The crypto world buys up domain names — Quartz

by Arthur · August 16, 2022

There’s a crypto coup afoot, but this time it doesn’t involve expensive JPEGs of simian lowlifes, shiba inu-themed meme coins, or virtual real estate in the metaverse. This speculative boom is, in a way, something Internet entrepreneurs have been doing for decades: buying up domain names to make money. This type of domain name does not ending in .com or .org, but .eth.

Administered by the Ethereum Name Service (ENS), .eth domains act as a public profile to showcase a person’s transactions and holdings on the Ethereum blockchain. If you’ve been on Twitter, you’ve probably seen them on crypto-focused users’ profiles.

Typing an .eth domain into your browser will not bring up an account, but doing so on the Etherscan database or a third-party site like Blockchair will display a user’s assets and transactions, including non-fungible tokens or NFTs.

Once an ENS domain is registered, it can be sold on the secondary market, for example on OpenSea, because it is itself an NFT.

The price of Ether, the native cryptocurrency of the Ethereum blockchain, is down more than half from its peak of around $4,500 in November 2021. So why are sales of ENS increasing now?

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ENS domain name sales are increasing

ENS registrations have been increasing since the service started in 2017, but are set to increase in 2022. In July, ENS reported record numbers: 378,804 .eth domain names were registered, 25,000 names were renewed, and it earned about $3.9 million in net income.

Over the past 30 days, ENS was the ninth most popular Ethereum-based NFT pool on OpenSea, the largest peer-to-peer NFT marketplace, having processed around $9.5 million in trading volume during that time . ENS sells individual domains and, like all NFT creators, receives a cut of secondary sales on platforms such as OpenSea.

But ENS is not a supply-limited NFT pool like CryptoPunks or Bored Ape Yacht Club, which have floor prices equivalent to hundreds of thousands of US dollars. With ENS, there are unlimited .eth domain names, but only a few are extremely valuable.

Personal web pages for web3

For many people interested in crypto, buying an ENS domain is like buying a personal website. If I own scottnover.com to represent myself in web2 why not also buy scottnover.eth for crypto focused web3? (I still haven’t.)

At the company Rally, an online auction house for buying and selling fractional parts of collectibles like baseball cards and NFTs, co-founder Rob Petrozzo noticed that many of his colleagues were switching handles in the company Slack workspace to their personal ENS domains.

Then big brands started registering or buying their ENS domains on the secondary market, he said. “In the last 24 hours, nike.eth just sold $60,000,” he said when we spoke in July. “Chanel.eth and hermes.eth, which are owned by private buyers, both got bids in the last 24 hours for, I think, $50,000 to $60,000.”

But some of the highest value ENS domains have been those with three digits, for example 123.eth or 456.eth. The cheapest three-digit ENS domain listed on OpenSea currently sells for around $38,000. Nick Johnson, founder and lead developer of ENS, told Quartz that many of the new registrations and secondary ENS sales have been driven by interest in the 999 Club or 10k Club, online social clubs for the owners of three- or four-digit ENS domains.

Rally also got in on the action recently, listing 105.eth on its platform. The offering, which is split into shares, sold out in 10 minutes, Petrozzo said.

What’s the point of an ENS domain?

ENS domains are both very private and very public. They can be pseudonyms – a way to identify oneself in crypto transactions – or one’s real name.

They also show a ledger of that person’s assets and transactions, which would be a head-scratching concept in traditional banking or finance. But ultimately they show that despite the growing speculation, it is functionality in ENS domains that gets to the core of how people represent themselves in so-called web3.

“What’s interesting is that the person behind this domain name can actually use other domain names when interacting in other settings,” said Al Morris, founder of the decentralized publishing protocol Koii Network. “So he can use one for, maybe, a consulting practice or for another business, and so you can see how someone would actually want to use ten of these domains and have each one designed to preserve his or her underlying identity.”