Blockchain and distributed ledger technology continue to push into all corners and layers of internet technology. In one of blockchain’s latest application areas, the technology that once started with Bitcoin is now revolutionizing contemporary internet infrastructure and aims to break up the concerning nature of traditional domain registrars such as GoDaddy. Perhaps even more impressively, this leap also signifies an attempt to create an entirely new internet based on the principles of decentralization and Web3.
Web3 domains (also known as crypto domains, blockchain domains, and NFT domains) signify an evolution away from traditional Domain Name System (DNS) addresses, featuring an innovative combination of blockchain technology, smart contracts, and cryptocurrencies. Domain extensions such as .crypto and .eth, which can be obtained as nonfungible tokens (NFTs), offer a myriad of advantages to its owners and promise early adoption of the future of the internet.
This complete guide provides the full picture of everything you need to know about buying and selling Web3 domains in 2024 and beyond.
What are Web3 Domains?
A Web3 domain is a special domain name recorded on a blockchain, such as Ethereum or Polygon. These domains offer various features, which include making cryptocurrency transactions easier, accessing decentralized apps (dApps), simplifying interactions with smart contracts, hosting Web3 websites, and sending Web3 emails. Unlike complicated cryptographic addresses, Web3 domain names, sometimes ending with ‘.dao’ or ‘.hodl,’ significantly improve the user experience in the Web3 environment. Additionally, like any other NFT, they are stored in a cryptocurrency wallet.
These domains provide more security, ownership, and control, creating a more democratic and private internet space. One key differentiation between Web2 and Web3 domains is the option to create any type of domain ending. Gone are the days where you could only choose from a limited pool of domain endings, such as .com, .net, or .org. In the world of Web3 domains, you can register your own domain ending, such as .johnsmith, or acquire a domain from a third party, such as .eth or .binanceUS.
Last but not least, owners of NFT domains don’t depend on registrars and middlemen to manage their domains. Instead, they have complete control over their digital identities – for example by being able to hold their domains in their own wallet, rather than with a registry. This promises full control over your digital assets now and in the future.
Why should I buy a Web3 domain?
Web3 domains provide a comprehensive solution to manage online identities in the Web3 world. The inconvenience of managing several identities across various sites, Web3 and even select Web2 applications is eliminated, as users may now establish a singular chosen username that serves as their digital identity throughout the expansive digital space. Whether on social media platforms like Twitter, Reddit, or countless of decentralized apps, your Web3 domain facilitates the identification process.
Moreover, Web3 domains play a crucial role in establishing verified profiles and the authentication of non-fungible tokens (NFTs), hence fostering the development of a cohesive and consistent identity across various social media platforms. Therefore, you effectively demonstrate proven legitimacy by connecting your Web3 domain to many accounts. The Web3 domain guarantees a clutter-free environment by allowing engagement exclusively with authenticated users, eliminating unverified accounts. The possible incorporation of Web3 domains into the verification procedure across several platforms presents opportunities for user authentication via their NFT avatars.
In addition, blockchain domains enhance the efficiency of cryptocurrency transfers by substituting intricate wallet addresses with user-friendly usernames. For example, sending funds from one wallet to another has become simpler with shorter instructions like “Transfer the funds to jack.eth.,” instead of to a 20 digit wallet address. This makes transactional procedures much more convenient and thus increases Web3’s access to more users.
Several more use cases, such as web hosting and email communication, are already available as well and are likely to gain significantly in importance as more private and business users adopt Web3 technology.
Where Can I Buy Web3 Domains?
Acquiring a Web3 domain is thankfully not much more difficult than obtaining one of its Web2 counterparts. A handful of platforms act as Web3 domain registries and enable anyone to register a crypto domain across a multitude of blockchains. Platforms like Freename have gained in popularity thanks to user-friendly interfaces and their commitment to decentralization.
In the case of Freename, Web3 regular domains as well as top-level domains (TLDs, aka domain endings) can be registered and “minted” as an NFT by any user. Prices generally depend on whether your preferred TLD is already owned by another user, in which case you would have to pay a small fee to register your domain with this domain ending.
However, if you own a Top-Level Domain (TLD) on Freename, you will earn 50% of the retail price of any domain registered under your TLD. To initiate the process, visit their website and browse the diverse Web3 domain TLDs available for acquisition, or simply come up with your own domain ending.
Step-by-step-guide to register a Web3 domain
Here’s a quick step-by-step-guide on how to register a crypto domain on the Freename.io platform., using the domain “Lightcity.hodl” as an example.
Step 1: Enter your email address and register on the Freename.io platform.
Step 2: Search for the Web3 domain you want on the Freename.io website.
Step 3: Add the domain name to your cart after ensuring it’s available.
Step 4: Complete your checkout and go to the payment screen.
Step 5: To facilitate the acquisition of your new domain, you can utilize either the conventional payment method or the alternative approach of using cryptocurrency as a means of payment.
Traditional payment methods often include debit/credit cards or a PayPal account. Alternatively, you may opt to make payments using cryptocurrency. The two accepted tokens are USDT and BUSD. Lastly, you can pay directly with your Coinbase account.
What Do I Need to Buy a Web3 Domain?
