The Ethereum Naming Service, ENS, is the utility service of Ethereum Blockchain. It helps to associate a human readable name like gupli.eth to a lengthy and crypto Ethereum wallets like 0x33l23sd2342d23423423s3423423423423. The ENS is the DNS of Web 3 world!
The ENS team announced their governance token $ENS on November 8 and they airdropped 25% of it is 100 million total $ENS tokens to the ENS users. Here is the breakdown of how 100 million ENS tokens are distributed
- 25% airdrop to .ETH holders (>137k accounts)
- 25% to ENS contributors (>100 individuals and groups, plus hundreds of Discord users)
- 50% to the DAO community treasury
ENS Airdrop to users
Users who are or have been registrants of a .ETH second-level domain will be eligible to receive 25% of the total supply allocated for the $ENS airdrop. According to the distribution, the total time of past and future registrations for the address as of October 31st, 2021 is considered.
The future registration period is capped at 8 years, so even if someone registered a domain for 20 years or 50 years, the maximum of 8 years was taken into account in computing the number of ENS tokens they could claim. Additionally, those who set up the ETH account as a resolver will earn additional points, which result in more ENS tokens being distributed in the airdrop.
Distribution on ENS Airdrop Claims vs ENS Token Price
ENS Airdrop attracted a lot of eyeballs as it is one of the most important airdrops of this year. This created a lot of media frenzy and social media chatter which resulted in additional volatility of ENS token price on distributed exchanges. Lets us examine the distribution of ENS tokens claimed by users eligible for airdrop vs ENS token price using Flipside Crypto’s data.
This charts shows the distribution of airdrop tokens claimed vs price of ENS tokens. About 41% of total eligible airdropped tokens were claimed when the ENS token price was about 38$ and roughly another 10% of tokens were claimed when ENS token was at 60+ USD. The rest of tokens were claimed between 38$ and 60$.
Majority of those who claimed their tokens when the ENS was 38$ will be benefited from tax bills in 2021! ENS tokens were claimed on the first day of the airdrop with the price of the tokens being 38$ and a majority of the tokens were claimed then. All those who claimed on that day have an ordinary income of 38 dollars per token! The media frenzy and spike in the price of ENS tokens caused euphoria for those who learned about the airdrops through media coverage. On November 25, the price of the ENS token peaked at 75$ and those who claimed the airdrop tokens will end up having to pay a lot of taxes in comparison to early claimants. The amount of tax they end up paying, along with the current value of their tokens, which is 44$, would make them regret claiming ENS tokens at the peak price! The price of Ethereum gas they paid to claim those tokens would have added insult to injury.
Observations
ENS is one of the key utility components from Ethereum network that provides simplicity to accessing wallets as well as allowing logins to decentralized. ENS’s airdrop is one of the high profile and most prominent airdrops of 2021. Out of the 25 millions of allocated airdrop tokens, 10 millions of ENS tokens are claimed on the first day of the airdrop at 38$ token price. Another big chunk of tokens of about 3 millions were claimed when ENS price was at it’s peak. These users would likely paying a lot in taxes as well as seeing their tokens lost 35% of their value as of this writing.