Just as the internet advanced with the evolution of the Domain Name System (DNS) – which turns domain names into IP addresses – the crypto sector is undergoing a similar transition with the implementation of on-chain domain names.
What are On-chain Domains?
Sandy Carter, COO and Head of Business Development at Unstoppable Domains, explained that on-chain domains are blockchain-based domain names that provide a decentralized alternative to traditional DNS’s. They offer more value by addressing consumer identity, including payment handles, social media profiles, email addresses, and phone numbers.
On-chain domain names allow crypto users to use simple names instead of complex wallet addresses when conducting cryptocurrency transactions. Users can also add metadata to these domains to verify that a crypto wallet address belongs to a specific individual.
The Advancement of On-chain Domains
The on-chain domains sector has experienced significant growth in recent years. Unstoppable Domains has registered about 4 million decentralized domains and partnered with fifteen registrars to expand its global reach. The collaboration between GoDaddy and Ethereum Name Service (ENS) further demonstrates mainstream interest in decentralized domains.
Enhanced Utility for Web2 Domains
The partnership between GoDaddy and ENS aims to enhance utility for GoDaddy domain owners. It allows users to link their GoDaddy domain name to ENS and their crypto wallet address, enabling them to receive crypto payments using their domain name as the wallet address. This collaboration creates additional ease of use and familiarity for non-crypto native users.
The Narrative Has Changed
The narrative around on-chain domains is evolving rapidly. While initially positioned as a solution for sending and receiving crypto, they are now seen as potential replacements for traditional Web2 domains. However, the use case for on-chain domains currently aligns more with digital identity and complements Web2 domains.
Challenges to Consider
Implementing on-chain domains may be challenging and slow down mainstream adoption. Education and simplifying the user experience are necessary for Web2 domain providers to adopt on-chain domain capabilities. Additionally, the question of where users will want to settle their digital identity arises as various blockchain ecosystems implement on-chain domains.
While on-chain domains gain adoption within the Web3 ecosystem, .ETH domains remain the most used option for settling digital identity and bridging Web2 domain names with crypto wallets.
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