As the internet has evolved over the past three decades, the domain industry has largely remained trapped in the 1990s.
According to the 2024 Global Domain Report, the current value of the domain industry is $340 billion, yet it is still clunky and inaccessible, hindered by settlement times, manual compliance and escrow, high broker commissions, and data fragmentation.
Web3 could change all this. Domains are the next real-world asset. They existed before digital assets; as we know them, they are the OG NFT, even if we didn’t call them that at the time. By tokenizing domains into verifiable, liquid digital assets, we can expand land on the internet and unlock an estimated $2 trillion market. With advancements in blockchain and authoritative tokenization, we now have the tools to modernize and drive innovation for the domain industry. This means unlocking the full potential of domains as real-world assets that can drive business opportunities, technical innovation, and overall value creation.
Whereas today, domains are clunky and plagued by opaque and isolated systems, domains as authoritative RWAs enable users to easily buy, sell, trade, borrow, and lend domains with speed, security, transparency, and low costs. As a result, tokenized domains can unlock their true value and financial potential in a way that’s never been done before. This is the promise of Domain Finance (DomainFi).
Why Domains Need Innovation
For too long, the domain industry has been plagued by fragmentation, inefficiency, and a lack of innovation. Today, domains are limited in function, acting more like static identifiers than dynamic, composable assets. They are difficult to sell efficiently, and the process is often hampered by centralized intermediaries and outdated systems. To date, centralized registrars and brokers have maintained a tight grip on the market, extracting high fees and limiting the financial potential of domain assets. Anyone who has tried to purchase their own domain and host a website knows the struggle—it is far from an easy or intuitive process.
Owners of prime digital asset real estate are often faced with the same challenges: limited options for accessing capital or extracting value while maintaining ownership rights. Web3 is poised to address these challenges by offering fractional ownership through smart contracts, allowing owners to gradually release ownership stakes while maintaining significant control over the asset. Additionally, blockchain enables on-chain lending innovation, offering new routes to monetization beyond traditional financing.
Top-level domains. Source: CircleIDBeyond better monetization, tokenized domains can also bridge the gap between Web2 and Web3. Rather than creating isolated digital assets, DomainFi seeks to build an ecosystem compatible with existing internet infrastructure. Existing Web3 name services fail to work outside of crypto, but by leveraging the established Domain Name System (DNS), we can provide true bridges between Web2 and Web3, enabling new use cases.
The $2T Opportunity
This interoperability is key. Current Web3 domain solutions struggle with usability due to their limited compatibility with traditional internet systems like browsers and email, creating a fragmented experience. However, this interoperability is critical to truly unlock a $2T market and will ultimately onboard new users.
Web3 is poised to do for the internet what the internet did for businesses—a transformative shift in how we interact with the digital world. And nowhere is this clearer than in the evolution of domain ownership and management.
By tokenizing domains, these digital assets become more akin to other financial instruments that can be quickly transferred, traded, and even used in sophisticated financial products. The parallels to traditional financial markets are striking. Before REITs, real estate investment was limited to those who could afford entire properties. Similarly, DomainFi is democratizing access to premium digital real estate while providing owners like myself with new tools for value creation. Domains can also be bundled into portfolios or used as collateral in DeFi platforms, similar to how real estate or other tangible assets are utilized in traditional finance
Imagine a future where you can easily own part of a premium domain, stake it to earn passive income, or bundle it with other assets to create new financial instruments. DomainFi is working to create this world where domain ownership is no longer constrained by the limitations of the past but empowered by the possibilities of decentralized finance.
The potential of DomainFi is staggering. Much like stablecoins transformed the payments industry in the past year, tokenized domains will transform internet infrastructure. By infusing the domain market with unprecedented liquidity, transparency, and flexibility, domains can become valuable, real-world assets. From leading Web3 ecosystems and communities to individual domain investors, everyone stands to benefit from a more liquid, interoperable, and innovative domain ecosystem.
The domain industry has seen little change over the years, but new technologies like tokenization could open up fresh opportunities for growth and accessibility. The time has come to move beyond outdated systems and explore the future of domain ownership.
Disclaimer: The opinions in this article are the writer’s own and do not necessarily represent the views of Cryptonews.com. This article is meant to provide a broad perspective on its topic and should not be taken as professional advice.
The post Opinion: Domain Industry Is Stuck in the 90s, But Web3 Can Transform It appeared first on Cryptonews.
