Latest Indicator: Interest in Ethereum Name Service Reaches 'Critical Scale'

The Ethereum Name Service posted its best month ever in terms of new registrations, account renewals, and revenue thanks to community awareness and low gas fees.

Ethereum Name Service (ENS) lead developer Nick Johnson tweeted the metrics for the Web3 Name Service as of May 23. He noted that the numbers are on track to break existing records because they are already at an all-time high, "and there is still a week left in May."

Jonson told Cointelegraph on Monday that the main factor leading to increased demand in the ENS space is that it’s a place where people can “form shared communities without any overarching structure being imposed on them in advance.” This has an amazing effect on domain name services.

“ENS awareness and adoption has reached tipping point; most wallets support the ENS name, so the usability factor matters.”

ENS is an open-source blockchain protocol founded in 2017 that allows people to assign digital identities to their Ethereum (ETH) wallets. Each name is an NFT ending in .eth that can act as an address, cryptographic hash, or website URL.

Data shared by Jonson shows that as of May, there have been 304,968 new registrations, 13,260 renewals and 3,165.85 ETH in revenue. All of these indicators are well above their previous highs.

Jonson also stated that "lower gas fees will definitely affect" higher sign-up and renewal rates. As of this writing, sending a fast transaction on Ethereum costs about 22 GWEI, worth about $0.92 according to gasprice.io. During periods of high transaction volume, gas fees may be higher than $50, which may prevent using the network except in emergencies.

"You can register an ENS name with 5+ characters for a year for $5 - high gas fees can make the cost several times higher, so gas price has a big impact on the affordability of ENS names."

Interest in ENS domain names has risen rapidly since April, when social clubs such as the 10k club within ENS gained significant traction. The 10k club consists of owners of ENS domains, numbered 0-9999. Both new registrations and renewals have nearly doubled since then.

ENS' record high revenue combined with a market downturn has sparked the ENS Decentralized Autonomous Organization (DAO) plan to raise funds for continued development. Revenue to fund development and maintenance "indefinitely" would help the project weather further market volatility, Jonson said.

“With the assurance of market impact, additional funds can be used more freely to help grow the ecosystem.”

However, the bullish indicators are not reflected in the ENS price. The token has been on a steady decline since its launch in November 2021, in which all .eth domain holders were airdropped a portion of the supply. ENS has fallen 86% from its all-time high in November to $12.21, according to data from CoinGecko.