Why are Crypto Investors Flocking to the Ethereum Name Service (ENS) NFT Collection? – InvestorsObserver

The month of May 2022 marked the start of a dismal period for the crypto community, with Ethereum and Bitcoin prices falling by as much as 40% and a host of other altcoins getting battered.
The declines were so steep that many analysts began to assert that the space had entered a new “crypto winter,” similar to the one that gripped the burgeoning digital arena in 2014.
Non-fungible tokens (NFTs) weren’t immune from the sell-off. Scores of NFT projects were forced to shut down and cut their losses as a result of Ethereum’s price dip, and liquidity and sales volume fell across the board.
But as the NFT market cratered, one collection seemed to stand out. Starting in April, sales for the Ethereum Name Service (ENS) NFT collection skyrocketed.
By July, more than 1.86 million names had been registered and the community had amassed over 508,000 unique participants. Sales had also surged on OpenSea, reaching over $5,400 ETH for the month of July – completely upending the NFT space.

What is the Ethereum Name Service?

Founded more than two years ago by Nick Johnson and his team of developers, ENS describes itself as a “distributed, open, and extensible naming system” that runs on the Ethereum blockchain.
The purpose of ENS is to replace the long string of alphanumeric characters associated with Ethereum wallet addresses with human-readable names that make it easier to transfer ETH.
Much like the way that the Domain Name Service (DNS) of the Internet translates requests for names into IP addresses, making it possible to navigate to Amazon.com without entering a complicated string of numbers, ENS allows ETH users to easily find someone’s wallet address.
For example, buying the word “thomas” on the ENS app would allow a user to replace an address in this format “2c894a01b56E7B26d947AD3,” with thomas.eth (every domain ends in .eth).
It can be helpful to think of an ENS domain as a decentralized profile that eliminates third parties and establishes a user’s digital identity.

Why Makes the ENS Project So Attractive?

An ENS domain is effectively a non-fungible token (NFT) that serves as an ETH wallet address, a cryptographic hash, or a website URL.
Since these domains exist as NFTs, an organic market has emerged that allows holders to buy and sell their addresses to the highest bidder, much like other NFT projects.
ENS domains feature words instead of pictures, a characteristic that sets ENS apart from other NFT collections and allows users to buy and sell names, words, and numbers all in one place, like a spectator sport.
However, like most success stories, there’s more than one factor that has contributed to the success of the ENS project.

1.) Utility

The main reason  ENS has generated so much interest is its utility. Although other NFT projects may offer holders access to tickets, the ability to enter an exclusive club, or merchandise from a notable brand, ENS gives holders utility immediately upon purchasing a domain name.
Those who buy their preferred name can establish their digital identity for years to come, and can also set their name as their wallet address, facilitating simpler ETH transfers.

2.) Status

It’s no mystery that factors such as status and clout play a large role in human societies, with many people willing to shell out eye-popping sums of money to climb the social hierarchy. ENS is no exception.
ENS holders with the names of celebrities, sports teams, and rare numbers are viewed by other members as special and looked on with a certain degree of admiration.
Users can also set their domain name as their Twitter handle and other social media sites – associating their whole persona with their wallet.
Puma has already done this on Twitter, giving their brand an added appeal to the Web3 crowd.

3.) ETH Merge

For months now, rumors have been circulating in the crypto community that the long-awaited date of the Ethereum merge is imminent. The event, which is expected to occur within a few weeks, will switch the Ethereum blockchain from a proof-of-work consensus algorithm to proof of stake.
The merge is expected to speed up processing time on the blockchain and reduce Ethereum’s carbon footprint – two characteristics that have been cited as drawbacks by ETH critics for years.

4.) Low Gas Prices

Like most other cryptocurrencies, Ethereum is in a bear market. While this means that NFT sellers are less likely to receive attractive offers, it also means that the blockchain is less busy, meaning that the cost to verify transactions is lower.