Blockchain Domains

Blockchain domains are a relatively new and important aspect of the burgeoning Web3.0 community.  They are not necessarily a progression of Web2.0 so much as a deviation from the globally deployed domain names system.

Today’s DNS is like a phone book directory that indexes websites and their corresponding IP addresses via a hierarchy called the Domain Name System (DNS).  At the top of this hierarchy is the root domain name, or the dot(.), which is managed by the Internet Corporation for Assigned Names and Numbers (ICANN). Registries manage the Top Level Domains that hang of the root (e.g Verisign manage .com) who accredit Registrars to sell and delegate Second Level domain names.

By contrast, blockchain domains rely on a publicly accessible blockchain and are made up of a group of complex smart contracts that make it work.  The owner of the domain name has the private key so owns it outright.

This is not to say that DNS will be replaced. Handshake, which is the leading Blockchain domain just replaces the root zone file, not DNS. It allows for a seamless transition between a centralized name root zone file controlled by private parties to a decentralized root zone file controlled by actual Internet users. The Handshake blockchain itself is essentially one big distributed zone file to which anyone has the right to add an entry.

To find out more about the blockchain domain name ecosystem click here.

The Leading blockchain-naming system projects are Ethereum Name Service (ENS), Handshake (HNS), Unstoppable Domain, .SOL and decentraweb.

At present, there are limited use cases due to how new blockchain domain names are; however the huge growth of blockchain technology, especially in crypto is seeing a lot of development and interest in this space.  As of today, blockchain domain names can be used in two ways:

1. Crypto Wallet Address.  They Turn a wallet address from a a long mess of letters and numbers into an easy-to-remember domain name.  For example, 3FZbgi29cpjq2GjdwV8eyHuJJnkLtktZc5 could become yourname.wallet, making it much easier to send and receive crypto.
2. Build decentralized websites.  Website owners can point their blockchain domains to a website hosted on a peer-to-peer network, such as IPFS. You can also link it to social media accounts in order to authenticate identity and set up email and chat protocols.

Cybersquatting refers to registering a domain name of a known brand with the intent of profiting from it somehow, usually by selling it back to the rightful brand owner for a profit.  Similar to the late 90s when domain names were first released, we have seen a landrush of early adopters registering their blockchains domains.  However, many brand owners have been slow to stake their claim to these domain names leaving them open to cybersquatting and complex recovery down the track should blockchain domains ever increase in utility and acceptance.

Handshake reserved the Alexa top 1000 websites domains (that can be claimed by the owner), however many of the website owners have not taken up this opportunity and their blockchain domains remain unclaimed. We have also seen many brands, not in the top 1000 Alexa reserve list registered to 3rd parties and also major companies’ sub-brands squatted on.  This is evident by the number of branded domain names for sale on the aftermarket, for example:

• newscorp/ was sold at auction for around $100 on 14 May 2021 and is currently for sale for 7M HNS or around 3M USD equivalent as of 9Nov.
• disneyplus/ was sold in Sept 2020 for under $50 and is advertised for 7.6M HNS or $3.2M USD.
• nikeshoes/ was sold in April 2021 for around $500 and is advertised for 1M HNS or 426k USD.

At present, there is very little detail about how a brand owner can recover their cybersquatter blockchain domain name.  Some commentators have suggested that the UDRP would be the appropriate mechanism to launch a dispute, however, without a clear policy, it is unlikely that this is the appropriate mechanism.

When handshake launched in 2018, they did offer a 90 day sunrise period to brand owners in order to claim their marked domains, however, this was missed by most simply due to the lack of broad attention to the project.  With regards to dispute, Handshake state on their Trademark Disclaimer page:

If you fail to fill out this form within the Sunrise Period, there is no guarantee at mainnet launch that you will be able to claim a domain name on the Handshake name system that references your trademark(s), and there is no guarantee you will be able to claim the name(s) in the future. After the sunrise period is over, Handshake will launch as a distributed, and decentralized system free from centralized control and secured by a proof of work consensus algorithm. This means that the Handshake Development will not be able to assist with name disputes as any changes to the system will be subject to community consensus which we cannot guarantee.