Are ENS Domains Worth It?
Are ENS domains worth it? Discover what you must know about ENS domains like those from the Ethereum Name Service.
The Ethereum Name Service is the biggest blockchain domain project in existence. In 2022, it witnessed massive organic growth exceeding over 2.2 million registrations across a variety of collections.
I’ve picked up a few from the more popular collections on ENS.Vision, including the 10k and the 100k clubs. I use mine to send and receive NFTs and crypto. Like many, I also bought a few to hodl and potentially flip.
These blockchain domains solve a variety of Web 3 problems, but they’ve a long way to go before reaching mainstream use. And don’t believe the hopium on Twitter. Below, I profile the bull and bear case for ENS blockchain domains.
The Bull Case for ENS
In 2022, the various ENS club saw massive organic growth despite the wider NFT and crypto bear market. Various ENS collections also reached repeated all-time highs. However, it can grow even more for several different reasons.
ENS Can Attract Mainstream Users
Over 2.2 million ENS maxis have registered their domains with ENS Domains, the vast majority aping during April and May into blue-chip collections like the 999 Club and the 10k club. The hype has even attracted the attention of mainstream media. So, when crypto winter ends, it’s exciting to imagine what will happen with ENS domains.
ENS Can Capture More Marketshare from the Existing Community
MetaMask has 30 million active users and over 160 million dot com domains exist. Although ENS has seen massive adoption, it’s clear that many more crypto and NFT fans have yet to dive into the ENS space.
ENS Isn’t Dependent On Anyone
Many NFT projects tank when the creator says or does something on Twitter or the team fails to deliver on a shoddy roadmap.
Unlike a traditional NFT, the ENS clubs don’t have or need any project owners, creators or roadmaps. It’s an organic community built from the ground up that most people can afford to ape into.
Blockchain Domains Are Solving Web 3 Problems
Holders can use one to manage their crypto and NFT wallets. They use them to send and receive payments without worrying about a complicated series of letters and numbers.
If you’re anyway bullish or into crypto or NFTs, you’ll immediately see how ENS domains simplify managing Ethereum, Bitcoin and pricey JPEGs. It’s much easier to remember an ENS than a cryptocurrency address.
Blockchain Holders Can use an ENS Domain For Their Web 3 Identity
This use case may explain why many use it on Twitter and other social media channels. Someone can even tip a creator by sending crypto to their ENS address.
ENS takes no royalties from traders. Traditional NFT projects charge 5% or 10%. You don’t pay anything to trade that pricey 999 or 10k ENS.
Companies Can Build on Subdomains
ENS maxis are excited about using and even renting subdomains. I could buy mycompanyname.eth and offer employees firstname.mycompany.eth to use. Or I could buy an ENS related to my business and rent subdomains to competitors.
Consider Budweiser, which bought beer. eth in 2021 for 30 eth. Perhaps they could create subdomains for miller.beer.eth, budwesierlite.beer.eth and so on? Other companies could do the same with their product lines.
Learn more about ENS use cases
The Bear Case for ENS
ENS attracting over 2.2 million registrations, is a nice landmark. However, it hardly has a first-mover advantage over widely used top-level domains. Dotcom has over 160 million, and that’s not taking into account dot net, dot IO and other TLDs.
ENS Domains Don’t Index in Google Search results
No serious SEO would build content or commercial website (yet) solely on ENS. They might buy the ENS and redirect to a traditional dot com.
The blue-chip ENS clubs have monopoly issues too. Domain squatters have picked many of these up and are holding onto them, not to build but for a significant flip. That will hardly grow the space.
The smaller ENS clubs have limited liquidity. Nobody is buying or selling many of these clubs because nobody wants them. After all, with traditional domains, people rarely use let alone trust domains with odd characters.
ENS Has Competitors
Unstoppable Domains recently completed a $65 million funding round. Holders can use its blockchain domains for many of the same use cases as a good ENS. I bought a few, and the prices are quick and easy.
Not Your Keys, Not Your ENS!
If you lose access to your wallet or forget your recovery phrase, say goodbye to that ENS domain. Unless it expires and the holder is willing to rebut on the open market months later, there’s no recourse, unlike with traditional dot com TLDs. Security and scams are a big problem in NFTs, and horror stories puff off many potential collectors. ENS is hardly immune.
Scammers can just as easily rob an ENS domain from a holder if they have a momentary lapse in security. That’s less likely to happen with a traditional TLD, whereby a registrar can assist with security.
ENS Has Governance issues
Deciding how long someone can mint an ENS at what price is up for debate in the Ethereum community, as evidenced by Vitalik Buterin’s September 2022 Tweets about a proposal to change how much ENS holders must pay to hodl an ENS for years.
Some of the ENS community claim changes to ENS may result in Tax Flash Loan attacks, i.e. I borrow a considerable amount to bid on a premium ENS, and the holder then has to pay a pricey renewal each year… or sell it.
Many ENS Clubs are Arbitrary
Consider the female first name ENS club. I plugged in several popular Irish female first names like Sineád but apparently, these don’t count. Chances are, you can find similar omissions in other ENS clubs.
ENS Twitter is Full of Hopium
Spend any time on ENS Twitter, and you’ll find maxis shilling the case for ENS because people in Dubai pay six and seven figures to flex clean license plates that only use a few digits.
The theory is this scarcity mindset applies to ENS domain names. It might… but it’s wishful thinking until it results in sales. Some ENS Clubs are hopium too. How many people are going to build on a braille ENS domain?
ENS Is Tied to the Success of Ethereum
Sure it may not be going anywhere, but who is to say what people will use for smart contracts and to manage their NFTs and crypto in five or ten years times.
Apple wasn’t the first company to release a phone with a camera and internet access. They just executed on solving that problem and positioned their iPhone better than competitors like Nokia.
ENS domains are a fantastic type of non-fungible token with many use cases. It’s no surprise the current ENS space feels like a gold rush from the 1800s. However, it’s too early to say if ENS will become the dominant standard used by mainstream audiences.
This article originally appeared on the NFT Brief.