The Tokenization of Domain Names

tl;dr: Premium URLs may be one of the first and best examples of a non-native crypto asset that gets tokenized, allowing for fractional ownership across a large community of like-minded people.

Back in November 2017, I wrote about my experience buying an Ethereum domain name CryptoExplorers.eth.

It was not easy, but I got it done. I had to do it via an auction mechanism using MyEtherWallet.

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Now, there are new tools, such as EthSimple, which I found out about via a BraveRewards Ad, that streamlines the process.

Between the growth of Ethereum and the maturation of the market, there are over 300,000 .eth domain names in existence, managed by the Ethereum Name Service (ENS).

Since a domain name is a unique asset (there is only one www.neverstopmarketing.com), it is a perfect use case for a non-fungible token.

Not surprisingly, then, that is exactly what the ENS is doing.

This will bring a lot more liquidity to the market, since buying, selling, and trading these domain names is still a bit sluggish.

How Existing URLs Get Tokenized

Now, let’s take this same concept of tokenizing a .eth domain name and apply it to an existing URL.

Imagine that you are a passionate quilter and you want to set up sight for enthusiasts who share your love of quilting.

You can go about registering WeLoveQuilting.com, build up some content, and promote it. When you get site traffic, you can sell advertising and sponsorship. Every page view is a bit of revenue for you.

But…what if you tokenized WeLoveQuilting.com and offered a portion of ownership in the URL to 150 of your friends who also love quilting?

Now, you have 150x the number of people who have an economic incentive to contribute to the growth of a site, by adding content and promoting it.

Or 150,000 people.

Or 1.5 million people.

You get the idea.

So, when some big conglomerate comes along and wants to buy WeLoveQuilting.com because of all of the people in their target market there, they don’t buy it from one person, they buy it from all of them, with revenue apportioned out based on fractional ownership.

Or, alternatively, let’s say the owners of WeLoveQuilting.com don’t want to sell.

They can do a revenue share on the in-site advertising in line with their ownership percentages.

The point is that now, thanks to tokens, an existing asset like a domain name, can be owned by multiple people.

This is already happening.

Chad and the team at eCorp have created Contrib.com and are on their way to doing just that. (discl: advisor)

The Innovation is About More than Domain Names

The world of domain names has been a bit sketchy for a while now, with unknown actors sitting/squatting on a huge number of assets.

As we move to a world of transparent ownership (at least by wallet address), we will start seeing new behaviors emerge. I don’t know exactly what they will be, but when you share who owns what, and how they earned it versus confidential, hush-hush salary numbers.

URLs are actually the first native digital asset, they just existed on a centralized blockchain.

Seeing how they get tokenized and what behaviors emerge as they migrate to crypto may give us a sneak preview of elements of the future.

https://medium.com/media/0707f5c806284d01a4a13c7b13a91ce3/href


The Tokenization of Domain Names was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.