In Web2, we have IP addresses identifying sites that map to a top-level domain (i.e., “.com,” “.org,” “.gov,” etc.).

In Web3, users have a crypto wallet with as many as 42 characters. Try remembering “0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045.” There’s an easier way.

Rebuilding the internet

Ethereum Name ServiceENS

is a domain name registration protocol that connects an Ethereum wallet address to a more simple address name.

Example: “0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045” becomes “vitalik.eth.”.

Think of your Ethereum address as your identity/username to Web3. Several celebrities have registered domains including Jimmy Fallon (Fallon.eth) and Paris Hilton (ParisHilton.eth).

If we wanted to register “The Average Joe,” we could either:

1/ Web2: Go to a domain registration site like GoDaddy and get a readthejoe.com address or…

2/ Web3: Go on Ethereum Name Service and register for readthejoe.eth.

Beyond ending in just “.eth,” Ethereum domains provide various benefits:

• Censorship-resistant: Unlike traditional domain registries, no one can revoke your domain — unless you stop paying.
• Payments: Just like your personal crypto wallet, your domain acts as a crypto wallet that can receive crypto payments.

Ethereum domains can also replace single sign-ons (i.e., logging into sites/apps using Facebook or Google). By using a social log-in, big tech platforms like Google and Facebook have access to your data and activity. With ENS, you control your domain and data.

In summary: .Eth domain names can replace your long wallet address, become your website domain, or both.

Flipping .eth addresses

At the end of 2021, there were 341.7M registered domains on the world wide web. Today, there are just 1.1M+ registered ENS names from 406K+ users. In recent weeks, the number of ENS registrations exploded:

• On May 2, 63,723 names were registered in a single day — from the few thousand registered each day in previous months.
• In 2022, ENS has made an estimated $23.6M from registrations and renewal fees.

Demand began rising at the end of April, with the realization that there would only ever be 10,000 three and four-digit addresses (e.g. 777.eth).

Domains can be sold on NFT marketplaces like OpenSea — and just like flipping domain names, selecting the right .eth addresses could one day yield returns.

ENS’ revenue source: Creating domains require registration and renewal fees. The more characters in the name, the cheaper the renewal fee — three characters is $640/year while five or more characters cost only $5/year.

Investors: Ethereum Name Services vs GoDaddy

For ENS, .eth addresses go beyond sites for professional or business uses. Any consumer holding a crypto wallet is a potential ENS customer — which opens up ENS demand to hundreds of millions or even billions of crypto users.

But to get there, ENS has a lot of catching up to do.

• Goliath: With 76.6M domains, a market cap of $12.7B and $3.8B in 2021 sales — GoDaddy (NYSE:GDDY) is the world’s largest domain registrar service.
• David:ENS
  , Ethereum Name Service’s governance token — has a $384M market cap and $45M in protocol sales over the past year — a tiny fraction of GoDaddy’s.