ENS domains are the highest conviction asymmetric bet I’ve had since CryptoPunks in 2018.
Keep in mind my bags are packed, but wanted to share some my investment rationale.
There are many ways to play ENS, but the one I like best is common last names. I feel there’s still 1000x gains to be had, but a high percentage chance of 1-10x outcomes if you have at least a few year investment horizon.
Realize with asymmetric bets I’m not making predictions on what will happen, I’m trying to think of plausible scenarios which could happen. Obviously there are risks to all of these scenarios playing out, but I feel they’re all possible.
I see 3 main end-user use cases for .eth domains which I’ll talk to independently:
- Personal use flex (least speculative)
- Family management / heirloom
- Independent subdomain sales (most speculative)
Use-Case: #1 Personal Use Flex
Cringe or not, status seeking is part of human nature. When a friend logs into dapps or sends money from smith.eth everyone will be aware that some domains are expensive, and a name like smith.eth has value.
PFPs and Lambos have shown people are willing to pay hundreds of thousands for status. There will be frequent “flex touchpoints” for a universal web3 login and wallet address, increasing the status obtained from the asset.
Use-Case #2: Family Heirloom
There’s little UHNW families care about more than their legacy, and one’s family name is a societal linchpin for this. Subdomains can be provided to family members which provides value to loved ones beyond individual flex.
I could see family subdomains being useful for web3 access controls for children, trust benefit dispersal, tokenized access for families, virtual memorials for grandparents… I don’t know all the potential use cases, but I have faith in the creativity of entrepreneurs.
Use-Case #3: Subdomain Sales (Upside: ~$1m-10m) Sell independently controllable subdomains to anyone. The most speculative, but ask yourself- What percent of people in the US or world do you think could be willing to pay $X per year for their “firstname.lastname.eth”?
I don’t know what the answer is, but most estimations lead to a substantial revenue stream. Let’s say you have lastname.eth with 1m people with that last name. If 2% are willing to pay $2/year for a subdomain it that would be $40k/year rev. 25 PE = $1m.
One big counter-point to all of these would be “There will be many more TLDs beyond .eth.” True… but I do think there will be a status hierarchy associated with the various TLDs. Similarly .com is still more valuable than .net despite them having the same functionality.
Analyzing the buyer pool- A name with 100k people in US will have approx 10k millionaires and 1k worth $10m+… and maybe 100 UHNW individuals. If ENS does become widespread there’s going to be a lot of people vying for the highest status family name domain.
My strategy over the last 1.5 years has been to use http://forebears.io data and have gotten ~200 common names which represent ~1.2% of world population. To normalize incidence value across geos I estimate approx pool millionaires with country wealth distributions.