Ethereum Name Service: Strong Community, Weak Investment Case (ENS-USD)

One interesting crypto token to explore this crypto winter might be the Ethereum Name Service (ENS-USD). This is a domain protocol built on the Ethereum (ETH-USD) blockchain. In this article What is Ethereum Name Service, Tokenomics of Coins, Strengths of Ethereum Name Service DAO.

What is Ethereum Name Service?

Simply put, the Ethereum Name Service is a domain provider built on public blockchain rails. You can think of it a bit like DNS, but for the Web3 environment. The service offers a public domain on the blockchain, similar to how companies like GoDaddy (GDDY) offer dot-com domains to their traditional web companies. The domain owner can not only use the Web3 domain to build his website, but also use the domain address for payment routing and identity verification. For example, Google (GOOG) (GOOGL) or Facebook (META) accounts are commonly used to sign in to Web2 websites. Web3 allows users to sign in to the application using their domain address through her Metamask-like wallet.

ENS uses the potentially problematic .ETH extension. This is because “.eth” is actually reserved for the country of Ethiopia by ICANN (Internet Corporation for Assigned Names and Numbers). .eth has never actually been used in Ethiopia, but it could lead to massive collision problems if Ethiopia and/or ICANN for some reason decide to take issue with it. To be clear, I don’t think this is likely, but it’s a possibility to consider.

Why Get a Web3 Domain

We previously discussed ENS for BlockChain Reaction subscribers in our in-depth NFT talk back in August. In that article, I explained why public blockchain ledgers allow peer-to-peer payments regardless of which app the end user chooses.

It doesn’t matter if the user you’re sending to uses MetaMask, Exodus, Brave, Atomic, Edge, or something completely different. Once you have the correct wallet address string, you can send it to the user.

The problem with crypto wallet addresses is that they are long strings and confuse non-crypto users. One of the basic cases for Web3 domains is payment routing and username login. Instead of copying and pasting unreadable strings, users can create human-readable domains to route transactions to the correct address in any application that integrates with ENS. For example, if I owned the domain “mikefay.eth” (which I don’t), I had a friend send $10 in her USDC (USDC-USD) to “mikefay.eth” can pay for some goods or services. The funds will arrive at my girlfriend’s Ethereum address associated with that domain, regardless of which wallet application my friend uses.

Anyone who has used Venmo knows the benefits of searchable usernames in peer-to-peer payment apps. ENS could be decentralized at the application layer, leveraging peer-to-peer payment utilities such as Venmo and CashApp. This is a very interesting real-world solution built on a public blockchain.

Sales, DAO Structure, Tokennomics

There is a lot of competition in the blockchain domain space. That said, ENS is one of the most successful given the level of domain sales, its own ownership, and decentralized governance of the protocol. At the time of submission, ENS has registered just under 2.6 million domains spread across his 596,000 unique buyers.

This level of domain sales is comparable to entities like Unstoppable Domains, but with an important difference. One big difference is that Unstoppable Domains sells them outright to users, offering over 6 different expansion options. ENS is operating on a renewal model, which he says is sustainable in the long term, with his focus on one extension. Another key difference is that ENS has his DAO structure whereas Unstoppable Domains is a private business. This is actually one of the most successful examples of DAOs in my opinion.

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Source: DeepDAO

According to DeepDAO, ENS has the highest lifetime DAO participants of over 87,000 and has the top 3 financial value with $861 million in funding. ENS seems to have dedicated and loyal users and domain owners. Unique domain holders are well over his 500,000, but only ENS token holders are his 64,000.

• Holders: 64,233
• Coin Price: $11.27
• Total supply: 100,000,000
• Circulating supply: 20,244,862
• Market capitalization: $228 million
• Cap Rank: #103

The biggest issue to the immediate investment theory of ENS Coin itself may be the amount of supply dilution that is yet to come.

The total maximum supply of ENS is 100 million coins, of which more than 61% are waiting for release on the time lock. The largest single wallet holder is his DAO Treasury at 10%. From there, Binance (BNB-USD) and OKX have around 7% of the supply. This means that out of 100 million coins, just over 20% is in circulation. This is not a high number and means that there will be a significant amount of dilution when the remaining tokens are released from the timelock near the end of 2025.

risk

If you believe in the future of Web3, the Ethereum Name Service is probably the community you should consider betting on. The problem may lie in the tokenomics of the ENS coin itself. Besides dilution concerns, it is by no means a utility token. Coin holders are not eligible for discounts on domain renewals or benefits for holding. Tokens exist purely as governance coins. So if you want to vote on the direction of the ENS ecosystem, it might make sense to consider buying this. It doesn’t matter if you are away.

overview

I think ENS is one of the most interesting applications of public blockchains in the entire cryptocurrency market. The activity and dedication of community members through DAO voting is exceptional and, in my view, one of the most impressive case studies of decentralized autonomous organizations. I can rightly say that I am personally rooting for ENS to thrive in the long term, but I would not recommend buying governance tokens as an investment right now. is very bullish on NFT domains.