital assets - Empower NFT. ENS domains may prove a user’s identity, and are also a DIY-type technology. Consumers are able to create and trade their own names, which helps with making ENS domains have the attributes of NFT creation and trading. - Identity representative. ENS domains store users’ personal data, and may be a business card for digital resources. - Establish communities. People with the same attributes launch community DAOs, like 10k Club.

Where Will the Price Go, as the One Most Successful Ethereum App?

Like Ethereum co-founder Vitalik Buterin stated during an interview: “The Ethereum domain name service ENS is by far the most successful non-financial Ethereum application, and it can basically be compared to a decentralized phone book.” With the rise in popularity of ENS domains, the price of ENS tokens also surged, with the highest increase of 125% in the past 60 days. When compared with NFT, the token price only had a modest increase. The FOMO of ENS domains does not impact the token price as much. But with the development of the ENS domains and its use-cases, the ENS token should reflect the value in the foreseeable future. It’s worth noting that ENS is supported by the Ethereum Foundation. Long Ethereum addresses can be hard to remember and trade. But an ENS domain may offer a more seamless experience in the Web3 ecosystem. Moreover, ENS domains do not charge royalty fees. Most importantly,  it isn’t completely controlled by a centralized platform. And even though these ENS tokens are trading at a low price, the future value could depend on the mainnet development.


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