What Are NFT Domains: ENS and Unstoppable Domains

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Contributor, Benzinga
March 30, 2022
verified by Ryan McNamara

As Web3 and the decentralized web have come closer to mainstream adoption, the realities of Web3 domain ownership and transferability have entered the spotlight, both from a registration perspective and from a consumption perspective. The most common method of handling ownership issues is by using non-fungible tokens (NFTs) to represent the ownership of a Web3 domain. 

What Are NFT Domains?

NFTs are unique (non-fungible) tokens representing the ownership of one of a kind assets that aren’t necessarily 1:1 tradable. In the context of domains, NFTs represent the temporary or permanent ownership rights to a domain, and they can be freely traded from one blockchain wallet to another, either directly using a standard blockchain transaction or indirectly through a secondary NFT marketplace like OpenSea or LooksRare. 

Another interpretation of the term NFT domain centers around a domain’s “top-level domain” (TLD), which is essentially the suffix following the ‘.’ in a site, with “com” and “org” being common TLDs. In this interpretation, NFT domains are domains — specifically those offered by Unstoppable Domains — with TLDs of “nft,” “crypto” or “wallet.”

Brief History of NFT Domains

The concept of NFT domains was pioneered with Namecoin, a fork of Bitcoin, in 2011. The “.bit” domains based on Namecoin eventually waned in use, right up until 2019.  Currently, there are two major providers of NFT domains: Ethereum Name Service (ENS) — which has TLDs of “eth,” “xyz,” “luxe” or “kred” — and Unstoppable Domains — which has TLDs of “crypto,” “zil,” “nft” and “.dao.” The former technically predates the latter by about a year, although ENS domains only began being represented as ERC-721 NFTs in 2019. Other blockchains like Terra and Solana also offer ENS-esque services as well.

What Can You Do With NFT Domains?

Generally, NFT domains can be used to add a human-readable username element to a wallet address, especially for ENS and other similarly styled services. Unstoppable Domains add on a publishing element, where existing websites can be bound to an uncensorable URL using a mirroring service. 

Additionally, various kinds of airdrops exist on some NFT domain projects, with the most notable being ENS governance tokens for the holders of ENS domains. These tokens — in addition to being important in making decisions — are valuable and ostensibly could be used to create exclusive communities over time. Similarly, holders of NFT domains could be airdropped tokens for an up-and-coming protocol via social media channels like Twitter, in a similar manner to projects like jokeDAO.

How to Buy an NFT Domain

Naturally, this niche utility begs the question as to how accessible the purchasing process of these domains is. Regardless of which service or chain you’re using, the process of purchasing a domain is fairly straightforward. The following steps are primarily aimed at Ethereum-based domains — ENS and Unstoppable Domains

Another thing that’s worth noting is that Unstoppable Domains can be directly bought with fiat, simplifying the process below.

Step 1: Open an account with a crypto exchange.

The first step to buying an NFT domain is purchasing Ether, which can be done by sending fiat currencies to a centralized exchange (CEX) such as Coinbase Global Inc. (NASDAQ: COIN), Gemini or Voyager or by sending tokens to a decentralized exchange (DEX). Note that costs for domains depend on the length of the domain (the part that precedes the TLD), the length of time for which you want to register the domain (for ENS) and current gas prices.

Step 2: Buy or download a wallet. 

In order to have an ENS domain, you need a wallet address for that domain to point to, which then means that you need a software wallet. Typically, a user’s software wallet will be a wallet that can be accessed through a browser extension to be able to interface with any Web3-enabled sites. Some crypto-native browsers like Brave and some versions of Opera come with natively implemented wallets, but most other browsers necessitate finding a free extension-based software wallet.

Best Software Wallet: MetaMask

The most popular wallet, by far, is MetaMask, which supports all tokens on the Ethereum Network and offers extensions for Chrome, Firefox, Brave and Edge. MetaMask is also popular enough to the point where sites are specifically integrated with the wallet to the point where one button and a password is sufficient to connect your wallet to a site.

Best Hardware Wallet: Ledger

To keep NFTs associated with these domains safe over time, a hardware wallet is the best long-term solution, by virtue of the wallet being fully isolated from the internet. In this sense, NFTs and other assets stored on hardware wallets are safe from phishing attacks caused by malicious links. Ledger’s Nano X and Nano S are some of the most ubiquitous of these hardware wallets, boasting support for most blockchains and full support for NFTs on both the Ledger hardware wallets and Ledger Live. 

NFTs associated with domains are less valuable than most other NFT projects in a purely monetary sense, so a hardware wallet shouldn’t be the highest priority if domains are the only thing being stored.

Step 3: Send ETH To MetaMask

To secure your domain, send Ether to your MetaMask wallet using your wallet’s underlying Ethereum address (of the form “0x” followed by 40 hexadecimal digits (0-9 and a-f)). MetaMask can copy your address to your computer’s clipboard through the account header in the top center of the extension window. This data can then be pasted into the transfer destination address field of the exchange that you used to purchase Ether. The associated transaction should take no more than 10 minutes, depending on gas and network traffic.

Step 4: Make your purchase.

Once your wallet has Ether, navigate to the ENS or Unstoppable Domains site and connect your wallet to the site by pressing the “Connect” button near the top of the page. This action will prompt a MetaMask (or other wallet if you’re not using MetaMask) popup with further instructions on how to authorize the connection. Once you follow the steps, your wallet is connected to the site and can now be used to transfer Ether to make a purchase of a specific domain that you can verify using either site’s search function. Prices on both platforms are dependent on the length of the desired domain and the TLD to be used.

Are NFT Domains Indexed by Google?

Currently, NFT domains aren’t indexed by search engines, mostly because their TLDs aren’t formally recognized by the Internet Assigned Numbers Authority (IANA), which then means that these domains aren’t eligible to be registered via Google’s services.

Is it Worth Getting an NFT Domain?

As with most on-chain purchasables in the space, NFT domains are generally only worth their price (including gas fees) if an individual is active in the blockchain space or if they expect to receive enough human-initiated transactions to a wallet to justify adding a label to their wallet. As for URL style domains, they’re primarily only justifiable if you have a reason to have one, similar to a traditional “.com” domain.

A caveat here is that the robust secondary market on these domains (as enabled by the NFT ownership aspect) makes it such that desirable domains (domains that are short or those that correspond to celebrity names) are potentially worth more than their offered price, making them viable as investments.

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About Aadharsh Pannirselvam

Aadharsh Pannirselvam is a student at the University of Chicago studying Economics and Data Science while building with Blockchain Chicago and the Chicago DAO. Aadharsh works on creating easily digestible web3 and DeFi content at Benzinga while learning off of the bleeding edges of blockchains and digital assets and exploring a career in the space. He holds positions in Ethereum, Bitcoin, and various other DeFi protocols and ecosystems. Aadharsh was previously affiliated with Flipside Crypto and is currently affiliated with Galaxy Digital. Aadharsh’s opinions are his own and not financial advice. The best way to get in touch with Aadharsh is via Twitter, @aadharsh2010 or via LinkedIn.