When you hear again that a Web3 domain name is sold for sky-high prices, when you see a Web3 friend around you again switch to a domain name as his user name, when you start to look for the domain name you are interested in in the registration column, do you think deeply, are these domain names useful? What are the differences and connections between the different projects? What is the imagination space for the development of the domain name track? If you are interested in these questions, don’t miss this article!
The structure and core ideas of this article are as follows, readers who already know about Web3 domain names can jump directly to the chapter they are interested in to read:
Chapter 1, Web3 domain name introduction: the user’s “Web3 nickname”, the encapsulation of the on-chain address Chapter 2, the application scenario of Web3 domain name: unified account name and identity data in the application, and Web2 web address interconnection, itself as an identity management and social display tool Chapter 3, Web3 domain name track classification combing: single-chain domain names (including public chain domain names, multi-domain registrars, social domain names), multi-chain domain names (including three different implementation paths), DNS alternative domain names Chapter 4, Some of the author’s observations and thoughts on Web3 domain names include: the strength of user demand for Web3 domain names, the analysis of Web3 domain name transactions, the prospect of the competitive landscape of Web3 domain names, and the potential suffix conflict problems of Web3 domain name projects
01. What is a Web3 domain name?
Web3 domain names, generally referring to those suffixed with .eth, . bnb、nft、. Wallet and other public chain abbreviations or abbreviations with strong Web3 characteristics, and the application scenarios are mainly domain names in the blockchain/Web3 field. Ethereum’s ENS is the most well-known and representative project of this track.
The concept of domain names originated in the early Internet era. For example, if you now enter “220.127.116.11” in the browser address box, then you can open the Baidu homepage, because the number 18.104.22.168 is Baidu’s IP address. But apparently, this string of numbers is not readable and difficult to remember. Therefore, early Internet designers built the Domain Name System (DNS), which encapsulates digital IP addresses by using more readable domain names such as http://www.baidu.com as “web addresses” for daily use. Now, every Internet user knows the concept of “web address”, even if most of them do not know the principles of IP addresses, DNS, etc. under it, but this does not hinder their experience on the Internet at all.
The most intuitive value of Web3 domain names is similar, it is the user’s “Web3 nickname”, which is the encapsulation of the on-chain address, such as vitalik.eth is the encapsulation of this Ethereum address:
Every Web3 user will hold at least one on-chain address, but I’m afraid no one will think about remembering their own, let alone someone else’s. Domain names such as vitalik.eth, 2089.bit, jack.bnb are obviously more readable and memorable than that long list of address characters, and can better meet the needs of people’s daily use. For example, if you need to ask your friend to transfer money to you, you may have to go to your wallet or notepad to find your on-chain address and send it to your friend; But if you own a domain name, such as vincent.eth, you can simply tell a friend to transfer money to that domain.
From this perspective alone, the value of domain names has a lot of room to play: after all, it can help public users shield the technical details of the chain address, so when Web3 enters the public, it will become the “surrogate” of the address in the hearts of users, just as most users in the Web “only know the web address, do not know the IP”?
Web2 domain name vs. Web3 domain name
From a technical point of view, the technical nature of domain names is not complicated, that is, the data relationship of “mapping”. Therefore, its implementation can take multiple paths: in Web2, the registration and management of all domain names is handled by ICANN in California, which is highly centralized and regulated by the US government; However, in Web3, the most mainstream domain name implementation is the on-chain smart contract represented by ENS, which mints each domain name into the form of Ethereum NFT, which can be freely registered and traded without permission, and the user himself sets the corresponding resolution address.
In addition, in addition to binding the address of the public chain, the domain name has more imagination, because it can also be bound to other public chain addresses, Web2 accounts, and even Web2 DNS addresses. For example, you only need to know the ENS domain name “mtyl.eth”, you can directly find one of the author’s commonly used Ethereum addresses, its corresponding Opensea account, the author’s Twitter account, and the author’s personal homepage website in ENS. In a way, this is the prototype of a Web3 universal identity.
