The impending Merge (transition from POW to POS) of ethereum seems to be affecting ENS domain sales. Major crypto companies are not staying idle in the face of the chain transition and are becoming big stakeholders in the test "Beacon Chain".
Ethereum Name Service (ENS), is a project that offers naming and recognition services for ETH wallets, in an operation similar to Internet domain naming, or DNS (domain name service). August became the third-best month in its annual history after ENS domains accounted for 2744 ETH or around $4.3 million in revenue.
According to ENS data for the past month, as many as 301,000 new .eth domain registrations were made and 34,000 new accounts were opened using at least one ENS name. The total of all .eth registrations now stands at 2.2 million names.
The biggest convenience of the Ethereum Name Service is the ability to identify an ETH wallet by a short unique name in the .eth domain, instead of by an approximately 42-digit code. This simplifies token and NFTs transfers, as well as facilitates payments. In addition to these benefits, .eth domains, like .com, .net or .org internet domains, could be sold and may have their own unique NFTs.
The mentioned Merge involves ethereum moving from a proof-of-work blockchain to a proof-of-stake which, in a nutshell, means a different system of validating (confirming) transactions that are more energy efficient and cheaper, due to the use of economies of scale.
ENS address registrations appear to be accelerating steadily. The record to date was set in July, when some 378,000 new names were registered. Although the role of domains in Merge itself is rather small, their increasing number may be a sign of the growing interest in ETH and the move to a cheaper and more efficient proof-of-stake (POS) infrastructure.
The inevitable centralisation of DeFi?
According to data from Dune Analytics and Nansen, crypto companies provide more than 66% of the staked ETH. This means that most companies such as Lido, Coinbase and Binance are likely to be responsible for a large proportion of transaction validation on the new ethereum system.
Such entities, called validators, are supposed to be a kind of 'thread' of the new POS system. They will be responsible for storing data, processing transactions and adding more blocks to the chain. Each validator is expected to hold a min. 32 ETH - at the current price, this is approximately $51,000. Holding tokens makes such entities large depositories across the blockchain.
This news has raised discussion on social media regarding the centralisation of the new blockchain, because with so much validation of POS transfers from institutions, can we really talk about DeFi? It seems that the ETH developers are aware of this drawback, but in order to make ETH efficient, reduce costs and further develop the ecosystem, they have decided to move towards a proof-of-stake blockchain.
On the Conotoxia MT5 platform, ETH is gaining around 0.5% today at 11:30 GMT+3, already drawing its sixth daily bull candle. The consolidation seems to have put the token's price above the 10 and 100-day moving averages.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
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