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What are NFT domain names?

What are NFT domain names?

NFT Domain Name 101

A domain name NFT stores a domain name on the blockchain instead of on the traditional Domain Name System, or DNS. It grants ownership of a domain name and can be used as an alias for one’s wallet address. The owner of a domain name NFT can also purchase and establish subdomains (subdomain.domain.eth, for example).

What is an NFT?

An NFT (non-fungible token) is a unique digital item stored on a blockchain. NFTs can represent almost anything — from art to virtual land to domain names —  and serve as a digital record of ownership. 

An NFT domain lives on the blockchain and gives users ownership of their stored data. These NFTs are used to create and host websites, and as a way to simplify transactions by replacing a wallet address — a long string of letters and numbers — with a domain name.

What defines a domain name NFT?

Think of a domain name NFT like an easy-to-remember shortcut to your wallet. Like other types of NFTs, a domain name NFT is stored on the blockchain. In web2, websites are accessed through DNS (Domain Name System) servers. DNS servers translate website addresses into IP addresses. Similarly, in web3, wallets can be accessed through domain names. These domain names translate into wallet addresses. 

With growing concern about the ownership of personal data and a desire to avoid third parties like domain registrars, domain name NFTs have become a potential answer to the question of how to retain more control of your data. Domain name NFTs allow users to own and control the data that lives on their domain in contrast to a hosted web2 domain name.

NFT domains can have extensions like .eth, .polygon, .nft, .crypto, .bitcoin, .x, and .blockchain.

What are the advantages of using blockchains for domain name NFTs?

Ownership and control

Due to the immutable and public nature of the blockchain, NFT holders can verify that they own their domain name and transfer it whenever they’d like. In addition, content stored on a web3 domain is decentralized and owned by the domain holder. 

Accessibility and networks

By using a blockchain to store and transfer domain name NFTs, it is possible to create a more seamless experience for owning, selling, and buying NFTs. Beyond interacting with others, a domain name NFT gives the domain owner easier access to their crypto wallet because, in many cases, they can replace their wallet address with their domain name.

Authenticity and provenance

By using a blockchain to track the ownership and movement of a domain name NFT, it is possible to establish a clear and verifiable record of the authenticity and provenance of the domain name. This can provide added transparency.

What is Ethereum Name Service?

Ethereum Name Service (ENS) is a “distributed, open, and extensible naming system based on the Ethereum blockchain.” It’s the most widely integrated domain name service with 2.8 million names, 529 integrations, and 649k owners at the time of writing. Domain names on ENS have “.eth” extensions, but as of 2021, ENS allowed sites with other top domain names like .com and .org to integrate directly. Now, if you own a domain that ends in .com, you can connect it to your ENS domain that ends in .eth.

ENS was initially proposed by Nick Johnson in April of 2016 as a protocol that could provide “flexible resolution of short, human-readable names to service and resource identifiers.” Johnson’s Ethereum Improvement Proposal explains that “the mapping between names and resources may change over time, so a user may change wallets, a website may change hosts, or a swarm document may be updated to a new version, without the domain name changing.” 

The purpose of ENS is similar to DNS, but because it’s built on the Ethereum blockchain, it has a different architecture. According to ENS, “ENS complements and extends the usefulness of DNS with decentralized, trustworthy name resolution for web3 resources such as blockchain addresses and distributed content.” 

Unlike other domain name NFTs, ENS requires at least a yearly renewal after purchasing a domain name NFT. Prices range depending on the length and uniqueness of the domain name.

Other notable domain name NFTs

Domain name NFTs began growing in popularity in 2021. That same year, Budweiser became one of the first big brands to purchase a domain name NFT — beer.eth. According to Yahoo, the purchase was made in tandem with a larger push into the web3 world, including the use of a profile picture designed by NFT artist Tom Sachs.

Also in 2021, Unstoppable Domains sold its domain win.crypto for $120,000 USD, which broke previous records for the most expensive blockchain domain at the time.

Where are domain name NFTs stored?

Blockchains store NFTs. You can use an NFT-compatible crypto wallet to access your NFTs, and you can view them on OpenSea once you’ve connected your wallet. OpenSea is compatible with multiple wallets. An easy way to remember the role a crypto wallet plays is to think of it as your unique address on the blockchain — it allows you to send, receive, and store items.

How can I explore and buy domain name NFTs using OpenSea?

You can find Domain NFTs on OpenSea by navigating to the domain name category page.

Similar to any other transaction, in order to buy an NFT, you'll need a crypto wallet and cryptocurrency (or, in some cases, just a credit or debit card). Using OpenSea, you can instantly buy items listed for sale, bid in auctions, or make offers on NFTs. 

Domain name NFTs build upon the popular DNS domain buying infrastructure and offer an alternative for those who also want to own a domain in the metaverse. Each domain is stored in a decentralized fashion and offers the opportunity for the owner to be the sole safekeeper of any content that exists on the domain.

🧠 Q&A

How are NFTs connected to blockchain technology?

NFTs operate on blockchain technology, making it possible to verify their ownership and easily transfer them from one owner to the next. Ethereum, Solana, and Klaytn are three examples of blockchain technology that store NFTs. Ethereum is also the most popular blockchain technology for domain name NFTs. 

A blockchain is a digitally distributed ledger that records transactions and information across a decentralized network. Most blockchains are verified by many nodes (read: computers), which is why you’ll hear them described as “decentralized.” Different blockchains may verify their transactions using different methods but ultimately operate similarly. 

Blockchain technology allows users to easily trade, collect, and verify their domain name NFTs. Domain name NFTs offer an alternative to sharing wallet addresses and create a more seamless process for sellers or buyers looking to access a user’s specific crypto wallet. 

How do I properly vet an NFT before buying it?

Web3 technology is still new and constantly evolving, so while no single action guarantees protection, there are best practices that can help. The best rule of thumb is that if something looks too good to be true, it probably is. Never share your wallet’s seed phrase, be careful when taking actions using your wallet, and make sure to thoroughly evaluate NFTs before buying.

What gas fees will I pay when buying a domain name NFT?

In web3, the term “gas fee” refers to the payment needed to execute transactions on the blockchain. OpenSea doesn’t control gas fees, set gas fees, or receive any of the gas fees incurred by users on the platform. Instead, they all go to network validators or miners. When you start the NFT purchase process using OpenSea, you’ll see the gas fee broken down by your wallet provider, so you can watch the fee refresh and complete the transaction when it’s low.

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