With only one mtyl.eth domain name, you can find the author on various platforms related to Web3
02. Specific application scenarios of Web3 domain names
As a direct-to-user NFT product, what exactly can a Web3 domain name do? Next, let the author sort out the application scenarios of domain names in Web3 in detail.
1) Domain name + DApp: unification of account names and interoperability of data
The most direct application is to use the domain name directly as the account name of each Web3-related application. In Web2, whenever a new website / application is used, it is often inevitable to register a user name; For convenience, many users will choose from some of the names they used before when registering a new account to reduce their memory costs and enhance the recognizability of their online identity. However, even if a user wants to use the same username, it is not easy to achieve the same username in different apps due to the different format and length of the username on different websites, and the prior registration by other users. If a person uses “Alvin” as a username in application A, you may not be able to find him by searching for “Alvin” in application B. Even if you do find an “Alvin,” you’ll still need to take the time to find out if the controller behind the two accounts is the same person.
In Web3, due to wallet address login and on-chain resolution of domain names, DApps can easily support users to use a certain domain name as their account name. And because of the uniqueness of domain names, as domain name support for multi-chain matures, you can be sure that Opensea (ETH) and Magic Eden (Solana) use the same domain name by the same person. Even Web2 applications such as Twitter can authenticate those who use their own NFT domain names as their usernames through some plugins and other methods, and even do not rule out that platform giants such as Twitter will support similar functions in the future.
Behind the unification of account names is also the interconnection of identity data. Since the resolution information of the domain name has information from other chains and Web2, the application party can obtain user information that cannot be obtained only through the wallet address on the chain through the domain name. This not only directly imports user data, reduces the cost of users to get started with new applications from the information level (think of various information filling in Web2 applications), but also enables the application side to make targeted recommendations to users; Various certificates and badges issued by the application party can also be resolved and bound by the domain name, increasing its interoperability on the chain and the recognition of users for it.
Although this cross-chain and cross-Web2 intercommunication of identity data does not necessarily have to be achieved through domain names, domain names are indeed a natural and excellent carrier for users, and they are strong competitors and cooperation objects for this subdivision value point.
2) Domain name + wallet: search address through domain name, unified account address management
The most common cooperation between wallets and domain names is to support domain name search when transferring, and eliminate the user’s memory of the transfer address, such as Metamask, a head wallet product that has realized ENS domain name search support.
If you want to give the author tip support through on-chain transfer, you don’t need to show the specific wallet address here, you can directly enter “mtyl.eth” in the destination address bar of “Send” to find the corresponding address to operate.
There is no need to show a long list of addresses, no WeChat collection code, just need to remember a simple domain name to support the author
As for wallets and domain names, there is still room for deeper cooperation, but these cooperation itself may involve the strategic development of wallets, so it may not advance quickly.
Or take Metamask as an example, each Metamask account of a user can establish a different sub-account; Different sub-accounts have different addresses on different chains. This sub-account management is located in the upper right corner of the browser plugin, as shown in the following image lock:
In fact, this sub-account name and the corresponding ecological niche can be replaced by a domain name
Metamask’s account name can currently be set by users freely and has no application scenarios (simple user management is convenient). But in fact, this account name can cooperate with the domain name project to use the corresponding domain name. The public chain addresses bound to the domain name naturally become the interactive address between the wallet and the application.
Further derived, after the wallet integrates the domain name and its various resolution relationships, it can also be displayed in the wallet. For example, display the relationship of Web2 social platforms such as Twitter and Reddit corresponding to a domain name account, and the credentials held by users in each DApp. These things are actually what some DID-focused wallet project parties themselves want to do, making this cooperation a potential conflict of interest. In addition, making these tool protocols is not an easy task for domain name project owners, so there is no practical progress yet. But in the future, this is indeed a possibility.
3) Domain name + Web2: The interconnection of web addresses
Some users who have heard of Web3 domain names for the first time will think that Web3 domain names such as “2099.eth” are similar to “2099.com”, both are Web2 domain names (that is, web page addresses), but in fact this is not the case. So, can your registered Web3 domain name really become a website address that can be opened by a universal browser? This is actually something that many domain name projects hope to advance, but its difficulty is not in the technology, but in the real world and ICANN communication.
