Table of Contents
A Short Introduction to Domain Names
Web2 vs Web3 Domain Name Systems
Data on Web3 Domains 3.1 On Chain Data 3.2 Off Chain Data
A Look into each Web3 Domain Name Systems
Some Insights into Some Web3 Domains 5.1 Ethereum Name Service (ENS) 5.2 Space ID 5.3 Unstoppable Domains
Food For Thought
1. A Short Introduction to Domain Names
To understand Blockchain Domain Name Systems, first, we have to know the basics of Domain Names.
A domain name is a human-readable name that is associated with a machine-readable IP address. Domain name was created because IP addresses (a string of numeric characters) are hard to read and remember. For instance, the domain name pizza.com might translate to the IP address 198.102.434.8.
Blockchain Domain name is a similar concept where the domain name is an easy-to-remember address used to replace the complicated long crypto address. For example, HashBrown.eth is used to replace 0x37a…BCG9.
2. Web2 vs Web3 Domain Name Systems
While in essence Web2 and Web3 Domain Names serve the same purpose, there are many unique differences.
The main difference would be that, unlike Web2 which is centralized, Web3 is decentralized where there’s no one central entity controlling the system. The same applies to the domain name where Web2 domain names are held in a server and Web3 domain names are kept in the user’s wallet.
Most users would be confused with the similar terminology being used in different contexts, mainly in which it is being used to describe your identity in web3. A common misconception would be another similar used term, the “Decentralized Identity” or otherwise known as “DID”.
Hence, we have broken down the concepts for you in which we used these terminology.
It is important to note that we only consider a web3 domain to have achieved some form of adoption when it is supported in which users are able to do transactions by using the domain name to send transactions, or searching it on a blockchain explorer.
Furthermore, some web3 domains allows you to build a decentralized website using the web3 domains, although most only with the supported browsers or extensions.
Why Own a Web3 Domain?
✅Convenience for others to easily find you on the block explorer
✅Conduct transactions through supported wallets
✅Various features such as being able to build a decentralized website
✅Better user experiences on supported dApps
❌Impersonation by giving users a false sense of security)
3. Data on Web3 Domains
3.1 On Chain Data
3.2 Off Chain Data
4. A Look into each Web3 Domain Name Systems
We look at a quick summary of the domain name systems projects as well as its unique aspects.
5. Some Insights into Some Web3 Domains
5.1 Ethereum Name Service (ENS)
ENS is pretty widely used, based just on anecdotal evidence from interacting with Crypto Native people on Social Platforms such as Twitter. This could be due to many people being involved with the Ethereum Blockchain, considering it as an entry to the Decentralized World.
However, as at UTC 2023-04-17, ENS seems to have seen a reduction in registrations.
ENS does seem to support multiple chains, many off-chain identities, features and thus making it a Decentralized Identity (DID).
ENS makes it easy for new users within the Crypto Space, using a popular wallet such as Metamask to send transactions on the blockchain. This is because some users might be confused by the long addresses if they are not using a domain name, and increases the chance of human errors.
Thus, integration with popular wallets could be a way to boost the popularity of these domain names services.
5.2 Space ID
Space ID allows you to trade multiple Domains such as .ETH, .ARB and .BNB.
We can see that .bnb is notably more popular as compared to .arb. As at 2023-04-17, with just a quick look from searching on the block explorer we can note that .bnb is supported while .arb does not seem to be supported (yet).
In addition, there is less attractiveness in owning a domain on a layer 2 as compared to a layer 1, as it is not the “main chain” after all.
5.3 Unstoppable Domains
Unstoppable Domains seem to have built up quite a reasonable reputation in the web3 domain market, and featured in various well known organizations.
With its various different types of top level domains/endings, it offers more customization to the user in choosing a “name” they like.
In addition, while most popular domain names are on a renewable plan, we can see that unstoppable domains have differentiated themselves from those in the market by making their pricing model into a one time purchase, permanent plan. This could be a key aspect to why it is the most popular dns currently.
However, this comes at a cost. The one time purchase makes name squatting a huge problem. It makes it hard to sustain growth and attract more well known users into the crypto space. We note that there does not seem to be consistency in terms of protection from name squatting.
6. Food For Thought
We can spot several insights and understandings in the current state of Web3 Domain Projects.
The general adoption of the underlying blockchain is important to the success of the Web3 domain name systems. A project solely focused on a single blockchain has to be a “first-mover” or project “endorsed/supported” by the team behind that chain, and its success is heavily reliant on the underlying chain it is built on.
Whereas a more generalized project more towards an blockchain agnostic approach, although harder to be adopted as the underlying chain would most likely have a native domain project, is approaching the market in a way in which they spread out their bets on different chains.
It is also important to note that these heavily endorsed projects have been built by or have heavy connections to the original team behind the chain, and in which, the domain may not be as decentralized as we think.
In addition, Web3 Domain Names based on layer 1s seem to be the more popular choice as compared to layer 2s. This could be due to the psychological effect of wanting to own an identity on the “Main” Chain, which does make sense.
In terms of decentralized websites using domains, relying on peer to peer solutions such as IPFS makes your typical website truly decentralized. However, we need to note down several pros and cons.
Furthermore, besides more popular ones like ENS, there have been too many domain projects being built on the hype of a new chain and eventually slowly losing momentum and totally abandoned.
Judging the adoption solely based on the NFT Mints might not be a good idea, because we can see that some of these domain names are being used as a way by some users to “flip” it for a profit.
Hence, we think that the Web3 Domains still have a long way to go in terms of development for better adoption among Web3 Users. A part of the reason might be because of the different chains coming out everyday, and being quick to offer multi-chain support for the newest and trendy chains for domains could be the key to succeed, at least in the short to medium term.
Have you ever bought a domain name, and would you consider using the Web3 domain name systems?
Feel free to connect with us on our Socials as we would like to hear your thoughts!