Buying a Web3 domain requires a few things, although most blockchain enthusiasts will already have everything they need. Of course, a secure cryptocurrency wallet is an absolutely essential requirement. Metamask and Trustwallet are popular choices as they provide a safe cryptocurrency platform for domain transactions. Some TLDs require you to pay in the currency of the underlying blockchain, as is the case with .eth. Typically, however, you will be able to pay in stablecoins and even credit cards. The specific cryptocurrency can vary depending on the chosen domain registrar and more importantly, the blockchain on which a domain is registered.
Additionally, make sure your cryptocurrency wallet has enough funds to cover the domain’s cost and any gas fees that come with it. You must have a stable internet for the process to go smoothly. If you’re new to blockchain, learning about how wallets, smart contracts, and NFTs work may also be a good idea.
Finally, you need to choose a trustworthy domain marketplace or provider. Good providers, which might be Freeename, Ethereum Name Service, and Unstoppable Domains, offer a wide range of blockchain-based domains and secure payment options. Once you cross off all of these points, you can confidently choose a unique and important name that fits your goals.
Where Can I Sell Web3 Domains?
Many users are turning to Web3 domains due to the convenience they provide, but others see it as an investment. If you’re looking to profit from value increases of your blockchain domain, or you simply want to get rid of an old domain, you can always choose to sell your crypto domain on the open market.
Since crypto domains are also NFTs, you can either sell them via NFT marketplaces such as OpenSea or Rarible, known for dealing with Ethereum-based NFTs, now allows buying and selling Web3 domains. It provides an easy-to-use platform for sellers to list their domains, set prices in cryptocurrency, and connect with potential buyers worldwide.
Alternatively, most blockchain domain registries like Freename also enable their users to sell any of their purchased domains. You can list your blockchain-based domains, and potential buyers can find and buy them right from the marketplace.
How much can I make from selling Web3 domains?
Before going into specific numbers, let’s first talk about what makes a specific Web3 domain valuable. As with other assets, the potential gains from the sale of blockchain domains depend on several factors, each of which plays a vital role in determining the market value of these digital assets.
The quality and uniqueness of the domain name itself are critical. Domain names that are brief, easily remembered, and directly relevant to the subject matter usually command a premium price. For instance, a domain like “jack.eth” is likely going to bring a higher price than “dasjnjdna.eth.”
Market demand is another vital factor that significantly influences future profitability. The variation in demand for specific domains or keywords can substantially impact the price they attract. Sellers must be aware of changing market demand to modify their strategy correctly. For example, if Elon Musk promotes Dogecoin and other meme coins once again, a domain such as “shiba.hodl” could significantly appreciate in value.
The Web3 domain’s value is also determined by the blockchain infrastructure it is based on. Domains hosted on widely used and popular blockchain networks like Ethereum or Polygon might have a broader market appeal and attract a higher price. For example, there are currently about 2,427,986 blockchain domain owners with Ethereum Name Service (ENS), according to data from Dune Analytics, signaling strong user demand.
Last but not least, it is also essential to consider the platform on which the Web3 domain is listed. The fee structures of different marketplaces differ, and these expenses may influence sellers’ net profitability. Furthermore, sellers must recognize the importance of marketing techniques in increasing a domain’s exposure and perceived value. Proactively engaging with prospective buyers and strategically emphasizing the distinguishing features of a crypto domain can increase the chance of a profitable and financially beneficial sale.
So how much can you make from a Web3 domain? On October 9, 2021, during a period of significant growth in the value of Ethereum (ETH), the domain name “paradigm.eth” was sold for a substantial sum of $1.51 million (equivalent to 420 ETH).
This transaction represents the highest recorded price for a cryptocurrency domain to date. Significantly, the NFT domain “paradigm.eth” achieved a valuation almost five times higher than the second most expensive domain, “000.eth,” which was sold for $0.32 million. There are, however, many other domains that are being sold for the equivalent of thousands of dollars every single day.
How can I find a high-value Web3 domain?
Finding a high-value crypto domain requires a combination of research and intuition. Starting this effort necessitates a thorough understanding of current industry trends.
This includes being up-to-date on the latest developments in the Web3 sector with its ever changing dynamics – part of which is monitoring Web3 domain auctions and marketplaces such as OpenSea, Rarible, Freename, and ENS, which provides precious insights into ongoing market patterns that influence pricing dynamics and demand. Furthermore, thorough keyword research is essential to ensure that the chosen domain resonates visually and coincides with the current market discussion.
Moreover, investors are advised to investigate the blockchain infrastructure that powers the Web3 domain. Domains associated with generally acknowledged blockchains, like Ethereum, Polygon, Binance Smart Chain, Polkadot, Solana, Tezos, Avalanche, Flow, Cosmos, Algorand, etc., might command higher market value. In addition, examining niche markets is a subject worth investigating because specialized domains tailored to specific sectors have the potential for exponential price increases.
Concluding, popular top-level domain extensions, such as .eth, .hodl, .usa, .defi, and .nft, are most likely to yield significant profits due to the growing demand and limited availability within the blockchain industry. These distinct domains attract corporations and people seeking to create a notable online identity by utilizing brand familiarity and industry relevance.