In ICANN’s Web2 domain name management system, issues such as “. com」、「. cn」、「. xyz」、「. “web extensions” such as link are called “top-level domains”, and applications for new top-level domains require special submission of materials + auction. Not only does this require a significant application fee, but the timing of the opening and auction of domain names is entirely up to ICANN. In addition, ICANN has a brand protection rule – if a brand owner (such as Apple) finds that its trademark domain name has been registered, it can appeal to obtain its own domain name, even if this appeal is not necessarily successful, which also brings many potential troubles to the project side. In addition, ICANN reserves top-level domains for countries (e.g., .cn is for China), and a few projects have suffixes that conflict with national abbreviations, such as ENS’s “. eth” and the country top-level domain set aside by ICANN for Ethiopia conflict.
Therefore, because the connection of Web2 websites is not the core value of Web3 domain names, coupled with the above reasons, no Web3 domain name project can now realize “direct Web3 domain names as website addresses”. But after all, there is a precedent for Web2 domain names, buying Web3 domain names to send website addresses, around which to build a personal homepage / company homepage concept, is still very attractive, such as Unstoppable Domains in Web2 connectivity is very positive. Other projects such as ENS have also formed a more mature “curve to save the country” scheme under the unremitting exploration of Web3 community members: using Web3 domain names as second-level domain names under top-level domains.
Although “vitalik.eth” cannot be parsed directly into the browser, such as “vitalik.eth.xyz” and “vitalik.eth.link” do. Readers may wish to try, for example, enter “vitalik.eth.xyz” into the browser, you can see the ENS Profile generated by Vitalik by default; Enter “vitalik.eth.link” to see Vitalik’s profile:
Vitalik’s ENS Profile
Vitalik profile built on eth.link
There is no convention for what top-level domain names are used, how each top-level domain suffix represents different meanings, and even whether the project party can obtain control of the corresponding headset domain name. In the case of ENS, .eth.link was previously registered by co-founder Virgil Griffith, but due to Virgil’s imprisonment, the domain expired and was auctioned off to Manifold Finance. ENS has filed a lawsuit in court to regain control of the domain, and the case is still pending.
This direct connection with the web address, although its specific implementation still relies on the Web2 domain name system, requires the project party to obtain the control of the second-level domain name they are interested in, but this is more acceptable to the public than some other solutions (such as IPFS static resolution + Web3 browser opening). This natural interoperability with Web2 websites is also a unique feature of Web3 domain names that come naturally and are unique to other similar identity management carriers.
4) Domain name application body: identity management tools & social display homepage
The ontology of Web3 domain name applications is now only responsible for the function of registering domain names and binding major chain addresses most of the time, and the sense of existence is not high. However, as more and more applications and wallets support domain names with application parties, wallets, and Web2, the domain name application body will also carry more identity management functions. Specific examples are as follows: set the resolution target corresponding to each chain and each Web2 platform, set the address, format and display information of the personal homepage, and set some private content / content that requires specific permissions to access.
The domain name project can also naturally make a social display homepage, and the information registered by the user and the desired display is presented in a structured way. For example, the second-level domain name suffix .eth.xyz carries the function of ENS personal homepage, as long as you know any ENS domain name, you can add .xyz after it and enter the browser, you can see some display information of the corresponding address of the domain owner. Although the experience of this exhibition is still very rudimentary, it is indeed valid in the long run. In addition to being operated by the domain name project itself, the personal homepage can also be carried out in cooperation with projects such as link3 that want to do similar things.
If the imagination is used further, the domain name project can also do its own socialization, or the social project can also issue domain names as one of the core of its operations. The SNS domain name issued by Linkkey is one of the more implemented projects of this kind at present.
If readers are interested in the decentralized identity track, they can refer to the author’s previous long research on DIDs:
5) Summary of this chapter
The above is the author’s integration of the current Web3 domain name more practical application scenarios. Different domain name projects have different focuses on development.
In the third chapter, this article will make a classification of the main projects of the Web3 domain name track, so that readers can understand the difference between these projects, as well as some details of the specific data and implementation of the domain name project.
