NFTexplained.info is a team of long term crypto investors who are well versed in the NFT space. In this article we will discuss the Ethereum Name Service phenomenon and break down all aspects of it including the strategic importance and evaluate if it will be a good long term play financially.
We are a team of crypto experts however none of our advice is financial. We aim to create educational content.
Let’s dive in!
Crypto names have been exploding all over the internet; you may have seen personal names on Instagram and especially Twitter. Names like gmoney.eth and even companies like the NBA purchasing NBA.eth – amongst many others. What is this hype about and what does ENS actually do?
ENS – which stands for Ethereum Name Service – is essentially an NFT which can be connected to any Ethereum wallet address. This NFT allows you to rename a specific wallet address from 0x5Cp7… to any unregistered name; to illustrate, Bob can turn his Ethreum address (i.e. 0x5Cp7) into Bob.eth.
These particular NFTs must be registered for a specific amount of time – securing an ENS for a longer time period normally costs more. This is very analogous to buying a domain name for a website. Shorter ENS names (i.e. those that are three digits or less) tend to be more expensive and more valuable.
Currently any three-digit ENS name has a floor price of 9.27 ETH and the floor price for four digit ENS names is 2 ETH (at the time of publication of this article).
The main benefit is allowing people to far more easily identify your wallet such that they don’t need to copy and paste your Ethereum address – an unintelligible mix of 40 hexadecimal characters – and begins with 0x. These addresses are fundamentally indistinguible and ENS domain names solve this problem.
Once an ENS name is connected to a specific Ethereum wallet address, it is much easier to find the address on blockchain explorers like Etherscan. It is also much easier to send digital assets as you can simply type NBA.eth instead of 0x64g6m9…
Now that the fundamentals of ENS have been explained, our team will take a look at why some of these NFTs are selling for absurd prices.
Why Would Someone Spend So Much On A .eth Domain Name?
With four digit ENS names like 8888.eth being sold for US $45,000 and five digit ENS names being sold for US $36,000, let’s take a look at what these investors are thinking.
As a general statement there are a variety of different reasons as to why some ENS names are being sold for very high prices. Purchasers often think ENS is a long term play on NFTs, web 3, and the Ethereum blockchain. Purchasers are also projecting mass adoption and that ENS will remain the largest domain registrar.
By long term play, our team is referring to the mass adoption ENS holders believe will happen with both NFTs as well as web 3.0 (as they are tightly connected). Additionally, ENS holders presumably think that Ethereum – which is currently the largest smart contract blockchain – will remain the biggest.
By mass adoption, NFTexplained.info is alluding to a scenario in which billions of users take part in the emerging web 3.0. Having a universal name like 8888.eth indicates publicly that the holder is incredibly wealthy or one of the earliest people to believe in ENS.
As with any NFT, ENS also plays a part in contributing to your online identity. That is why many users on Twitter have a .eth name – some people have even built a brand around the name.
Additionally, as with any NFTs, ENS are very scarce (e.g. there will only ever be 999 three digit ENS names).
Large ENS holders often think that ENS will serve as a more effective way to login to decentralized applications to which a wallet can be connected. This is becoming more prominent as we have already seen Twitter users connect their account to their Ethereum address.
What Is The Perspective of People Who Envision ENS Or .eth Names As Unsuccessful?
There is certainly a possible future in which mass adoption does not occur and the other factors that our team detailed above don’t come to fruition.
As a general statement, it is impossible to know if ENS names will be successful or not. ENS or .eth names will likely be unsuccessful if there is not mass adoption for NFTs, web 3, and Ethereum. Additionally if people don’t want others to easily identify their wallet, then ENS will likely not be a success.
Since the blockchain is immutable, people may enjoy the anonymity of not having their Ethereum wallet so easily found. Blockchain explorers tell you information which some may find sensitive such as their current balance and details of the transactions they have made.
Now that you have a thorough understanding of ENS, our team will now discuss an alternative way to gain exposure to ENS – aside from purchasing specific ENS names.
What Are ENS Tokens? How To Gain Exposure To .eth Domain Names
One way to indirectly invest in these particular NFTs and become a member of the ENS DOA – which allows you to communicate/vote on changes that you want with other holders – is to purchase the ENS governance token.
As NFTexplained.info previously mentioned, none of our advice is financial and should never be interpreted in that manner.
If you are interested in gaining exposure to ENS and are one of our US readers, our team recommends using Binance. Using that link will also allow you to receive a trading discount.
Binance allows you to trade ENS and many other digital assets and has low fees which is why our team recommends them.
Now we will dive into some FAQs our team has received!
What Is An ETH Domain Or Username?
ETH domains such as NFTexplained.eth are attached to a specific Ethereum wallet address. NFTexplained.eth is a new name for your Ethereum public wallet address (i.e. 0x5fd7… can become NFTexplained.eth and all transactions can now go through NFTexplained.eth instead of the long 0x5fd7…).
What is ETH Twitter?
Many crypto users on Twitter have handles like NFTexplained.eth; this is because their handle is their Ethereum public wallet address. This particular NFT (NFTexplained.eth) makes it much easier for the public to identify your wallet as well as receive digital items as the sender won’t have to type 0x5g7….
Why Are People Adding ETH To Their Twitter handles?
People add .eth to their Twitter handle for a variety of reasons; these reasons may include showing off their NFT, and make it easier for users to identify their wallet as their Ethereum wallet address is readily memorized or researched effortlessly.
How Much Does An ETH name (ETH Domain) Cost?
Minting a new ENS (Ethereum Name Service) is often incredibly cheap however buying ENS names like NFTexplained.eth off the secondary market like OpenSea can be remarkably expensive. The cost of registering or minting an ENS name depends on the length of the name and the amount of time you would like to secure the name.
At this point in time – given that gas prices on Ethereum are low – minting a 6 digit ENS name with the gas fee (and securing it for a year) would cost a maximum of US $10.
Where Can I Buy Ethereum Name Service Tokens?
Our team recommends purchasing ENS tokens from Binance as the fees are lower than other crypto exchanges that support the trading of ENS tokens. That being said, other platforms also allow you to trade ENS tokens.
US users can find Binance linked here.
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