The Ethereum Name Service (ENS) has minted non-fungible tokens (NFTs) representing 25 top-level domains owned by domain name system (DNS) company Uni Registry & Naming. These include domains such as “.hiphop,” “.click,” “.game,” and “.audio,” among a number of others.
Uni Registry & Naming (UNR) is auctioning off 23 of these top-level domains (TLDs). Winners will receive both the TLD and an NFT representing the ENS version. The NFT acts as part of the mechanism that easily allows TLD owners to hold control of their TLD on ENS.
Top-level domains are the last segment of a domain name and are rarely sold. Perhaps the most popular example of a TLD is “.com” while in crypto, the TLD “.io” is highly sought after. Overall, there are only about 1,500 TLDs.
ENS allows Ethereum users to put “human readable names” in place of long wallet or service addresses, making it easier for individuals to transfer funds, use smart contracts or otherwise develop projects. ENS also allows owners to use it with TLDs you already hold. For example, if whoever owns “.xyz” on DNS can register it on ENS.
As Brantly Millegan, director of operations at ENS, describes it, “ENS is an Internet naming protocol that runs on the Ethereum blockchain. ENS names are mostly used to simplify receiving payments in any cryptocurrency and for decentralized websites, though they can store any arbitrary information. ENS is integrated in over 200 services, like Coinbase, Uniswap and the Brave browser.”
UNR says this is the first instance in which both a TLD and an NFT representing the ENS version are being auctioned. The NFTs were minted using the ERC-721 NFT standard.
The auction represents another interesting use case for NFTs that go beyond the massive popularity that digital artwork NFTs, for example, have experienced and show just one way that people are continuing to expand their use cases.
TLD and ENS and DNS and NFT, oh my!
If you don’t pay much attention to internet infrastructure, terms like DNS and TLD aren’t ones you think about every day, but they’re foundational to the way we navigate the web.
Milligan explains that a TLD acts like “real estate” on DNS, which is the naming system on which the whole internet works.
If a TLD is like real estate, then you can think of DNS as the town and TLDs as the neighborhoods. The owners of TLDs can lease houses out to individual sites.
The security company Cloudflare describes navigating DNS as the way “humans access information online through domain names, like nytimes.com or espn.com. Web browsers interact through Internet Protocol (IP) addresses. DNS translates domain names to IP addresses so browsers can load Internet resources.”
When you visit a website online, you don’t type in the long string of numbers that makes up an IP address – you type in the domain name.
Similarly, an ENS is a blockchain-based extension of DNS that enables new things like crypto payments.
“DNS makes things like the web user-friendly. ENS makes things like crypto payments user-friendly,” said Milligan. “Don’t like having to see, copy and paste, and otherwise interact with crypto addresses? ENS solves the problem.”
He says the bottom line is that it should be increasingly easier for people to use a traditional DNS name as their ENS name for crypto payments.
Additionally, if someone owns a TLD they have the right to issue and sell second-level domains. Again, take “.com” as an example. If you have “example.com,” you are getting it from the company that owns and manages the .com TLD.
Benefits of owning a TLD on ENS
Miillegan said these NFTs represent control of an entire TLD on ENS.
“You’d become the owner of a TLD on both DNS and ENS,” said Millegan in a message. “Any DNS/TLD owner can claim their TLD on ENS. What is unique here is that an organization is auctioning off 23 DNS/TLDs and they’ve already claimed the ENS versions too, such that the winner of the auction will get both already ready to go.”
“This is an important step in bringing together the worlds of traditional DNS and blockchain-based ENS in a complementary way, in which owning a name on DNS automatically implies owning the same on ENS on the Ethereum blockchain, ” Millegan added.
“If they’ve ever wanted to own a TLD on DNS and ENS, this is their chance,” he said.
What the winner gets
An open auction for the NFTs, which closes on April 23, is currently up on NFT marketplace OpenSea. A pre-registered auction will follow on UNR’s platform from April 28 to April 30.
In a blog post announcing the auction, OpenSea compared TLDs to scarce assets like IP spectrum and internet fiber that are key to the functionality of the Internet.
“Each TLD already generates its own subscription revenue. The future owners can not only use domains within their namespaces as they see fit, but also adjust their pricing models and monetize thousands of premium names and registry-owned inventory,” it continued.
The auction winner would receive ownership rights to the top-level domain asset; ownership rights to the NFT representing their TLD on ENS (and therefore essentially the ENS version of the TLD); control of the entire TLD namespace on DNS and ENS, including all current subscription revenue streams; and the ability to further develop and monetize their assets.