03. Domain name project classification and sorting
There are many current domain name projects, perhaps nearly forty or fifty, but if you divide from the technical implementation and application scenarios, it is not too complicated – you can think of ENS as the “pioneer” and “big brother” in the domain name field, and most domain name projects are replicas of ENS on different public chains, even if not directly forked, its specific implementation on the chain is also highly referenced to ENS.
The author divides the current domain name projects into the following three categories: single-chain domain names, multi-chain domain names, and DNS alternative domain names. Among them, single-chain domain names can be further refined. As shown in the following figure:
1) Single-chain domain name
Public chain domain name: represented by ENS
Such projects are very recognizable: they are all suffixed with the abbreviation of the public chain, such as .eth, . sol、. AVAX, and all have the official background of the public chain or the explicit support of the official. Their implementation logic and application scenarios are also highly similar, nothing more than on different public chains. Therefore, to study this type of project, you only need to focus on ENS.
ENS is the leading project in the Web3 domain name field, founded in 2016 by Nick Johnson, a former software engineer at Google. Initially, ENS was a side project authorized by the ETH Foundation, and the ENS team was later established with the support of the ETH Foundation. ENS has not taken any financing from outside, only donations from institutions such as the Ethereum Foundation.
ENS went live in beta in May 2017 and generally available in May 2019. ENS consistently ranks among the top 10 Opensea in terms of trading volume, with two peaks in November 2021 and April-May 2022. As of the beginning of November 2022, ENS has 2.62 million domain names registered, 573,000 registered users, and 508 eco-partnership projects, which is significantly ahead of many other similar projects. ENS airdropped + issued coins in November 2021, and in early November 2022, its fully diluted market capitalization was about $1.5 billion.
ENS currently has no plans to directly expand to other public chains, and the recent actions of the project side are mainly reflected in the connectivity of Web2 web pages, such as the above-mentioned second-level domain pages and their corresponding applications. In addition, ENS is also working with Spruce ID to promote Sign-in with Ethereum (EIP -4361), a new login method, hoping to achieve identity data communication through it, which is worth paying attention to and looking forward to.
For more details on Sign-In With Ethereum, see: login.xyz
While ENS and well-known are high, it’s not perfect. ENS exposed the “ZWJ character problem” after it went live:
The ZWJ problem refers to ENS’s support for the padding character ZWJ when registering – e.g. “%E2%80%8D”, so that domains that are not physically different can be rendered with the same appearance. For example, “vitalik%E2%80%8D.eth” and “vitalik%E2%80%8D%E2%80%8D.eth” are displayed in the web page as “vitalik.eth”, which makes the user transfer by copying and pasting the domain name, there is a risk of being deceived by the “fake domain name”.
At present, this problem ENS can no longer be solved technically, and can only rely on the consciousness of the application layer to patch, such as Opensea, Metamask will put a yellow exclamation mark on domain names with ZWJ characters. However, if ENS enters a large-scale promotion period, it is expected that the relevant fraudulent applications will inevitably appear. This has laid a potentially troubling factor for the large-scale rollout of ENS.
Opensea’s “yellow triangle” ENS domain name
Web3 domain registrars: represented by Unstoppable Domains
Such projects often sell Web3 domain names with multiple suffixes at the same time, and these domain extensions are often highly related to Web3. Among them are Unstoppable Domains.
Unstoppable Domains raised $65 million in July at a valuation of $1 billion, close to ENS levels. It also supports the registration of 9 domain names .crypto/.nft/.x/.wallet/.bitcoin/.dao/.888/.zil/.blockchain. It is worth mentioning that unlike most domain name programs that require annual renewal registration, Unstoppable is a permanent registration mechanism, so the fees for some rare domain names will be more expensive.
The registration process of Unstoppble Domains is not completely on-chain like projects such as ENS, but a centralized registration management + on-chain NFT mint model: users can use Google login + credit card payment when registering, and then go to Polygon on mint NFT (except for .zil domain names, go to Zilliqa on mint).
