Ethereum Name Service (ENS) registrations spiked this week as a prominent address sold for hundreds of ether, sparking retail interest.
ENS is a decentralized domain name protocol that runs atop the Ethereum network. It provides users with an easily readable name such as “abc.eth” instead of a complex, long-form alphanumeric address for their crypto wallets, similar to the way the Domain Name System substitutes memorable names such as "coindesk.com" for websites' numeric Internet Protocol addresses.
Some ENS buyers treat the names as investments, purchasing popular and common names and selling them for a profit, research firm Delphi Digital said in a note this week. Last week, “000.eth” was sold for a record 300 ether, fueling interest in three-digit ENS names as “traders tried to capitalize on the hype,” Delphi Digital added.
Daily ENS registrations also spiked, reaching over 30,000 new addresses on July 4 and over 20,000 on July 7. This followed a lean period in late May and early June, when registrations ranged between 3,000 and 5,000 a day.
Some analysts noted that ENS addresses were among the most popular and liquid assets trading on NFT marketplace OpenSea.
“The interest we are seeing in ENS is partly driven by the fact that it's one of the very few pure true utility NFTs that are visible, widely known, liquid and traded on OpenSea,” said Anderson Mccutcheon, CEO of Chains, in a Telegram message.
“The difference in value is also less subjective, as an address like "chains.eth" is objectively more valuable than "asd1asdg3.eth,” Mccutcheon said. “The fundamentals and value that ENS addresses are far more certain than other opportunities” for retail crypto investors.
Jeff Mei, chief marketing officer at ChainUp, said the uptick in shorter domain name registrations could be linked to NFT investors preferring the shorter tags due to a presumably higher value.
Other market observers said lower ether and gas prices also incentivized market participants to purchase and trade ENS addresses.
"ETH gas prices are lower during this bear market environment," said Jisu Park, founder at Sooho. "This poses the perfect opportunity for investors to register ENS domains at scale, as the primary cost of doing so is the ETH gas fee.”
“As the gas fee has decreased significantly, investors are highly incentivized to claim and trade ENS domains during this window,” Park said.