Web3 domains are following the examples of the early web and its user-friendly pivot. Web3 domains are following the examples of the early web and its user-friendly pivot. Back in 1990, the internet faced a major problem that we don’t regard as relevant right now. Instead of typing website addresses in words like google.com, users had to type in long IP addresses like 172.251.220.139 to be able to access them. It was a disaster because remembering such elongated number sequences is completely impractical for the average user. The Domain Name System (DNS) was then developed to tackle this problem, and it smartly got rid of these number strings from the front end and instead used memorable names like google.com and yahoo.com. Now, crypto is looking to learn from this development to try to make access easier. More than a quarter of Americans now own digital assets. It was less than 2% just a decade ago, but despite this explosive growth, actual wallet engagement remains on the lower side. This is primarily contributed to the fact that crypto wallet addresses, much like IP addresses prior to 1990, are a hassle to begin with, perhaps even more so. 42-character wallet addresses can hardly be remembered by anybody, let alone by average users. This is why much of wallet activity is limited to copying and pasting addresses, and it is difficult to recognize individuality within these long, scrambled characters. Web3 Domains are looking to address this fundamental limitation by taking a leaf out of the history books. Around 10 million Web3 domains have been registered across the world to date. While it pales in comparison to the global domain name registry in excess of 300 million, it cannot be ignored either. Unstoppable domains have handled 4 million registrations, and ENS with 2.7 million .eth domains; the space is moving forward confidently. Companies like Freename recently raised $6.5 million in a funding round, as these Web3 domains are set to rival mid-tier country-code domains. The idea behind Web3 domains is to make crypto user-friendly for the masses. The clunky reality of 42-character wallet addresses can affect the long-term utility of the crypto segment, and Web3 domains are stepping in to provide a solution. Are Crypto Wallets Unusable? Technical barriers are essentially conversion killers for the crypto segment, rather than minor annoyances. The long private and public keys create room for a lot of typos and other mistakes that can result in the loss of funds. Seed phrases do help, but even one mistake with them can lead to permanent loss of funds. Data confirms this underlying concern, as only 15% of wallet users post daily engagements despite rapid crypto adoption statistics. The wallet is the fundamental tool to interact with blockchain networks and sign transactions, but almost two-thirds of NFT newbies give up buying the collectibles because of the complexity. The self-custody option and encryption improve security a lot, but the entire responsibility is delegated to the end user, many of whom are not knowledgeable about technology, let alone crypto and Web3. It is a recipe for slow growth. The Working of Web3 Domains Web3 domains are essentially blockchain-based assets, often in the form of NFTs, that convert long wallet addresses and email systems into easily remembered website domains. They do not fall under the control of centralized registrars like GoDaddy and DNS, and therefore, they can be bought for eternity, allowing decentralized capability. With a Web3 domain, a user’s entire online experience can be represented in a few characters. Major Examples Established names like Unstoppable Domains have successfully registered 4 million domains in total. They include popular Web3 extensions like .crypto, .nft, and .x. They have developed an on-chain settlement mechanism for domain trades and are looking to enable crypto payments and digital identity. Web3 domains have no renewal fees, and the platform uses SedoMLS and OpenSea integrations to court domain investors of all backgrounds. Freename, on the other hand, offers both Web3 and traditional domain registering options. The company aims to pass the benefit from the tokenization of existing .com domains for digital currency payments. Freename has secured a U.S.-approved patent for a new technical protocol. This protocol addresses a key challenge in Web3-Web2 interoperability. Its primary function is to enable the secure resolution of domain names across different, otherwise separate, blockchains. With this patent, the sector may be looking at a unified standard for the entire Web3 domain economy, following the footsteps of what DNS did for the internet back in the 90s. The Ethereum Name Service (ENS) is yet another successful example, with over 2.7 million .eth domains registered, and is the de facto standard for all Ethereum Web3 addresses. It has an easy-to-use naming system that makes use of the Ethereum blockchain’s layer 1 capability. Ethereum wallet addresses work seamlessly with ENS and integrate easily with wallets and decentralized applications, or dApps. It is the foundational identity layer of Web3. Smaller players include Handshake’s decentralized naming protocol and the HNS coin, but the platform is limited to specific niches. Some startups like Namebase are beginning to facilitate domain trading and management for Handshake. There are multiple other examples working with popular programmable chains like Solana, Tron, and others. The basic promise of these startups is to make the Web3 transition easier and simplify wallet usage. One Web3 domain can be used to handle activities across multiple blockchains. A Unified Web3 Historically, the company offering greater interoperability across multiple blockchains will have the primary breakthrough. Web3, despite concerted efforts, is suffering from fragmentation, as it is hard for one blockchain domain system to read the other one, and many networks come and go out of fashion, making it difficult to be a worthwhile solution to the long public address conundrum. However, recent breakthroughs allow multiple chains to work as well as in a single domain, thus gaining user confidence. The Web3 market is gaining ground and is likely to reach as high as $6 billion by the end of 2025. Supporting an annual compound growth rate of 39% for the next ten years, the Web3 market is undergoing AI integration. With the metaverse support surging in demand for Web3 applications, foundational identity layers. The market momentum is undeniable. The Web3 market is projected to reach $6.15 billion in 2025, with a compound annual growth rate of 38.9% extending through the next decade. This growth is fueled by metaverse expansion, AI integration, and surging demand for decentralized applications, all of which require Web3 domains as foundational identity layers. "The new internet will be defined by identity," Martone says. "Domains are becoming the universal layer that gives names to wallets, powers payments, and provides trusted identities for people, businesses, and even AI. They're not just addresses, they're the keys to the digital world of tomorrow." Conclusion Web3 domains as a whole are looking to resolve some of the most persistent problems related to crypto wallet usage. By taking a 42-character wallet address and turning it into an easy Web3 domain, they can make crypto safer and more appealing to average users. There are already 10 million Web3 domain registrations from across multiple chains with an annual growth rate of 39%. Furthermore, the Web3 domain is becoming more than a wallet tool, but a new way to look at digital identity and online presence through the digital identity layer.