Unstoppable Domains Payment can be made by credit card upon registration
After registration and payment, go to the on-chain mint
In terms of project development, Unstoppable Domains will also focus on the concept of “Web3 name”, but its actual product design and publicity focus on the experience of Web2 users, as well as the interoperability of its domain name and Web2 website. In terms of Web3 connectivity, in addition to the account name cooperation mentioned earlier, Unstoppable Domains has also launched “Login with Unstoppable”, which is a button parallel to wallet login methods such as “Metamsk” after you click “Connect Wallet”, which users can use to log in in cooperation projects such as yearn.finance. However, at present, this login can not bypass the wallet, but requires an additional process to fill in the domain name, and the current experience is not good.
Unstoppable Domains may not be particularly well-known in the Chinese community, but its popularity overseas and overseas marketing efforts are very large. Unstoppable Domains now has more than 2.7 million registered domain names, and more than 500 applications integrate with Unstoppable Domains.
The main problem with Unstoppable Domains and similar programs is that the domain extensions they sell are not supported by an authority, so the ownership of popular domains is often disputed. The problem of this domain extension conflict is also a problem faced by this track, which I will discuss in the next chapter.
Social domain name application: represented by Linkkey
Such projects may not be particularly innovative in domain name technology, but they are more focused on combining domain names with social applications.
Linkkey’s SNS is one of the representatives, and it hopes to use domain names as a carrier to do “value socialization” in the Web3 field. According to the theory that “a person can only maintain deep social links with up to 150 people at the same time”, each SNS user can issue NFTs that symbolize their social value, and determine the user’s social value through the market price. Linkkey’s token model design also has certain novelties, its domain name registration function and some product functions have been launched, the complete product will be available at the end of this year and early next year, interested friends can go to its official website to do some experience and in-depth understanding.
2) Multi-chain domain name
NNS、. bit, Space ID, are the three main projects in this category. In the promotion and development of the project, they all emphasize the nature of “Web3 identity card” and “Web3 identity management”, and they have written a clear multi-chain support plan.
However, on the issue of how to specifically implement “multi-chain support”, the three domain name schemes have their own characteristics. The author will focus on their multi-chain implementation scheme to briefly introduce below.
The .bit project has launched a domain name system with the .bit as a suffix. The project side believes that .eth, . bnb、. The development of public chain suffix domain names such as sol may encounter some upper limit problems (especially new public chain domain names), because the core projects on other mainstream L1 public chains may be difficult to accept cooperation with another public chain suffix domain name. bit is a domain name suffix without a public chain tag, which may have a more natural advantage when carrying out multi-public chain cooperation.
.bit is based on the Nervous CKB public chain, which cannot be regarded as a mainstream public chain in public perception, but it has a unique nature – it is specially built to achieve the unified management of different public chain assets.
How Nervous Asset Specifically implements multi-chain asset management involves some technical problems of cryptographic principles. There is a more intuitive analogy in its official documentation, which is briefly described as follows:
If the ETH public chain and BTC public chain are compared to the United States and the United Kingdom, and the ETH address and BTC address are compared to the ID cards of the United States and the United Kingdom, respectively, the current status quo is that residents must have a US ID card (BTC address) to hold and manage assets in the United States (BTC), and the same is true in the United Kingdom (ETH). The two countries do not recognize each other’s national identity cards (addresses).
The Nervous public chain can be regarded as a neutral and open third country, which supports citizens of other countries to hold assets through the ID cards of other countries, such as a BTC user sending assets issued on Nervos CKB in a BTC wallet, which can be regarded as a US resident with a national US ID card selling TA’s house in a neutral country, and this process has been officially recognized by a neutral country (verified by the Nervos CKB node).
NNS is a domain name system with .nft as the suffix launched by Metascan.pro (the parent company of Twitterscan), which currently mainly implements core functions such as registration and resolution on the Ethereum main chain.
Metascan’s project will launch NNS contracts on other public chains (such as BSC) in the next few weeks, so that users can register domain names with lower GAS fees. The NNS domain name system on different public chains is unified, and the specific implementation of this “unification” may involve the deployment of some information cross-chain nodes, and may also involve some forms of centralized management.
