Analysis: ENS domains become “the perfect NFT collection” for bear market?

WuBlockchain
7 min readSep 6, 2022

Author: Maverick

Editor: Colin Wu

The once unbeatable OpenSea saw its trading volume hit a new monthly low in August over the past year. Blue-chip liquidity such as BAYC, CryptoPunks and Azuki, which had been the mainstays of the market, have been losing ground after a massive liquidation crisis, and daily trading counts have long deteriorated to single digits. However, under this bears, domain names, one of the most valuable assets in the history of the Web, are standing out at this time. ENS domains, the OG type of subject in the NFT industry, are quickly making their way up the trading platform’s turnover charts. Nick Tomaino, founding partner of venture capital firm 1confirmation, changed his Twitter nickname to “1492.eth” on Sept. 5 and said ENS is the perfect NFT set.

ENS domain is the most widely held subject in NFTs. According to official data, a total of 541k users have registered a total of 2.17 million ENS domains. Anyone can register or buy a domain name of their own with an expiration date based on their preference from the market, and the story behind a good name, the brand it represents, etc. will quickly take over the minds of other users after it has been widely spread. Over time, when a person speaks the name, the narrative behind it and the brand value it contains will unfold.

However, it is often difficult for a domain name to develop value because most of the characters do not have any real meaning, so ENS domain is simply a marker or symbol that replaces a long, unwieldy string of addresses for most users. Some eagle-eyed investors have found that a limited number of ENS domains with special meaning can have speculative value under limited conditions.

Some users choose ENS domains based on what is already available and widely spread, registering/purchasing a domain name of a large company that already exists in reality, such as telsa.eth, in anticipation of the company buying the domain name when it enters Web3 or a potential purchase by another like-minded investor willing to pay a higher price. However, such domains are often taken by others years ago and are firmly in their hands, so it is unlikely that anyone will change hands until they reach a high psychological price.

If there is no meaning, make it

ENS domain can be registered with a wide range of character sets, including digital, letter, emoji, special symbols and their intermixture, etc. Different character sets and their combination create a special domain name set, and the differences in length artificially create the differentiation and scarcity of the same type of character set. Differences and scarcity make for speculative things.

According to ENS.Vision, the current ENS domain categories can be divided into the following categories :(according to the volume ranking, only the total volume exceeds 1000 ETH)

1.10k Club: Names with 4 Digits: 0000–9999

The total volume has exceeded 17,000 ETH, far leading the volume in all ENS categories. The floor price is more than 2 ETH, which is the most popular ENS domain category recently.

2.999 Club: Name with 3 digits: 000–999

The most expensive ENS domain category, the floor price is over 30 ETH.

3.3 Letters: Names with 3 Letters, Total: 17,576

4.100k Club: Names with 5 Digits: 00000–99999

5.Pre-Punk Club: Names minted before Crypto Punks, Total: 78,813

6.Arabic 999 Club: Arabic numerals 000–999

7.English Nouns: Total: 3,103

8.4 Letter Dictionary: English 4 Letter Dictionary Words, Total: 4,001

9.English Verbs: Total: 6,127

10.5 Letter Dictionary: English 5 Letter Dictionary Words, Total: 5,760

11.3 Digit Palindromes: Palindromes with 3 digits, Total: 100, Floor Price: 40 ETH

12.Surnames: Total: 4,427

Among the total volume of ENS domain with more than 5.5million ETH in opensea, 999 club and 10K Club account for nearly 1 / 2 of the volume. The volume of 10K Club in nearly 24 hours has exceeded 350 ETH, surpassing BAYC, CryptoPunks and other blue chips to reach the top of the ranking.

Paper hand rate is low, ENS domain has the potential to become a NFT blue chip

In the afternoon live data of September 5, 999 Club (total 999) had 114 live listing orders, with a listing rate of 11.4%, of which only 4 listing orders were within 10% of the floor price (floor price of 30.5 ETH), 9 listing orders were within 20% of the floor price, and 27 listing orders were within 50% of the floor price. If deviate from the floor price in 50% of the list as a paper hand, so the paper hand rate is about 2.7%.

