The Ethereum Name Service (ENS) token has gained over 90% in the last three weeks despite bearish sentiments in the cryptocurrency space, as a result of a hawkish federal reserve, negative United States GDP and worrying inflation data.
The token traded $13.89 on the 13th day of April and then peaked at $26.64 yesterday, representing a 91.79% rally in the token price, despite Bitcoin falling below the $38,000 trading zone which forced a major sell-off in the altcoin market.
Asides from its price rally, we are also seeing traction for the platform as it recorded a sudden surge in registration of domain names in April. ENS hit a milestone of 1 million registered domain names in April, a factor that also contributed to the sharp rally seen in the token price. In fact, registrations at the end of April saw 162,978 new domain registrations, according to data from Dune Analytics, the same period we saw the most rally in the token.
Along with new registrations, secondary sales for ENS names on OpenSea reached a peak of 446 Ether (ETH) worth of volume ($1.3 million) in the last week.
What is the ENS Token all about?
- Ethereum Name Service (ENS) is a distributed, open and extensible naming system based on the Ethereum blockchain. ENS converts human-readable Ethereum addresses like ajibola.eth into the machine-readable alphanumeric codes you know from wallets like Metamask. The reverse conversion, associating metadata and machine-readable addresses with human-readable Ethereum addresses, is also possible.
- The goal of Ethereum Name Service is to make the Ethereum-based web easier to access and comprehend for humans, similar to how the Internet’s Domain Name Service (DNS) makes the internet more accessible. Like DNS, ENS also uses a system of dot-separated hierarchical names called domains with domain owners fully controlling their subdomains.
- A handful of industries like the technology space are shifting from Web2 to Web3 and with this move, awareness of blockchain technology is also spreading. The ENS is one project that is looking to help facilitate Web3 adoption by making it easier for DApp users to interact with the Ethereum network.
- ENS launched with a highly successful retroactive airdrop in November 2021 that rewarded users who had registered addresses before the project launched its token.
Why invest in its Token?
- ENS touts to be a one-of-a-kind value proposition due to being the first service that transfers the Domain Name Service to the decentralized Web3. It is important to note that ENS is not a company but an open-source project that calls itself “an open public utility that belongs to the company.”
- The project aims to become a piece of infrastructure as vital to Web3 as the DNS is to the internet. Moreover, ENS does not have a single point of failure thanks to blockchain technology and is, by design, more censorship-resistant and secure.
- One of the main obstacles to the mass adoption of blockchain technologies is the accessibility as well as ease of use, which ENS aims to remedy. Instead of using machine-readable albeit inconvenient alphanumeric codes, users can receive any crypto or NFT to a short and easy-to-remember link. This simplifies the user experience and makes blockchain technology less technical.
- It is also important to remember that the ENS token is the governance token of Ethereum Name Service and is used to govern the protocol and influence decisions on pricing its .eth addresses and the price oracle. Token holders can also delegate their tokens to the DAO for voting.
ENS runs on Ethereum, which is secured by a proof-of-work consensus mechanism which requires miners to mine new Ether. A set of decentralized nodes validates transactions and secures the Ethereum blockchain.
- Thanks to the decentralized nature of Ethereum, and over 10,000 nodes securing the network, ENS does not have a single point of failure and cannot be hacked as such. Ethereum Name Service has also partnered with different wallets like Coinbase Wallet, Trust Wallet, My Crypto and others.
- The token has a total supply of 100 million but currently has a circulating supply of just over 20 million at the time of writing. It is up 72% from its all-time low of $12 which it created about 2 months ago. It has a market capitalization of $421.3 million with a volume of transactions of $3.4 billion in the last seven days.
- The token hit an all-time high of $85.69 in November 2021, the same period when Bitcoin and the entire cryptocurrency space hit a new all-time high.
As a result of the renewed interest in ENS domains, according to Dune Analytics, the protocol saw its second-highest monthly revenue at $7,838,962 generated from registrations and renewals. This makes a total yearly revenue of $42,767,760 for the protocol, which is ultimately redirected back into the project’s treasury to be used by the ENS DAO.
According to ENS, the primary purpose of registration fees is to “prevent the namespace from becoming overwhelmed with speculatively registered names.” A secondary function of the fees is to provide enough revenue to the ENS DAO to fund the ongoing development and improvement of ENS.