Theoretically, domain name cross-chain feels not complicated, as long as the domain name resolution information on all chains can be unified through cross-chain nodes. But in fact, when multiple public chains are involved at the same time, maintaining the synchronization and real-time consistency of domain name registry information still faces many challenges under the current Web3 infrastructure. This is why most domain name projects currently only support one public chain. It is worth paying attention to how NNS specifically implements this cross-chain, and how stable and decentralized it is.
Space ID introduced the .bnb domain name on BSC. At present, as far as this domain smart contract itself is concerned, its nature is highly similar to ENS, and it only supports the connection and resolution of projects on BSC, and there is nothing very special. But Space ID plans to launch a set of “NameSpace” to go to the entire public chain domain name project, and even let Web2 platform companies also issue their own domain name space. Instead of being like .bit, I want my domain extension to become a common name in the Web3 world.
This namespace can be roughly understood as follows: if a person holds Solo.bnb on BSC, then in the namespace of Space ID, it will hold bnb:solo in the future; If he holds Solo.eth, then he holds eth:solo in the namespace; Even Apple, Google account names can be converted into forms like apple:solo, google:solo and so on.
This vision is worth paying attention to and looking forward to, but the part of Space ID that has been launched still has a certain gap with this vision, and it may take longer iterations.
To sum up, although most Web3 domain names take identity management as a core narrative, once it involves the interconnection of multi-chain smart contract domain names, it will face more complex technical details in cross-chain and multi-chain. At present, .bit’s multi-chain solution is the fastest in landing.
3) DNS domain name substitution: Handshake, Namecoin
Due to the centralized management of Web2 ICANN domain names, it has caused dissatisfaction among a considerable number of decentralized believers. Therefore, there are some people who are exploring the implementation of decentralized website domain name resolution. The main vision of these two projects is to complement and replace the Web2 DNS system.
Since their philosophy, development direction and most Web3 domain names are very different, and have not attracted much market attention recently, this article will not focus on them, and interested readers can do their own in-depth understanding.
04. Thinking about the key issues of Web3 domain names
1) Analysis of user needs of Web3 domain names: currently non-rigid needs; Transactions are mainly focused on short-digit domain names
Although the author has introduced in detail the current application scenarios and uses of domain names before, it has to be admitted that domain names are not the rigid needs of current Web3 users.
Even if a user does not purchase any Web3 domain name, it will not affect his normal Web3 application experience at all; Even if he loses the Web3 domain name he purchased, unless he has used it for his social accounts on a large scale (as I used mtyl.eth), his perception is limited. Readers may wish to think about their own and those around them’s use of domain names: how many percent of people never bought them, how many percent of people bought them just to try them out or invest, and how many percent of people actually used their domain names on a large scale.
The author has done a statistic on the renewal/retention of ENS users through on-chain data, and found an interesting conclusion: 52% of active domain names on or before August 20, 21 expired on 8/20/22. This means that during the year, 52% of domain names expired (probably more years ago), and the original user did not renew or register the same domain name in time. Taking the other 21-year time period to observe, this failure rate is basically between 45-55%.
Considering that the minimum registration time for ENS is one year, although this caliber can only be shown for returning ENS users who registered before last November, it can also tell a lot of problems. Compared with many fleeting “vent” application projects in the Web3 field, this retention situation can be said to be quite good, and it can also reflect the long-term growth nature of domain names as Web3 infrastructure and the development of the Web3 ecosystem; However, from its absolute figures, this proportion is still not high, indicating that Web3 domain names are still not a rigid demand of users.
The long-term development of domain name projects, the author believes that it mainly depends on the development of Web3 application ecology, especially the development of Web3 social projects. Because only relying on the domain name project itself in the application and wallet account name promotion, it is difficult to bring a fundamental large-scale increase to the entire field; Only the vigorous development of application projects can highlight the importance of the account name system and identity management system associated with the domain name, and highlight the value of the domain name itself. However, before that, domain name projects must be prepared enough, so as not to find that their core functions such as identity management, cross-chain solutions, and Web2 URL connectivity are still not mature enough when the real wave of applications hits. In addition, the domain name project itself to make social applications, or to do a wallet-like login system, is also a possible development path.
2) Web3 domain name transaction analysis: currently focuses on short number domain names
ENS is the most actively traded domain name project with fully public data, so it is highly representative of transactions.
