What are ENS Domains and why does Jay-Z own one?
If you use Crypto Twitter (CT) you may have noticed some users’ names ending in .eth — an indication they have an ENS (Ethereum Name Service) domain name. What is this? What does it mean?
Well, built on the Ethereum blockchain, ENS names are used for website domain names and act as shorthands for ETH addresses. Rather than using a long string of numbers and letters, an ENS domain allows users to quickly share wallet details, add their own avatar pictures (like an NFT), and link it to traditional web addresses such as .com and .org domains.
Launched in 2017, The Ethereum Name Service (ENS) takes inspiration from the Domain Name Service (DNS) that emerged in the mid-1980s for development of the world wide web (WWW). In the 80s the internet was text-based, read-only (for the most part) and required coding commands to navigate. It also wasn’t very worldwide, with just a few research bodies and universities making use of it for local networks. To improve connectivity, institutions began creating .com domains within internet inventor Tim Berners-Lee’s WWW structure. In time, this evolved into the internet we know today, after entering into more general use around the mid-1990s.
Some people around at the time managed to scoop up desirable domain names, hold onto them for a few years and then sold them on for a profit once the internet took shape. The highest .com domain sale ever was for business(dot)com; bought for $7.5 million in 1999 and resold for $345 million in 2007 — representing a 47 times return.
Jay-Z Buys Into ENS
According to data from Dune Analytics, sale volumes for ENS domains have picked up significantly this month, causing several crashes to the ENS app. ENS domains can be browsed on OpenSea. Prices range, with higher demand for shorter names due to their scarcity (with fewer letters there are fewer possible letter combinations).
ENS domains have received endorsement from rap royalty, with Jay-Z recently buying hov.eth as his ENS name. Jay-Z has previously shown his commitment to emerging technologies as one of the first high-profile owners of a crypto punk NFT. Jay-Z (AKA Shawn Carter) has taken a keen interest in emerging technology, having co-founded a venture capitalist (VC) investment firm, Marcy Venture Partners, in 2019.
Collecting rare IDs appears to be a growing trend among the wealthy due to the prestige scarcity can offer to its owner. For example, a trend in Dubai has emerged recently with vanity licence plate numbers fetching high sums. The “AA8” plate recently fetched $9.5 million at a charity auction, for instance.
In recent weeks there have also been record-high sales for low character ENS domains as shown here:
- abc.eth 90ETH
- 555.eth 55.5ETH
- 005.eth 50ETH
- 006.eth 32ETH
- 0x8.eth 25ETH
- ttt.eth 25ETH
- 025.eth 25ETH
- 008.eth 20ETH
- 2000.eth 20ETH
The Web3 Community
ENS domains are also having exclusive communities being built around them. Holders of domains numbered between 0-9999 have created a private Discord group dubbed the “10K club”, highlighting that these domains can convey prestige and status to their owners. Some brands are also beginning to acquire their ENS name, with Budweiser and Puma recently securing their names.
ENS domains are considered by some as a bridge between Web2 and Web3 by incorporating traditional domains with Web3 and crypto. If ENS proves to be the preeminent Web3 domain, we might see long wallet addresses resigned to history, which could make the space less intimidating for new crypto users by closing the knowledge gap, as seen with the WWW.
With greater speculation being driven by increasing VC investment into crypto and metaverse projects, ENS domains could continue to be highly desired as tech companies work on bringing a more immersive virtual world to reality.