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Over the past two years, the rise of Web3 functionality has benefited decentralized domain name services, with millions of blockchain-based domains registered to date. Difficult market conditions may have hampered exponential growth, but industry leaders believe utility-driven adoption will continue into the future.
Web3 is fundamentally changing the way businesses, brands and retailers serve their customers. Customers have complete control over their data, wallets and online identities thanks to blockchain ecosystems such as Ethereum.
Distributed domain names have proven to be a valuable tool for users and businesses to integrate with Web3 functionality. From providing human-readable names that replace numeric wallet addresses to serving as decentralized profiles across the Web3 ecosystem, decentralized domains offer an alternative to traditional domain services.
Ethereum Name Service (ENS) and Unstoppable Domains are two of the most prominent platforms serving this space, with more than 6 million domain registrations combined since their respective launches. Both services saw significant growth in newly created domains in 2021-2022.
Cointelegraph reached out to a handful of decentralized domain name platforms to assess the current state of the industry, who is leading registrations, and what the future holds for the sector.
2022 has proven to be a big year for both ENS and Unstoppable Domains, with both companies highlighting some key metrics for the year in their exchanges with Cointelegraph.
ENS is a decentralized, open and extensible naming system that runs on the Ethereum blockchain. Maps human-readable names such as “alice.eth” to machine-readable data such as cryptocurrency addresses and URLs.
ENS emulates a traditional Domain Name Service (DNS) using dotted hierarchical names, commonly called domains, with domain owners controlling both domains and subdomains. ENS domains are effectively non-fungible tokens (NFTs) that act as Ethereum wallet addresses, cryptographic hashes, or website URLs.
According to ENS developer Makoto Inoue, as of January 2023, the total number of officially registered domains on the platform was 2.8 million, excluding names re-registered after expiration. Including subdomains and DNS names increases that number to 3.9 million. This uses wallets and decentralized identities, except off-chain names like Coinbase’s in-house cb.id domain solution.
Nora Chan, VP of Communications at Unstoppable Domains, has demystified the premise of blockchain-based domain name services. Unstoppable Domains provides Polygon with her Web3 domain with no gas fees and provides an affordable way for users to establish a secure and portable identity for her Web3.
Domains are bridged to Ethereum and can be used for a variety of purposes, including sending and receiving cryptocurrencies, logging into hundreds of apps and metaverses, building decentralized websites, building Web3 identities, and more.
The platform has registered and created 3.1 million domains so far, with 1.2 million registered in 2022 alone.
Both Inoue and Chan reflected on the bearish market conditions of 2022 and offered mixed views on the implications for decentralized domain registrations. As Inoue explained, the recessionary market conditions actually benefited his ENS enrollment.
During the bull market, high gas prices actually hampered ENS growth, as .eth registrations cost $50-$100 while yearly registrations cost only $5/year. am.”
However, as gas prices are gradually coming down, it is becoming more affordable to register an ENS name. Inoue also noted that his ENS enrollment growth in 2022 was influenced by ‘category’ findings.
This involves creating ENS domains based on a list of names with common characteristics, such as “10K Club,” which are four-digit domain names from 0000.eth to 9999.eth. His ENS domain in the Genesis era is a select group of his ENS names created prior to June 2017, prior to the emergence of the popular CryptoPunks NFT collection.
Chan, meanwhile, acknowledged that registration rates for Unstoppable Domains have slowed in 2022. Yet his 1.2 million domains registered in 2022 still make up more than a third of his total domain list.
Businesses, brands, and users are getting more and more accustomed to Web3’s capabilities. Decentralized domains allow users to carry their full digital identity, pay for goods on e-commerce sites, and collect NFT versions or extras linked to specific real-world products.
As many of these services plug into Web3, the likes of ENS and Unstoppable Domains provide the infrastructure for both businesses and users to enter this new paradigm.
For ENS, the rise of Coinbase’s high-profile cb.id subdomain integration was the biggest third-party service integration story, Inoue said.
Cross-Chain Interoperability Protocol (CCIP) is a universal standard for creating services and applications that allow developers to process and transmit information actions across multiple networks. The ENS developer says CCIP Read can reduce the overall cost of gas by providing a way to store his ENS name outside of his Ethereum Layer 1.
Chan emphasized that despite the recent crypto bear market, Unstoppable Domains has extensive integrations with partners such as Brave, Opera, Trust Wallet and Etherscan. The company has also launched a variety of his Web3 top-level domains such as .x, .nft, .wallet and .crypto with mainstream brands and businesses.
Unstoppable Domains’ partnership with Blockchain.com has created a .blockchain top-level Web3 domain, with Blockchain.com’s potential 83 million people looking for customizable .blockchain domains or human-readable wallet addresses users have been unlocked.
If Inoue’s prediction is correct, 2023 could see a surge in subdomain registrations. An ENS developer told Cointelegraph that ongoing development may give users more control over their subdomains.
In 2023, we will see a surge in subdomain registrations. This will be driven by the release of the Name Wrapper, a feature that converts subdomains to NFTs (currently only .eth is an NFT), allowing the community to It makes it easier to sell and transfer subdomains.
Inoue also highlighted subdomain integration with Coinbase and others as an adoption driver to make ENS names more accessible to users. Ethereum also reduces the gas cost of interacting with the protocol, making it resistant to bull market gas surges.
Although the registration of these subdomains does not generate direct revenue for the ENS organization itself, Inoue said it will promote the overall adoption and usefulness of the protocol within the Web3 ecosystem.
Zhang said focusing on creating more utilities, building partnerships, and improving the user experience of the service will be key to continued adoption this year.
Cointelegraph also spoke with Vasil Toshkov, founder and CEO of PeerName. His platform he founded in 2014 sells .bit domains based on Namecoin. The platform currently sells a handful of his Emercoin blockchain domains, including .coin, .bazar, .lib and .emc, and currently manages around 8,000 domains.
According to Toshkov, PeerName sells “true decentralized domains” to run its websites, and does not offer NFT domains or centralized management services. We used to sell a wide range of domains from different platforms, but now focus on decentralized and practical applications.
PeerName sold about 700 domains in 2022. Toshkov highlights increasing competition and high fees at the end of a bull market as key challenges.
Our business has performed much better during the bear market. Then there is no competition from fake domains. Fees are low and users pay seamlessly. We only have users who buy domains to use, not as.”
PeerName’s top-selling domains include .bit, .coin, and .onion. The latter domain is not blockchain-based, but is used within the Tor browser and client systems. Toshkov believes that .bit domains may also be integrated into the Tor project and browsers, which could drive adoption.
If this happens, interest in them will be huge. These are the first and most decentralized blockchain-based domains. Similar to Bitcoin, but for domains, he said. Told.
Cointelegraph previously investigated The prevalence of domain “hijacking” and “squatting”. It is caused by speculative users who register domains with well-known brands and names.