In the nearly three months of ENS domain name transactions from April 25 to July 7, 2022, digital-only domain name transactions contributed 44% of the number of transactions, accounting for 65% of the transaction value; In the segment of digital domain names, 97% of transactions are 3-5 digit short numeric domain names, and 3-digit domain names contribute 29% of transaction value with 1% of transaction volume.
From the perspective of the development of various new domain name projects, the short number domain name is also the shortest numeric domain name among many domain name categories, similar to 982.eth, 2089.eth, 12346.eth, etc., what is the value, worthy of such concentrated attention and transactions? The author believes that there are two main reasons:
Short numeric domain names have strong potential brand value due to their readability and memorability. For example, when it comes to the numbers 58, 360, 4399, and 12306, the first thought of readers who have used related products is the corresponding company name? In the Web2 field, using short numbers as a brand name of an enterprise/business/product is a business logic that has been verified and may still be true in Web3. Short numeric domain names naturally come with definite scarcity and cannot be increased (unlike English abbreviations). For example, there are up to 1,000 three-digit domain names and up to 10,000 four-digit domains. Coupled with the emergence of NFT digital numbers such as BAYC and concepts such as the corresponding 10k Club, the value of this scarcity has also been verified. Now the floor price of a four-digit ENS digital domain name is close to 2ETH, and it is not ruled out that it will match or even exceed BAYC in the future.
In the Web2 field, there are a large number of cases of short domain names being sold at sky-high prices, so when Web3 goes to the public in the future, can the short domain names of the head domain name project also be sold at sky-high prices? It’s very imaginative indeed. However, it is precisely because of this that whenever a new domain name project appears, there will always be a certain speculative user who will preemptively register a large number of three- and four-digit domain names, and the project side is aware of this. Some project parties will explicitly increase the registration fee of short domain names at the time of registration, while others will reserve short domain names and market them as a special product.
It is worth noting that the emergence of this speculative phenomenon also makes the issuance of domain names a “no-cost business” for the project to some extent: only need to fork the contract of ENS, make an official website to write documents and draw cakes, and then you can expect users with a speculative mentality to grab a variety of “high-value” domain names and charge a lot of registration fees (such as referring to ENS, 640 US dollars / year for three-digit domain names and $160 / year for four-digit domain names). As for whether the pie painted by the project can be fulfilled later, that is another matter.
Therefore, when users choose a domain name project, they should also conduct more detailed investigations and pay more attention to the actual promotion of its application scenarios, including: the quantity and quality of application projects that support the domain name, the progress and possibility of realizing the vision drawn by the project side (such as social display, multi-chain interconnection, Web2 web page support, etc.).
3) Prospect of the competition pattern of domain name projects: the Matthew effect is obvious
Purely from the perspective of the price of domain names, the author believes that the competition of different suffix domain name projects is a matter with a strong Matthew effect. When it is necessary to choose a domain extension, the head domain name will become the first choice of rich people and KOLs, and this choice will further expand the value of the head domain extension. Therefore, the final head domain name may only have 1-2 at most, and because the domain name has stronger social attributes, their status will be similar to or even exceed the status of the .com suffix among many Web2 DNS top-level domains.
At present, ENS’s .eth suffix is the most promising to develop into a head, but ENS’s ZWJ defects, lack of multi-chain support and other issues may give later competitors a chance to catch up. Considering that even ENS, its registration volume does not currently exceed 3 million, which is not high compared to the Web3 user base and Internet user base, there will still be some room for competition in this regard.
One thing worth discussing is, will the transcendent status of the top domain name in price make other domain name projects completely lose their living space? In Web2, in addition to .com, there are .net, . Like org and many other common top-level domains, Web2 domains are mainly to B, and business and brand values are high. If the name of the domain name itself has high symbolic and brand value, then the suffix may take precedence lower than a good, readable prefix. For example, if your company is called Silver Stars, would you like to register a silverstars123.com or a silverstars.xyz as your website home page address?
