One of the most popular apps on Ethereum is enjoying a surge in price for its decentralized autonomous organization (DAO) governance token following a widely lauded airdrop.

Ethereum Name Service, a protocol that issues non-fungible tokens (NFT) that can represent Ethereum addresses as well as web domains, launched an airdrop portal for its newly issued ENS token last night. Airdrops are a token distribution method that awards a portion of circulating tokens to Ethereum addresses that fulfill certain parameters, such as having purchased an NFT.

ENS NFT holders are currently eligible to claim tokens, with many users reporting allocations worth upwards of $20,000, and the project’s circulating market cap currently sits above $500 million.

A sentence I wouldn’t have understood a week ago and now fills me with glee:

“Holy crap that $ENS airdrop was amazing!”

I made $18,000 by accident.

To explain:

1/

— Adam Davidson (@adamdavidson) November 9, 2021

In an unusual twist, the airdrop required a number of governance steps prior to claiming tokens, and an overnight price surge now has traders eyeing valuations in the tens of billions.

Constitutional convention

The claims process kicked off on Monday at 7 p.m. ET (12 a.m. UTC Tuesday).

Ethereum Name Service domain holders’ eligibility and allocation were determined using a formula that took into consideration both the amount of time an address held an ENS domain, as well as the duration of its future registration.

In what may be a first, in order to claim allocated tokens users had to vote on four articles of a foundational ENS governance constitution. These articles covered ensuring governance cannot revoke ENS ownership, allowing governance to alter registration prices, allowing governance the authority to integrate with other software naming conventions like DNS, and allowing governance control over a grants program.

Claimants then were required to delegate their token voting power before receiving their tokens. Applications for delegates opened last week, and include some of crypto’s most powerful organizations. The token already has support from Coinbase, the U.S. centralized exchange behemoth, which has not listed the token for sale but in a tweet yesterday said the company would be participating in governance. As of last night, Coinbase is the largest delegate:

Top delegates so far:

coinbase.eth – 135002
brantly.eth – 132231
rainbowwallet.eth – 128324
nick.eth – 116331
mikedemarais.eth – 88478
fireeyesdao.eth – 65801
avsa.eth – 68707
simona.eth – 59276
cory.eth – 42397 (wow!)
lefteris.eth – 40834
abwagmi.eth – 40383$ENS $23.67

— cory.eth (@cory_eth) November 9, 2021

The claims interface, the requirement to vote and delegate voting power prior to claiming tokens, and the smooth rollout have all been widely praised, and some have referred to it as among the most successful airdrops in crypto history.

“ENS is for the people,” said Ethereum Name Service director of operations Brantly Millegan in a statement to CoinDesk. “No investors, decentralized and the community can now set the key parameters of the protocol. This is the essence of Web 3.”

Price action

The token has been remarkably volatile in the roughly 12 hours since launching, sitting at $39.46 per ENS at the time of writing and up 119%.

Multiple traders added Ethereum liquidity to Uniswap v3 pools prior to any ENS tokens being released, leading to unusually high prices on the decentralized exchange’s interface:

WHAT THE FUCK pic.twitter.com/0FUNvrI5mL

— NateAlex (@NateAlexNFT) November 9, 2021

Once released, users added liquidity to the automated market maker (AMM), and trading volume has been rising steadily ever since. Per CoinGecko, the token has cracked the top 200 tokens by market capitalization as well as the top 60 by 24-hour trading volume.

Traders and analysts are now speculating how high ENS can fly.

A popular price target bandied about is $119. GoDaddy, the internet domain giant, currently has a market cap of $11.9 billion – at $119, ENS’s fully diluted valuation would exceed it, and an emerging narrative focuses on ENS as “the domain name of web3.”

Many traders are also eyeing the first major exchange listing as a “sell the news” event. Previous buzzy airdrops, such as AGLD, soared on release, only to plummet once listed on FTX.

the reason why we need to wait for $ENS to list on a big exchange before we REBALANCE out of it is because it is more noble and virtuous to dump on retail cex noobs than on each other 🤝

— 찌 G 跻 じ ( 𝙃𝙚𝙣𝙩𝙖𝙞, 𝙎𝙚𝙣𝙥𝙖𝙞 ) (@DegenSpartan) November 9, 2021

Disclosure: This reporter claimed and immediately sold ENS the night of the airdrop.