Sui Name Service (NS) big pump，项目潜力爆发还是a flash in the pan？

Author: Luke, Mars Financial

Introduction

NS tokens surged by 103% in just one hour, breaking through 0.43 USDT, followed by a slight pullback, currently trading at 0.38 USDT. This wave of gains has attracted widespread attention and surprised many retail investors: why did a relatively unknown blockchain domain token suddenly become the market focus? This article will delve into the technical advantages and economic model of NS, compare it with Ethereum Name Service (ENS), and finally explore whether the blockchain domain field has investment potential.

The violent rise caused by the liquidation of giant whales

The surge of NS is not entirely driven by the token economic model, but by the fund operation of the whales, a situation quite similar to the past GameStop event. At that time, the whales quickly created a short-term craze in the market through massive replenishment and airdrop positions.

A whale will invest funds into the Navi platform in early 2025 and use NS as collateral for loans, while also engaging in short selling on the exchange. The whale first lends out NS, sells it short, then uses the profits to repay the loan and re-collateralize NS, forming a continuous cycle of fund operations. However, the space for this operation is gradually depleting. If other investors start to withdraw their NS on Navi, the whale's short position may face rapid liquidation.

According to on-chain data, the sharp rise on February 20th was precisely due to a single or a group of whales buying back 75,000 NS every minute, attempting to cover short positions and repay loans, which triggered dramatic price fluctuations. In the process, the collective counterattack by retail investors played a role in exacerbating the situation, similar to the 'squeeze' effect in the stock market, causing the price to spike to 0.43 USDT at one point.

Although this situation may seem to provide retail investors with short-term profit opportunities, it also hides significant risks. The replenishment and airdrop behaviors of whales may create an unstable capital cycle in the market, and if retail investors and traders withdraw their NS one after another, the whales' short positions may be quickly liquidated, thereby exacerbating price fluctuations. Therefore, this type of market surge is both an opportunity and may also be a bubble.

What is NS? Blockcast domain service in the Sui ecosystem

Sui Name Service (NS) is a core technology in the Sui ecosystem, providing users with a simple and easy-to-remember blockchain address solution. In the world of blockchain, long strings of addresses can often be a headache, and the goal of NS is to make these complex addresses more concise and easily recognizable. For example, an address on Sui like '0xd77861e972e02feb0927611eb934b67a1f9e60782e36cdef61f6779919b6a8cd' may confuse you, but through NS, you can convert it into a short identifier like '@john' or 'john.sui', similar to creating a username on social media, except it is completely decentralized and operates on the Sui blockchain.

Developed by the Mysten Labs team, NS utilizes the high-performance architecture of the Sui blockchain, providing a speed of up to 100,000 transactions per second, enabling it to process a large number of transactions. Users only need to pay about 20 SUI (equivalent to a few dollars) to register a domain name, and the V2 upgrade in June 2024 also added subdomain functionality, making naming more flexible, similar to "@john.family". The core mission of NS is to provide a decentralized "domain yellow pages" for Web3, providing more convenient digital identity and asset management for the blockchain world.

NS vs. ENS: The showdown between the newcomer and the big brother

To understand the potential of NS, we may compare it with the veteran giant in the blockchain domain name field, ENS. ENS, as a core project in the Ethereum ecosystem, has long been the dominant player in the domain name market since 2021. It provides users with concise addresses like 'vitalik.eth.' With Ethereum's vast ecosystem and first-mover advantage, ENS has become the most popular domain name service in the blockchain world. ENS has registered over 2.6 million domain names so far, with prices soaring from the initial $43 to $85.69 in November 2021, then dropping to $6.7 in the bear market (October 2023), and now stabilizing in the range of $25-35.

However, ENS also faces some challenges. The most significant weakness is the high Gas fees, which often result in annual domain registration costs ranging from $5 to $640, with short domain names being particularly expensive, sometimes requiring 300 ETH (hundreds of thousands of dollars). In addition, due to Ethereum's transaction speed and fee issues, the registration and usage costs of ENS are relatively high for ordinary users.


Unlike ENS, NS runs on the Sui blockchain, which has significant advantages. Sui is known for its high-performance transaction architecture, with the ability to easily achieve 100,000 transactions per second. This gives NS a huge advantage in both cost and efficiency. Registering a domain name similar to "@john" with NS only costs a few dollars, and the Gas fee is almost negligible. Thanks to the rapid development and low-cost advantages of the Sui ecosystem, NS is likely to experience rapid growth in emerging markets.

However, the ecosystem of NS is not as mature as ENS, and the user base and market size are far behind ENS. Retail investors need to be patient and wait for its gradual development in the ecosystem.

) Domain Race: The 'ID fever' of Web3, with both potential and risks

Blockchain domain names are rapidly becoming one of the foundational infrastructures of the Web3 ecosystem, similar to the Domain Name System (DNS) in traditional internet. It not only simplifies complex blockchain addresses but also provides a decentralized and verifiable identity system for decentralized applications (DApps), NFTs, and digital assets. Just like .com domain names in the 1990s became scarce assets of the internet, blockchain domain names may become the "digital ID cards" in the Web3 space. With the surge in Web3 users, the market demand for blockchain domain names will also rise significantly.

In this field, NS and ENS represent two different competitive strategies. As a leader in the Ethereum ecosystem, ENS has become the "big brother" of blockchain domains with its powerful ecosystem and first-mover advantage. It currently has registered over 2.6 million domains and has firmly locked the high-end market through its integrated wallets, DApps, and NFT use cases. However, ENS's high gas fees and higher registration costs are still its main weaknesses, especially for ordinary users, the domain registration costs are high.

By contrast, NS relies on the high performance and low cost advantages of the Sui blockchain, demonstrating strong competitiveness in the market. The transaction speed of the Sui blockchain is extremely fast, and the cost of registering a domain name is only a few US dollars, with gas fees almost negligible, making it highly attractive in emerging markets. However, NS is still in the early stages of development, and its ecosystem and user base are far inferior to ENS. Investors need to exercise caution.

Overall, although the market has huge potential, speculative activities and regulatory changes may still bring risks to investors. Nevertheless, blockchain domains remain an important cornerstone of the Web3 ecosystem, and those who can accurately grasp market demand can profit in this race.

Conclusion: This sudden surge is only a temporary opportunity, and risks still exist.

Despite the high market attention caused by the short-term surge of NS, this price spike may be only due to the short-term fluctuations caused by the whale's position liquidation. Similar to the 'squeeze effect' in the stock market, whales conduct large-scale repurchases to cover short positions. Although it pushes up prices, this kind of fluctuation is likely temporary and unsustainable. Although retail investors have gained high returns in the short term, the risks behind this surge should not be ignored.

With the fluctuation of market sentiment and the restriction of circulation, NS may face the risk of price correction, especially when the operation of whales ends, the market support may weaken. Therefore, although NS has potential in the Sui ecosystem, investors must remain cautious and not be induced by short-term price fluctuations. For investors who wish to hold for the long term, they should pay close attention to the long-term development of the project, technological progress, and ecosystem construction, rather than relying solely on short-term market popularity.

In the cryptocurrency market, opportunities and risks always coexist, investors need to make rational judgments and manage risks. The future of NS is still full of uncertainties, and this surge is just a brief episode in the cryptocurrency market, not necessarily sustainable. Therefore, it is recommended that retail investors stay clear-headed when participating, avoid blindly chasing highs, to avoid the risks brought by short-term bubbles.