Ethereum ENS (Ethereum name service)’s $30M revenue distribution and future prediction— 2022/01

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This article is going to introduce ENS and discuss about how ENS made ~$30M revenue with the future prediction

Introduction to ENS (Ethereum name service)

ENS (Ethereum name service) is like the DNS (Domain Name Service) in the centralized world. The service DNS provides is link the unique IP address to the specific human-understandable domain name. For example, www.medium.com is the domain registered by the DNS, so each time when we want to access the medium content, we don’t need to remember the complex IP name, but just enter the domain name, then we can access the website. ENS follows the similar logic, but in the decentralized world, you can register your own domain name in Ethereum. Using the blockchain technology, this domain belongs specific to the users.

The contract address for ENS is: 0xc18360217d8f7ab5e7c516566761ea12ce7f9d72. The example for the transaction in ENS is:

Revenue Type

There are 2 types of revenue generated by using ENS service:
1. Register revenue. The register revenue is generated by sign up the domain, it is the first time user sign up the domain name, they need to pay the transaction fee to the ENS to get the permission of the domain.
2. Renew revenue. Before the end of the expiration date, users need to renew the domain. There are 90 days grace period and after that, users need to pay the renew fee to extend the permission of owning the domain name. The fee structure is: “Yearly renewals cost $5/year for names that are 5 characters or longer. 4 character names cost $160/year, and 3 character names cost $640/year. Fees are paid in ETH. The ETH/USD exchange rate is set by the Chainlink ETH/USD oracle.” - From the ENS official website

Analysis for the Revenue Type

Before the real data and chart, there is one assumption here: The revenue is defined by the Ethereum in USD price at the receipt time, not the current Ethereum USD price.

Revenue generated from ENS name registrations since the airdrop

The way to calculate the revenue generated by ENS registration is by identifying the Ethereum events of the NameRegistered, then calculate the Ethereum in USD fee.

From the chart, we can see that the total ENS name registration fee has already reached to ~$27.3M until today.

Registration fee per day in USD (defined by the time when receiving the ETH)

Revenue generated from ENS name renewals since the airdrop

The way to calculate the revenue generated by ENS renew is by identifying the Ethereum events of the NameRenewed, then calculate the Ethereum in USD fee.

From the chart, we can see that the total ENS name registration fee has already reached to ~$1.97M until today.

Renew fee per day in USD (defined by the time when receiving the ETH)

Relationship

So, after looking at the both types of revenue, one thing we can easily derived from that is the renew fee consists only around 6% of the total revenue generated.

Plotted both type in one chart, what we can find is.

Revenue generated per day (green is the renew fee and blue is the registration fee)

To further analyze the relationship, we can use the scatter plot to find the basic overview. It is a positive relationship between these 2 revenue types, if at the day there are more registration fee generated, then it tends to be have more renew fee generated.

Scatter plot for renew fee and registration fee

For sure the above table is not quite straightforward to show the detailed relationship, let’s do a further dive in and look at it per different time period. As the first timestamp starts 2020/02, so, let’s divide it to 9 bins from 2020/02 to 2022/01. The data has been normalized to avoid the trend influence. From the chart, we can derive the conclusion that, even if we divide the time to 9 periods, it still doesn’t have much difference compared with the overall trend, which is the registration fee has a high positive correlation with the renew fee in ENS.

Prediction

Now, the question is our most interesting one, how they are going to develop in the future? We can answer this question from 2 perspectives:

Time series prediction for the trends

From the above analysis, the conclusion for the future prediction development is that there is highly possibility that there will be more users start using the ENS and more revenue generated via that.

The percentage of renew fee

From the below chart, we can find that overall, the percentage of the renew fee decreases since the launching time. The calculation for the percentage is: renew_fee / (renew_fee + registration_fee). In the first several months, the weights of the renew fee could even reach to ~90%, but recently, the ratio decreased to the stable level around 8%. So, the prediction for the renew fee is that: Instead of paying renew fee, users tend to register new domain name in the ENS in the future. It is a good sign also to show the healthy development potential for the project.

Bar chart shows the development of the percentage of the renew fee

Thanks Flipside Crypto for providing the data.

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On-chain analyst, passionate to deliver nimble self explanatory visualized blockchain analytics. Wishing a world without any type of hierarchical contempt.

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Cryptwizards

Cryptwizards

On-chain analyst, passionate to deliver nimble self explanatory visualized blockchain analytics. Wishing a world without any type of hierarchical contempt.

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