ENS Registrations Dip: Analyzing the Slowdown in Ethereum Name Service Demand

2024-07-17, 07:27

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![](https://gimg2.gateimg.com/image/article/17212009521692587449analysis.jpeg)
## [TL; DR]
The number of registered ENS decreased by 48% between April and June 2024.

Regulatory uncertainties, the performance of the broader crypto market and investor sentiment influence the price of ENS.

The drop in the number of registered ENS is likely to be temporary as there is a high possibility of a price rebound in the near future.

## Introduction 
The volatile nature of cryptocurrencies makes it difficult to predict their future price movements and other market behaviors. As an example, the values of <a href="/vi/price/ethereum-name-service-ens" target="_blank" class="blog_inner_link">Ethereum Name Service</a> and Ether (ETH) were in a constant decline for several weeks. The fall in their values can negatively influence market sentiment and future price movements. This analysis focuses on the recent decline in the registration of ENS despite a fall in the <a href="/vi/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> transaction fees.

## ENS Registration Declines as the Market Tumbles
The registration of Ethereum Name Service (ENS), a prominent domain name service provider, declined much during the second quarter of 2024. Its decline came after it recorded a year-to-date high within the last weeks of April. As a fact, the Ethereum Name Service enables people to create and use domain names within the Ethereum network.

Using ENS, the network users can create human readable ETH wallet addresses with the form. eth. This type of wallet address makes it easier for people to handle digital assets as it reduces human errors when conducting transactions. Furthermore, the primary blockchain naming services allow decentralized applications to easily connect with digital wallets. For example, it becomes easier for ENS to connect with dApps on the Ethereum ecosystem.

In spite of the fall in Ethereum gas fees there was a sharp ENS decline during the referred to period. The stagnation in the <a href="/vi/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum price</a> led to the fall in its gas fees. A decrease in Ethereum gas fees makes ENS registration cheaper which should have lured many crypto users to register their own human readable cryptocurrency domains. Nevertheless, that was not the case. The poor performance of the broader crypto market could have created a negative sentiment which demotivated ETH users to register their  ENS domains.

Data on Dune Analytics, one of the leading blockchain analytics firms, indicates a sharp decline in blockchain domain registrations. For example, the data indicates that only 20, 131.eth names were registered during June, marking a 30% month-over-month (MoM) decline from that of May. That also denotes a 58% ENS decline from the 47,704 registrations made in April which is the 2024 peak. The following graph presents a summary of the ENS performance since July 2023.
![](https://gimg2.gateimg.com/image/article/1721201030img_v3_02cs_7b4d2680-f6d8-4166-a420-c4ae84863eix.jpg)
Ethereum Name Service Monthly Registrations: Dune Analytics

As you note on <a href="/vi/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a>, the ETH digital identity blockchain for Ethereum in June was the lowest recorded since July 2023. This shows the Ethereum network impact on the ENS name registrations.

## How the ENS Decline Affects the Broader Ethereum Ecosystem: A Critical Analysis
Since the Ethereum Name Service is an essential element of the Ethereum ecosystem the decline in ENS registration affects the behavior of investors such as traders. First, the investors use the level of ENS registration as a barometer to measure market interest in Ether. An ENS decline makes investors cautious as they view it as a market signal that investor interest in Ethereum has decreased. Thus, that indicates a potential bearish outlook. Ultimately, this leads to a fall in ETH demand and a rise in its selling pressure. However, that depends on the existing crypto market conditions.

The current ENS market trend also shows the growing regulatory uncertainty which leads to a negative market sentiment towards a specific crypto asset such as ETH or towards the entire cryptocurrency market. However, some analysts believe that the current blockchain technology trend that includes a decline in interest in ENS is only temporary. They think that an improvement in regulatory clarity will likely lead to a rebound of the asset.

## Future of ENS Registration: The Market Remains Bleak
During the beginning of the second half of 2024 the future of ENS registrations remains bleak. For example, the open interest in ENS derivatives decreased significantly within the first weeks of July. During that period the ENS open interest decreased by over 48% showing a fall in their demand. In simple terms, open interest refers to the total number of outstanding derivative contracts at any given time.

A fall in open interest shows that the number of traders who are exiting their positions is higher than those who are opening new ones. A fall in open interest reflects a decrease in the demand for the underlying asset which is usually accompanied by a drop in the price of the asset. Since the ENS open interest fell significantly during the beginning of July that indicates a decrease in the demand for the asset. Also, at the beginning of the second week of July the ENS Relative strength index (RSI) was around 47.93 which suggests that the selling pressure was higher than the buying momentum.

Despite the recent dip in the blockchain domain registrations the ENS future outlook is bright. Once there is a surge in ENS buying activity we will likely see a spike in their registration. Also, an improvement in the broader crypto market performance will likely lead to a rise in the ENS registrations. Generally, the performance of the broader crypto sector, the regulatory environment and investor sentiment influence the number of registrations that occur within a given period such as one month.

The Ethereum Name Service (ENS) rebranding exercise that started on 8 July could also increase its demand. For example, there has been an upgrade in the ENS’ marketing material and website as well as an increase in its presence on social media. Pertaining this, [Blockonomi quoted Khori Whittaker, Executive Director of ENS Labs](https://blockonomi.com/ethereum-name-service-unveils-brand-refresh-to-bridge-web2-and-web3/#:~:text=Khori%20Whittaker%2C%20Executive%20Director%20of,but%20cautious%20about%20diving%20in. "Blockonomi quoted Khori Whittaker, Executive Director of ENS Labs"), as saying, “This rebrand marks a turning point for ENS as we set out to refresh the internet. We’re meeting people where they are today – curious about Web3 but cautious about diving in. By shedding complex tech talk and embracing accessible language and design, we’re stepping into the spotlight as your friendly guide to the new internet.”

The aim of this rebranding is to improve user onboarding through the provision of easy to understand information. Domenico Perri, Head of Design and UX at ENS Labs expanded on this aspect. [He said](https://blockonomi.com/ethereum-name-service-unveils-brand-refresh-to-bridge-web2-and-web3/ "He said"), “We’re building bridges, connecting tech enthusiasts with curious newcomers to create a vibrant community where everyone belongs. Our goal is simple: to create a better internet for all. This rebrand is our invitation to you – regardless of your background or expertise – to join us in this transformative journey.” Therefore, if this rebranding is successful, the ENS registration may increase in the near future.

## Conclusion
In June the ENS registration decreased remarkably due to several factors that include regulatory uncertainties and the negative crypto market sentiment. Nevertheless, hope is not lost. As the broader crypto market recovers the prices of ENS will likely rebound. A rise in investor confidence in ENS will help to push its price up.

## FAQs about Ethereum Name Service (ENS)
### What is Ethereum Name Service?
Ethereum name service is a blockchain based service that converts randomly generated digital wallet addresses to human readable domains that end with.eth. Such names help Ethereum users to reduce human errors when making transactions.
### Is Ethereum name service a good investment? 
Based on the current market conditions investing in Ethereum name service has good returns. For instance, in the last 1 year the value of the ENS increased by 160%. 
### What is the future of Ethereum name service?
The demand for ENS is likely to increase in the future when the market enters a bull market. Also, when the ETH ETFs are launched its demand may rise. This is because the demand for ENS rises when the price of Ethereum increases. 
### How to create an ENS? 
To create an ENS you go to the ENS Manager App and connect your wallet. You then search for the name you want and select the number of years you want to register the name for and then click next. Finally, you may need to edit your profile before clicking “Register.”

<div class="blog-details-info">
<div>Author:* Mashell C.*, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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