The Domain Hype Is Coming Back
Did you know, that the domain cars.com was sold for $872 million?
A boom in domain registrations on the nascent network accompanied the proliferation of the internet. Google was born on the internet, while many others took their real-life businesses online by registering websites.
As the flagpole of a brand, a company, an institution or an individual, domain names remain an integral part of the internet. In contrast, Blockchain technology and Web3 are bringing domain name hosting into a new era.
That is where things got interesting. Smart tech people and early adopter realized there was value in registering names of prominent brands, companies, or famous individuals, knowing that those same people would eventually want to do the same. In this way, domain squatting was born.
Domain names cost some big sums as the world gradually went online. As written earlier, cars.com holds the record. The second most expensive domain sold in history, CarInsurance.com fetched almost $50 million. Some of the most valuable DNS addresses are internet.com, sex.com, beer.com and hotels.com, according to different sources.
Anecdotes about celebrities paying large sums for parked domains bearing their names are still common. Web3 and blockchain-based domains are now repeating the process.
Decentralized crypto domains replace your IP address with a human-readable address for your crypto wallet instead of providing a collection of characters. These Web3 domain names can be traded on exchanges like Magic Eden or OpenSea as NFTs. Other Web3 domain extensions include .crypto, .dao, and .eth.
Blockchain domain names are appealing for obvious reasons. Instead of reciting an obscure 42-character crypto wallet address, the sender can simply use the command “Send the salary to max.eth”.
With the Web3, users can reclaim control over their data and content from monopolistic tech giants like Amazon, Google, and Microsoft, and regain control over the web as well. The Web3 DNS differs from conventional domains in what ways, and how does it operate?
In today’s world, conventional blockchains are difficult to use and have lowered their appeal. This is a typical wallet address: “0x483adb48edbd7f85jb5db02456c7bl49c13f56332”.
Adoption would be prevented if people were scared off by this. In order for the internet to become widely used, it had to overcome this IP address-related issue.
For blockchain businesses to create digital identities across public addresses, a name service is required. Customers will also have a much easier time interacting with a named address than with a string of random letters and numbers.
Ethereum Name Service
In particular, ENS simplified the crypto and DeFi sector for beginners. With it, users can create generic nicknames for all their public addresses and decentralized accounts. Instead of using a string of incomprehensible keys for different crypto addresses, users can rely on one ENS Ethereum domain. By providing portability and interoperability between decentralized apps and blockchains, ENS serves as the naming protocol for decentralized internet services.
In a nutshell, Ethereum Name Service is simply a lookup service built on the Ethereum blockchain. It is not only compatible with Ethereum, but also with other blockchain networks. ENS links information to a name. ENS can be thought of as the nickname generator for public Ethereum addresses, improving crypto accessibility.
On the other hand, it helps to translate machine-readable addresses on other blockchain networks into human-readable addresses. As a basic principle, ENS replaces long public addresses with simple and easily readable names. The architecture of Ethereum Name Service can help you understand how it works. The two most important parts of the architecture are the registry and resolvers.
The registry is really just a single, smart contract. A domain and subdomain list is maintained by ENS registry along with three critical information points. Registers store information about domain owners and resolvers. Registry records also contain data about caching time-to-live for all records in a domain. A smart contract or an external account can own a domain in Ethereum Name Service.
A registrar is also included in the ENS registry, serving as a smart contract with domain ownership. Users who comply with contract rules are assigned subdomains of the domains under their control. An ENS Ethereum registry domain owner has the following privileges:
- Subdomain ownership transfer
- Allocation of TTL and resolver for the domain
- Transfer domain ownership to another address
The main function of the ENS registry is mapping from a name to the resolver.
Then there are the resolvers, which are smart contracts that can facilitate implementation of specific standards. Some of the general resolver implementations address straightforward requirements, such as providing infrequently changed addresses for specific names.
Solana Name Service
Just like ENS the mission of Solana Name Service is to find a decentralized and affordable way to to map domain names to on-chain data. This on-chain data could be anything from a SOL address to IPFS CID, images, text, e.g.
SNS breaks the same barrier like ENS as they both transfer long and difficult addresses to a human readable address to help with Web3 adoption. However, the use of a Solana domain name goes far beyond payments. As an example, the data stored on-chain might be an IPFS CID (the unique identifier of a website hosted on IPFS).
It is the centralized and censorable domain name which is the single point of failure for most dApps. Domain names registered on-chain, however, cannot be censored or taken away. Therefore, IPFS (or Arweave)-hosted websites using Solana domain names would be completely decentralized and unlikely to be censored.
When the domain name is entered into the URL search bar, an extension would be required to request the on-chain data. The feature should be available in all Solana web wallets.
Also the domain registration is simple. From a technical standpoint, it’s just an instruction that needs to be signed by the root TLD (Top Level Domain) authority for a small fee. As the fees are so low people could claim thousands of domains, which wouldn’t be a fair process. As a result, anyone who wants to register a domain will have to participate in an auction. The auctions will last for seven days and are open to the public. By doing this, other participants in the market will be able to see the domain names that are being auctioned and bid on them.
Apart from the fact that SNS is responsible for Solana and ENS for Ethereum, both want to drive adoption and make it easier for users to navigate through Web3. So where are the main differences?
ENS vs. SNS
The graphic above shows the biggest differences between SNS and ENS. So what could cause SNS to dominate ENS in the future? The most obvious reason could be the cost factor. SNS domains are purchased one time for a very low fee and don’t have to be renewed. A 3 character address on Ethereum currently costs $640 per year, which are high opportunity costs for the average retail investor. Also the NFT space on Solana is strong and over the last 1–2 years big communities developed. During the time of writing ENS has a total volume of 62.3K Ethereum and 2.3M registered items on OpenSea. SNS has a total volume of 35.7K Solana and 16.7K registered items. Therefore the dominance of SNSis still a long way off but the potential is there