Thread by @HAMscale

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. #ensdomains #ENS

🧵👇 (1/13)

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.

(2/13)

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.

(3/13)

I see 3 main end-user use cases for .eth domains which I’ll talk to independently:
1. Personal use flex (least speculative)
2. Family management / heirloom
3. Independent subdomain sales (most speculative)

(4/13)

Use-Case: #1 Personal Use Flex
(Upside: ~$10-100k)

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.

(5/13)

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.

(6/13)

Use-Case #2: Family Heirloom
(Upside: $~100k-1m)

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.

(7/13)

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.

(8/13)

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”?

(9/13)

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.

(10/13)

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.

(11/13)

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.

(12/13)

My strategy over the last 1.5 years has been to use 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.

(13/13)