02/05/2022 Domain Names Are Fueling the Latest NFT Craze on Ethereum—Here’s Why

The Ethereum Name Services has generated $1.3 million in sales over the last 24 hours, as .eth domain sales surge 2,300%.

Source: Ethereum Name Service
Source: Ethereum Name Service

In the past week,Ethereumdomain name sales on OpenSea are up nearly2,300%, as users rush to buy highly coveted, and scarce, three and four-digit names.

The Ethereum Name Service (ENS) is a domain name provider for theEthereum blockchain.The ENS is controlled by aDAO, or decentralized autonomous organization, which usesgovernance tokensto make collective decisions. It has close ties to theEthereum Foundationand has been around since 2017.

But this week, Ethereum users have taken to speculating on the future value of three and four-digit ENS domain names. ENS names are domains that end in “.eth.” Each one is anNFTthat ismintedand sold just like your averageNFT, which is a unique blockchain-based token that signifies ownership.

ENS names are touted by their proponents as the future for decentralized,uncensorablewebsites and a potential universal login for all thingsWeb3. Today, ENS names are most commonly used as a simple, readable alternative to a traditional Ethereumwalletaddress, which consists of 42 hexadecimal characters.

A number ofcelebrities and public figurescurrently use their ENS names as their Twitter usernames, like Jimmy Fallon (fallon.eth), Paris Hilton (parishilton.eth), Trey Songz (treysongz.eth), Coinbase CEO Brian Armstrong (barmstrong.eth), and Ethereum founder Vitalik Buterin (vitalik.eth).

Notably, Buterintweetedtwo years ago about three and four-letter ENS names.

“They’re a fixed-supply assetandyou can do things with them!” he said.

Similar to the web domain craze of the early internet, ENS names with fewer characters are easier to read, spell, and search.

Since the minimum number of digits for an ENS name is three, three and four-digit names have seen a massive and sudden uptick in sales. ENS’s Head of Community alisha.eth noted that on Tuesday, the ENS saw a whopping 446 Ethereum, or about$1.3 million, in secondary sales on OpenSea.

“As an observer, I feel like I blinked and I missed it,” she said of the recent surge in an ENS-hosted Twitter Space yesterday.

According todatafrom Lead ENS Developernick.eth, the ENS went from taking in about $700,000 from April 14 until April 21, to $3 million from April 22 until April 27.

In the past week, the ENS saw a119% increasein domain name registrations, and the total number of active .eth names is up 7%.

ENS revenue over time, Source: nick.eth

But this domain name craze isn’t quite like that of the 1990s. Today, many users are hyped up over numeric ENS names, like 123.eth. Many three-digit ENS names are selling for over 6 ETH each, which is about $17,000, such as792.eth,645.eth, and981.eth.

Some are buying their ENS names for the amount in the name itself, such as 887.eth going for8.87 ETH, which is nearly $26,000. 555.eth sold for 55.5 ETH yesterday, which is an eye-watering $160,000.

As to why some are paying hundreds of thousands of dollars for a name that might to others evoke thoughts of being a prison inmate or living in an Orwellian dystopia, the NFT community has a few ideas.

“If your Punk [profile picture] is [number] 4000, then you’re going to want 4000.eth,” said tommygun.eth in a Twitter Space hosted by ENS Consultant 2594.eth on Thursday, referring to howCryptoPunks(aka Punks) are numbered as part of a collection of 10,000.

In fact, the vast majority of NFT PFP collections are numbered, especially among the highest-grossing collections, such asBored Apes,Azuki, Clone X, andMoonbirds.

Tommygun.eth also shared that he owns a number of three and four-digit ENS names, even though only oneprimaryENS name can be registered to an Ethereum wallet at any given time. (Though you can register as many non-primary names within a wallet as you want.)