Web domains in web1 and web2 were big business. Several .com domains reportedly sold for over $25MM in the secondary market including CarInsurance.com, Insurance.com, VacationRentals.com, PrivateJet.com, and Voice.com. As we dig into the process for registration of a new website, a little history might help here.
The Internet Corporation for Assigned Names and Numbers (ICANN) is a U.S. non-profit that has oversight of domain addresses. ICANN has performed this role since its formation in 1998. In 2000, a for-profit company called Verisign (Ticker: VRSN) acquired Network Solutions, who had a contract with ICANN for the popular .com, .net, and .org domains. Verisign has since added tons of other domains to their portfolio. Verisign did $1.3Bn in revenue in 2021 and was wildly profitable with $784MM in net income. The company has a $20.7Bn market cap.
When you buy a web domain, you are typically doing this through a domain name registrar. There are over 900 of these registrars, and the biggest is GoDaddy (Ticker: GDDY). GoDaddy has all kinds of other web services beyond just registering your domain name. The company did $3.8Bn in revenue and $242MM in net income in 2021. GoDaddy has a $12Bn market cap.
Within web3, plenty of the companies are using traditional .com web addresses. Giants like Coinbase, FTX, and Dapper Labs all use .com for their main websites. A few have chosen .io like OpenSea. Some of the startups and edgier companies are going with .xyz like our new media portfolio company who uses Offbeat.xyz. These main website addresses don’t really do anything new in the web3 world. They are just basic web addresses where you can publish your website.
The most exciting things are happening with Crypto wallet replacement domains. The first big success in this area was Ethereum Name Service (ENS). Interestingly enough they use ens.domains as their web address. ENS worked with ICANN and has control over the .eth domain names. ENS was set up as a DAO and foundation entity by the Ethereum Foundation back in 2017. In 2018, ENS partnered with True Names Limited, a Singapore-based non-profit organization, who is responsible for the core software development of ENS. On their website, they describe ENS as “a public good, a basic piece of Internet infrastructure that belongs to the community”.
The .eth domains serve as a short form replacement for the 40 hexadecimal characters of an Ethereum wallet. I purchased zwerner.eth last year, and when people ask me for my wallet address I can just use that much shorter answer. These .eth domains are not something you can program a website to, they only work as wallet addresses. If you try a Google Search on zwerner.eth you’ll get taken to the Etherscan details for my Ethereum wallet. This is my public wallet, the one I want to share with the world. Obviously I don’t need to use something that so obviously doxxes my identity for my .eth address, but I think it’s fun to do so. Big web3 celebs like Vitalik Buterin (vitalik.eth), Jimmy Fallon (fallon.eth), Brian Armstrong (barmstrong.eth), and many more have made their wallet domains their user names on Twitter.
These .eth domains are NFTs that you purchase and own in your Ethereum wallet. Right now to buy a simple .eth addresses costs about $20, which is basically the same as you would pay on GoDaddy. I’d recommend you go to ENS now and pick up something you like. My guess is that everyone will have a .eth address in the future for their Ethereum wallets. High value domains have traded for north of $25K. You can go on OpenSea and you’ll find 1.6MM+ .eth domains for sale in the secondary market. Just like in the .com space, enterprising individuals or companies are buying up .eth domains for popular companies or individual names and trying to profit from this. You’ll see listings today on OpenSea for amazon.eth and google.eth, and also for lebron.eth and madonna.eth.
Outside of Ethereum Name Service, the big player is Unstoppable Domains. This is a for-profit company aiming to be the GoDaddy of the web3 world. They were founded in 2018 with a vision of “enabling user-owned, digital identity for every person on the planet”. Last week the company raised a $65MM Series A funding round at a $1Bn valuation. Top Crypto VC Pantera Capital led the financing, with participation from Alchemy, Gaingels, Polygon, and others. In the press release, they stated more than 2.5MM domains have been registered through them that can be used with 300+ decentralized apps.
The domain names from Unstoppable Domains work just like ENS with a wide range of web domains including .crypto, .nft, .x, .wallet, .bitcoin, and more. Most of these can be purchased for $20–80 cost. Just like .eth, you can use these domains as your wallet address. However, these are not tied to just the Ethereum blockchain. Unstoppable Domains has enabled these domains to work with Bitcoin, Solana, and many other chains. Just like ENS, these domains are minted as NFTs and go into your Crypto wallet. You can buy these directly from their website, and you can also go on OpenSea and purchase a domain in the secondary market. There are 300K+ domains available in the secondary including sex.crypto, pizza.crypto, beer.crypto, and many more. I haven’t bought any domains from Unstoppable Domains yet, but I likely will soon. I want to own the Zwerner name across web3 before one of my college age kids beats me to it.
That’s all for today, but I’m sure I’ll have more to say on web3 web domains as this part of the market evolves. Please follow me on Twitter for more frequent updates.
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