However, in the Web3 field, the application scenarios of domain names are currently mainly to C. Assuming your English name is Charles, and you and your friends are used to seeing Charles as your account name, but charles.eth has been registered on ENS, if each domain name has similar application scenarios and experiences, will you prefer to register a name such as charles2874.eth, or register a name such as charles.gate? This is a difficult question to answer, which may depend on the future development of the head domain name and the specific positioning of the user’s mind. However, if the assumption that “each domain name has similar application scenarios and experiences” is not valid, and the application support of the head domain name far exceeds the waist and tail projects, then it is obvious that users will further gather in the head domain name.
From a long-term perspective, Web3 domain names may also become the rigid needs of every B-side project like Web2 web addresses, and the logic of the domain name demand side may change at that time. However, this not only requires the maturity and promotion of the domain name project itself, but also requires that “registering a Web3 domain name – building the project homepage through the website address connected by the Web3 domain name” has become a certain convention and consensus. Judging from the current focus of the development of various domain name projects, this may still be a relatively far away.
4) The suffix conflict problem of domain name projects: the inevitable decentralization and the damage to user experience
The issuance and registration of Web3 domain names without the permission of a centralized authority is intuitively a good thing. But this also brings potential controversy and conflict: if two projects open the registration of the same domain extension to users, how should it be resolved? After all, making an ENS-like smart contract and issuing NFTs with a certain domain extension to the public is a matter with almost no threshold.
This is a very thought-provoking issue in the domain name field, because the reason why a domain name can be used as a “Web3 common name” lies in its uniqueness on the public chain and even within the entire Web3 system. If this uniqueness is broken, the value of the entire domain name is compromised. Imagine, if there are now two .eth projects open for registration at the same time, and both have their own cooperative applications, which project’s .eth domain name do you register? If a friend gives you a domain name instead of an address as the transfer target, do you have to ask more, is the domain name project supported by the wallet you use now the same as your friend’s registration? Obviously, this will bring great confusion to the identity system on the chain.
Intuitively, the issuance of domain name suffixes generally follows a “first come, first served” principle, the domain name project that carries out the corresponding business first can give priority to obtaining the control of the corresponding domain name project, and the later project is more like a copy disk and should not be accepted by the mainstream community. For example, if the author now goes to copy ENS contracts and issues exactly the same .eth domain name on Ethereum, it is difficult to imagine what kind of user will pay to register the .eth domain name issued by the author after knowing the details of the two projects.
However, things are often not that simple, because the two projects may not be on the same public chain, the “first / last” judgment of business may not be clear, the business focus of the project may be different, and the users attracted at the start may be different. Therefore, in the early stages, the consequences of such a conflict are not obvious, and both projects can be developed at the same time. So for the application project side, how should the related cooperation support problems be solved?
A recent notable controversy in the domain name space is that the .nft domain name issued by NNS was removed from Opensea (not from other exchanges) because Opensea received a complaint from Unstoppable Domains, which preceded the former to publicly sell .nft domain names on the market and have registered in Hong Kong. NFT” trademark. But in fact, the .nft domain name NFTs issued by NNS and Unstoppable Domains are not on the same public chain, and the business focus of the two is different, not the relationship between imitation and imitation; From the perspective of trademark infringement, NNS has also registered “. nft” trademark, so the reasonableness of Opensea’s removal of NNS is actually debatable.
This is not the first time that Unstoppable Domains has clashed with other domain projects over suffixes, including .coin, . In terms of suffix such as wallet, Unstoppable Domains have clashed with other projects, and in the end, either one party voluntarily retreats, or it depends on litigation and the ruling of the US court. This is ironic, and in the end, the US government system is solved, isn’t it back to the same centralized path as Web2 ICANN?
But if it is not solved in this centralized way, completely allowing the project parties with the same domain name suffix to develop freely on the chain, how to solve potential conflicts in the future? Like ENS’s ZWJ problem, is it up to the application to make additional annotations for different project parties with the same suffix? Or to build an organization similar to a DAO, hoping that various domain name projects can coordinate to build a decentralized “Web3 ICANN”? Whether it is a user at home or abroad who is concerned about the domain name field, these issues are the focus of concern and discussion.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-is-the-value-of-your-web3-domain-name/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.