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What does this do exactly?
By "this" you mean NIP-05 identifier?
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Yes is it needed?
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Most clients will show some kind of 'verified' badge if you have NIP-05 name, so you look more trustworthy. And when someone mentions you they won't have to specify your pubkey, but can just type your NIP-05 name which is easier to remember, and then when a post with your mention is displayed, your NIP-05 name will be displayed, not pubkey, which is again - easier to understand and remember for other people.
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