SUI Name Service (NS) big pump, is the project's potential going to explode or be a flash in the pan?

Authored by: Luke, Mars Finance

Introduction

NS token 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 increase has attracted widespread attention and surprised many retail investors: why has 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 discuss whether the blockchain domain track has investment potential.

The surge caused by whale liquidation

NS's sharp rise is not entirely driven by the token economic model, but by the fund operation of the whales, which is quite similar to the past GameStop incident. At that time, the whales quickly created a short-term market frenzy by massively replenishing and dropping positions.

In early 2025, a whale will invest funds in the Navi platform and use NS as collateral for loans, while shorting on the exchange. The whale first lends out NS, shorts it, then uses the profits to repay the loan and re-collateralize NS, forming a continuous cycle of fund operations. However, the space for such operations has gradually dried up. If other investors start withdrawing their NS on Navi, the whale's short position may face rapid liquidation.

According to on-chain data, the sharp rise on February 20 was precisely due to a whale or a group of whales buying back 75,000 NS coins per minute, attempting to cover short positions and repay loans, which triggered dramatic price fluctuations. During this process, the collective counterattack of retail investors played a role in fueling the fire, similar to the 'squeeze' effect in the stock market, causing the price to briefly soar to 0.43 USDT.

Although this situation seems to provide opportunities for retail investors to make short-term profits, it also hides significant risks. Whales' replenishment and airdrop behavior may create an unstable capital cycle in the market. If retail investors and investors withdraw their NS one after another, whales' short positions may be quickly liquidated, further intensifying price fluctuations. Therefore, this type of market surge is both an opportunity and may also be a bubble.

What is NS? Blockchain domain name service in the Sui ecosystem

Sui Name Service (NS) is a core technology in the Sui ecosystem, providing users with a simple and memorable blockchain address solution. In the world of blockchain, long strings of addresses can be a headache, and the goal of NS is to make these complex addresses more concise and easy to recognize. 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 to achieve a transaction speed of up to 100,000 transactions per second, enabling it to handle a large number of transactions. Users can register a domain name for approximately 20 SUI (equivalent to a few US dollars), 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, and to provide a more convenient digital identity and asset management for the blockchain world.

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

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

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, requiring up to 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 operates on the Sui blockchain with significant advantages. Sui is known for its high-performance transaction architecture, with transaction speeds easily reaching 100,000 per second, giving NS a huge advantage in cost and efficiency. Registering a domain name similar to "@john" with NS only costs a few dollars, while the Gas fees are 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 NS ecosystem is not as mature as ENS, with a user base and market size far behind ENS. Retail investors need to be patient and wait for its gradual development in the ecosystem.

Domain Name Race: The 'ID card fever' of Web3, with potential and risks coexisting

Blockchain domain names are quickly becoming one of the foundational infrastructures of the Web3 ecosystem, similar to the Domain Name System (DNS) in traditional internet. They not only simplify complex blockchain addresses but also provide decentralized and verifiable identity systems 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 could become the 'digital ID card' in the Web3 space. With the rapid increase in Web3 users, the market demand for blockchain domain names will also soar.

In this field, NS and ENS represent two different competitive strategies. ENS, as a leader in the Ethereum ecosystem, has become the "big brother" of blockchain domain names with Ethereum's 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 applications. However, ENS's high gas fees and higher registration costs remain its main weaknesses, especially for ordinary users, the domain registration cost is high.

By contrast, NS, relying on the high performance and low cost advantages of the Sui blockchain, has demonstrated strong competitiveness in the market. The transaction speed of 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 from being comparable to ENS. Investors need to remain cautious.

Overall, although the market has huge potential, speculative behavior and regulatory changes may still bring risks to investors. Nevertheless, blockchain domain names 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.

Although the short-term surge of NS has attracted high market attention, this price spike may only be a short-term fluctuation caused by the massive whale airdrop position liquidation. Similar to the 'squeeze effect' in the stock market, whales conduct large-scale repurchases to cover short positions, which, although pushing up prices, is likely to be temporary and unsustainable. While retail investors may have achieved high returns in the short term, the risks behind this surge cannot 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 those investors who hope to hold for the long term, they should pay close attention to the long-term development of the project, technological progress, and ecological construction, rather than relying solely on short-term market enthusiasm.

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