Alejandro Arrieche
The demand for web3 domain names appears to be rising lately as reflected by trading volumes in the most prominent platforms for non-fungible tokens (NFTs) as dot-com era name-squatting appears to be resurfacing.
One of the most popular companies selling these blockchain-powered domains is Ethereum Name Service (ENS), a registry that has seen over 2 million names created by over 500,000 users since the service was launched.
In the past week, over $4 million worth of ENS domains have exchanged hands in OpenSea, exceeding the trading volumes experienced by the most popular NFT collections such as the Bored Ape Yacht Club (BAYC) and Moonbirds.
These domains are considered by many as the next step to improve user experience within the crypto realm as they can be used to substitute the intricate 42-character wallet addresses to exchange assets more easily.
Services like ENS are leading the pack by introducing “.eth” domains but others such as Unstoppable Domains have expanded their reach to incorporate other potentially popular server names such as “.crypto”, “.dao”, and “.bitcoin”.
Users are reportedly buying popular domain names through these platforms with the expectation that corporations may soon rush to register their respective brands. In some cases, this could lead to monetary arrangements for the lawful transfer of the domain’s ownership.
Amazon.eth Receives $1 Million Bid as Cybersquatters Seek to Make a Comeback
To date, some of the most expensive ENS purchases include Amazon.eth, a domain that reportedly received a bid of $1 million followed by bids exceeding $90,000 for Starbucks.eth and Samsung.eth.
The decentralized nature of digital assets may complicate things for companies who seek to fight name-squatting legally as most NFT platforms are non-custodial protocols. This means that users can retain ownership of their domains in a wallet that only they have access to and this protects their assets from being seized by a third party.
As a result, if web3 domains become popular and demand from corporations rises, they could be forced to pay whatever price the user sets for securing the domain name.
Also read: Deloitte Loses Cybersquatting Case Against Crypto Outfit DKYC
Back in the late 1990s, cybersquatting was a popular activity that allowed individuals to buy popular domain names that corporations may later be forced to acquire to establish a presence on the internet.
In 1999, the World Intellectual Property Organization (WIPO) created a process through which an organization that owned a trademark could claim a domain name without compensating the current owner.
How to Invest in We3 Domains?
There are various ways to get exposure to web3 domains. The first and perhaps easiest is to buy the domains outright by using an NFT Marketplace such as LooksRare or OpenSea. The most profitable transactions may be those involving domain names that may be sought by successful companies in the future that would like to develop a web3 presence.
Meanwhile, the ENS registry has launched its native token “ENS” to create a decentralized governance structure for the protocol. So far this year, the value of ENS has retreated by more than 61% as the crypto winter has ravaged the entire ecosystem.
However, in the past 3 months, the value of the token has nearly doubled from $8.2 to $15.4 per coin as web3 domain names are progressively becoming a popular commodity.
In the future, if the popularity of the services continues to rise, the value of its native token could also increase as more and more investors would like to get involved in the project to draft proposals that could continue to improve the crypto protocol.
The maximum supply of the ENS token is 100 million and there are approximately 20 million ENS in circulation at the moment. For a proposal to be voted, it has to count on the support of over 100,000 tokens.
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This article was written for Business 2 Community by Alejandro Arrieche.
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