Let’s take a look at 10K Club (total 10,000), the number of real time listing orders is 1,481, with a listing rate of 14.81%, of which 32 are within 10% of the floor price (floor price 2.1 ETH), 91 are within 20% of the floor price, 261 are within 50% of the floor price, and more than 80% of the listing orders are above 50% of the floor price. This means that more than 80% of the listing orders were more than 50% off the floor price. Keeping the above conditions, the paper hand rate of 10K Club is about 2.61%.

Under the same conditions (the highest deviation from floor price within 50% is defined as paper hand), the paper hand rate of BAYC is about 2.09%, CryptoPunks is about 2%, Azuki is about 0.9%, CloneX is about 1.1%, and Doodles is about 0.95%. It can be seen that among the top NFT blue chips listed by BendDAO as collateral, the paper hand rate is mostly maintained at about 2% and below. Although 999 club and 10K club are slightly higher, it must have the potential to become blue chips in the hearts of holders.

ENS domain storytelling

1.PFP as avatar and ENS as name. ENS becomes a personal hashtag for remembering, transferring money, receiving airdrops, etc. One of the best recent examples is the announcement that Nick Tomaino, the founding partner of 1confirmation, bought 1492.eth and changed its Twitter name.

2.Inclusion of ENS domain in the “Ape Metaverse”. Previously, when the Othersdie land came out, there was a heated discussion about the value of the land. Some started from the resources, some thought that the central island was the most valuable, and there was a voice that combined the number of BAYC, the number of Otherside land and the ENS digital domain name. To achieve personal identity data sovereignty, “PFP+LAND+ENS”, that is, where does an ape with any name and appearance live in the ape metaverse.

In the future, when the ape metaverse is unified, it will be possible to see the status from numbers, and the quantity/scarcity of NFT is transformed into the singularity of numbers. In the future, when a number is spoken, such as 3399, it will be known that the person owns 3399.eth, BAYC #3399 and Otherside #3399.

Of course it could also be another Metaverse or blue chip, such as CryptoPunks top NFT collector “Punk 6529”, who uses 6529 as his Twitter, website and other social cards. When it comes to 6529, there is currently only one Punk 6529.

3.Digital domain names are eager to replicate in Web3 the success they had in Web2 history. 360.com, once held by mobile leader Vodafone, was later acquired by Qihoo 360 for $17 million, the most expensive domain name ever sold; and in the recent .com 4-digit auction records on juming.com, prices can be found ranging from tens of thousands to hundreds of thousands of RMB.

However, there is no lack of some criticism about digital domain names, many people think that this is just a kind of artificial speculation. Among the Top 50 holders of 10K Club, the number of holders reached 2113, that is, about 1.2% (50/4118) holders hold 21.13% (2113/10000) domain names; Among the Top 50 holders of 999 Club, the number of holders reaches 465, that is, about 10.3% (50/485) holders hold 46.5% (465/999) domain names, among which 0xe8… 1BB0 alone holds 127 three-digit domain names.

In addition, the digital domain name in the content expression compared with the English domain name or other combined domain name is much inferior, the meaning of the character set is given by people, and in the subsequent spread of widely spread and form a consensus. Numbers are simple and easy to remember, but the content they can carry is relatively insufficient and vague. The cultural expression ability of 10 numbers (0–9) is far less than that of 26 letters (A-Z). Besides, from the perspective of transliteration/dictation, speaking numbers in the Chinese context may be easier, a number is a syllable, but if switched to the oral English, a number is a word.

It is also strange to use numbers instead of names or to address people, because in real cultures it is often the case that prison inmates are not called by their names but by their numbers.

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Colin Wu, Chinese journalist, won 2013 China News Award