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April 30, 2023
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How Web3 can change Domains

Article by Michael Calce, CEO of Decentraweb.

As many people in the domain-ownership industry already know, the majority of web domain names and addresses are overseen and controlled by the Internet Corporation of Assigned Names and Numbers (ICANN). This governing body can revoke a user’s rights to a domain or name at any time and at will – even for the most seemingly arbitrary reasons.

This bureaucracy, simultaneously cumbersome and indiscriminate, has hindered the Web2 community and development. But the expansion of the Web3 sphere has created a new paradigm, one which presents a truly decentralized frontier for buying, owning and monetizing domains. Here’s a look at how we got here – and where we’re going, thanks to Web3’s revolutionary potential.

A history of ICANN's monopoly

Shortly after ICANN was established in 1998 during the Web1 era, the governing body signed a contract with the U.S. government to become its official regulatory instrument. As the internet has evolved, so has ICANN. It has no hand in the creation or vetting of the actual content portrayed by domains, but it oversees who holds the rights to that content and who no longer should.

In order to purchase a domain name, a user must register the name with a domain registrar, which in turn must agree to ICANN’s terms. If at any point the government perceives a user to be in violation of these terms, it will send a letter to ICANN, which may enforce penalties against the offending registrar, the worst being revoking its accreditation. If the government deems a seizure of the domain necessary – for example, if the content on a domain violates intellectual property law – the user will also suffer, namely by losing the rights to the address.

Former domain owners who wish to regain ownership of a site revoked by ICANN can challenge the seizure, but they may have difficulty proving the government’s reclamation illegitimate due to the intentional vagueness of ICANN’s conditions. In other words, as the primary and the most powerful institution overseeing domain ownership, ICANN is often able to justify its own reasons for revoking a user’s rights, despite concerns from critics that such practices impinge on freedom of speech. This poses a real threat to online equity and democracy as we build an ever-more-expansive internet.

Thinking outside the .com

While still nascent, Web3 is already deepening our understanding of the structure and function of domain ownership. With Web3, users who purchase top-level domains (TLDs) can register them directly and gain full ownership of the rights to the domain.

This bodes well in other areas. Early investors will be able to buy short domains that are catchy, based on popular terminology or even emojis (.pizza, for example). This increase in variety will enable them to collaborate with businesses that deal in those words, phrases, or emojis. A .pizza domain owner, to expand on that example, can strike a deal with pizza restaurants to allow them to mint subdomains off of their TLD, making the TLD a reliable source of income.

The ultimate idea is to construct a Web3 marketplace where subdomains can be bought and sold without ICANN’s involvement. With an endless array of exciting domains extending far beyond a simple .com address, the space presents opportunities for exponential growth to individuals and companies.

Every owner for themselves

This is not to imply that all domains will be ripe for the picking in Web3. As in Web2, there will be competition. Someone who wants to use a top-level domain that is already owned can try to barter, exchange, or even sell a domain that they themselves own. A subdomain can always be minted, but if you want a TLD, you’ll need to act fast – or get good at negotiating.

The point of every Web3 endeavor is for the ecosystem to be as decentralized as possible. Unlike in Web2, with its ICANN oversight, there will be no governing body to settle most disputes or call the shots. In any implementation, TLDs should not be owned permanently – there should always be a renewal required, usually at the five-year mark, and any TLD that hasn’t been renewed is up for grabs. This enables the ecosystem to thrive. Should a user let their ownership lapse only to find it snapped up by another user, they’ll have to wait for the new term to expire – or haggle with the new owner – to try to get it back.

In the future domains and subdomains will be used for more than just webpages. They will be our identities, wallets and addresses to digital assets. A good balance is to allow subdomains to be permanent and not require renewal. This means that even if the main domain changes hands, the owners of the subdomains to their assets will remain the same, without interference from anyone, including ICANN.

Decentralized community, centralized identity

In Web3’s current iteration, whether users are playing play-to-earn games with digital parcels of land or fashioning avatars for themselves, they show up in the metaverse as anonymous Ethereum contract addresses and mint IDs. Many developers envision an environment in which users’ access to the domains they own is built into an existing platform.

Identity incorporation will be the goal of this next phase, and domain names will be key to the process, allowing users to build their metaverse identities and communities through the sale and purchase of domains. Without the identity component, a user is reduced to a website or an address: a company minting a .brand domain with its brand name, for example, will augment its customers’ website experience and grow its business. What developers want is for the metaverse to recognize the inherent individuality and value of the people who use it.

Keeping the bigger picture in mind

So, what are the benefits of permissionlessly – and, in the case of subdomains, permanently – owning a domain name? Will it foster greater transparency in how people use and abuse their relationship to the internet and to each other? How decentralized should the environment even be?

These are the significant questions Web3 developers are facing as they forge ahead. In place of organizations like ICANN dictating a code of ethics in the metaverse, DAOs (decentralized autonomous organizations – internet communities governed by user-led bodies) will vote on the terms of a user forfeiting ownership of a domain. It’s more democratic, and it’s easier for a user to understand their infraction. While punitive intervention on behalf of governments may prove necessary for certain types of content, matters of opinion will coexist side by side, as they do offline.

As Web2 enters its final stages, the DNS space has stagnated, the .com has lost its luster, and the idea of a user’s freedom of expression is increasingly nebulous. So much infrastructure has yet to be created for a chance of realizing a future that improves upon these conditions. And we’re on our way.