Wanna bet I can hype you up with one statement? Investing in web3 domains can make you a lot of money! I can feel your eyes sparkle, that’s why the most successful punch phrase in marketing blockchain and web3 is “ monetize your creations”. It’s fairly obvious why this new technology is appealing to everyone. If you’re already familiar with web2 domains, that’s great because you have a good background of what I will talk about. However, if you’re not, consider this article as the first milestone in your journey to make money from Web3 domain names!
This article will be an initiation, as it will encompass a bit of everything. DISCLAIMER, it’s not intended as a bit of financial advice, just trying to open your eyes to money-making opportunities. I’ll start with a brief introduction to domain names, then a recap on the huge success web2 domain names had. Then, I’ll get you familiar with web3 domain names, some research statistics, and 9 starter tips to get your web3 domain-name-investment game rolling!
What are Domain Names?
Before we dive into the know-how of making money from web3 domains, let’s get down to the fundamental understanding of domain names. In simple terms, domain names are the address you type into a web browser. In technical terms, domain names are a string of text that links to an IP address. They are made of two parts separated by a dot:
- Top-level domains (TLD) is the generic section such as ‘.com’, ‘.net’, and ‘.org’, as well as country-specific TLDs like ‘.uk’ and ‘.jp’.
- The second-level domain (2LD) is the more specific part of a domain name, for example, “google.” “Facebook.” “chainwticher.”
Basically, there are a lot of technical things happening behind the scenes of typing a domain name into the web browser. For example, when you type “google.com” into your browser do you ever think about how your computer- a mere machine – understands those words? Well, it doesn’t and that’s why there’s an IP address for every domain name. Consider it the language your computer understands. It comes as an alphanumeric string like 192.0.2.2.
How Do Domain Names work?
To better know the potential of making money from web3 domains, you have to understand the basic technology of domain names. I’m adding this section for all the curious people out there. I’m pretty sure you’ve heard about IP addresses and couldn’t quite get what it’s all about. If you know how the internet works, that’s amazing. However, if you’re among the 2% that never questioned it, this will be fun.
Consider the web a vast place with lands, neighborhoods, and real estate. Every computer has its own IP address, so it exists on a parcel of that vast land. Let’s say your IP address right now is 18.104.22.168.
When you type the address “chainwitcher.com” into your browser, you are requesting access to this website’s content, which has its own IP address (22.214.171.124). So when chainwitcher receives your request, it needs to know where to send back the information, and that’s why it will use your IP address (126.96.36.199).
But How Is This Process Managed?
Someone has to make sure the computers/servers AND the humans using them understand what’s going on. That’s where the Domain Name System (DNS) comes into play. It will translate human-readable domain names (www.chainwitcher.com) to machine-readable IP addresses ( 188.8.131.52).
If it weren’t for the DNS, you would have to memorize and type 184.108.40.206 into your web browser every time you wanted to access chainwitcher. Which isn’t very appealing to the majority of us.
Web2 Domains: Recap
It’s not that hard to understand how web3 domains are valuable money-making opportunities if you know about the huge boom web2 domains had!
March 15,1985 marks the day of the first-ever registered domain “Symbolics.com”. As of the first quarter of 2022 in 37 years of existence and according to Verisign, there are over 350.5 million domain name registrations. That’s not all, I’ll tell you the coolest fact of the day: if you go to symbolics.com, you will find that its owners turned into an online museum of the internet! This domain has full documentation of the internet’s historic evolution with time, go check!
As I mentioned before, the web is a virtual simulation of our tangible life. Therefore, you can imagine it being made of parcels and addresses. Just like people invest in real estate in physical life, there are those who invest in domain names on the web. Trust me, many have become millionaires from these investments. For example, web2 domain name sales in the US Market alone reached $8.1BILLION in 2022!
25 Most Expensive Domain Names Publicly Reported
According to GoDaddy, these are the most expensive domain names ever sold.
CarInsurance.com — $49.7 million
Insurance.com — $35.6 million
VacationRentals.com — $35 million
PrivateJet.com — $30.18 million
Voice.com — $30 million
Internet.com — $18 million
360.com — $17 million
Insure.com — $16 million
Fund.com — £9.99 million
Sex.com — $14 million*
Sex.com — $13 million
Hotels.com — $11 million
Porn.com — $9.5 million|
Shoes.com — $9 million
Porno.com — $8.8 million
Fb.com — $8.5 million
We.com — $8 million
Business.com — $7.5 million
Diamond.com — $7.5 million
Beer.com — $7 million
Z.com — $6.8 million
iCloud.com — $6 million
Israel.com — $5.8 million
Casino.com — $5.5 million
Slots.com — $5.5 million
Everyone well-invested in the domain name industry is flying over the moon at the opportunity web3 domains have. First of all, it’s because the whole world got a front-row seat to the huge success web2 domains had. Therefore, web3 domains are the second chance everyone has been dreaming of. Not only that, but these blockchain-based domains come new and improved with special perks over their predecessors.
Web3 domains are also referred to as NFT domains, crypto domains, and blockchain domains. That’s basically different naming for the same function. Check our NFT domains guide if you’re into digging deeper. The best feature of web3 domain names is that they function like NFTs on a blockchain with their own smart contracts. This means that web3 domains offer you the same advantages NFTs do.
Web3 domains still need a mitigator between human-readable language and blockchain-encrypted code. That’s why every blockchain will have its own DNS alternative. For example, you used to get web2 domains from GoDaddy Domain Registration. For web3 domains, you can use domain-providing platforms such as Ethereum Name Service and Unstoppable Domains.
Web2 TLD –> “.com” – “.org” – “.gov” – “.net”
Web3 TLD –> ENS → “.eth”
–> Unstoppable Domains → “.crypto” – “.nft” – “.dao” – “.wallet”
Web3 Domains: Advantages
There are several advantages to web3 domains aside from making money, such as:
- One Name For All – You can use web3 domain names to replace your complicated wallet address name and log in to several apps at the same time.
- Ownership – Unlike traditional domains, fully own and control your domain. You buy it once, you own it for life! This means that instead of one company controlling your data online, the power is transferred back to you as the user.
- Enhanced Security — Only you hold the power to make updates to your web3 domain, which minimizes worries about servers getting hacked or domains getting stolen.
Which Web3 Domains Make the Most Money?
Before we dive into tips to make money from web3 domains, let’s kickstart with web3 domains that made the most money. I will use the famously-circulating data survey domain investor Matt Garcia carried out on November 22, 2021, via his youtube video.
- The time frame for this study was between August and November 2021.
- The sample study was on domains ending in .eth and .crypto that sold for over 1 ETH. This resulted in a survey pool of 388 sales. All the percentages are referring to this total of 388 sales.
- The analysis criteria for the web3 domain names were:
- Number of characters
- Number of words
- Use of singular or plural form
- Word Type (e.g. a noun, an adjective, a verb, etc.)
- Domain purchasing reasons
Graphical Results of the survey:
Web3 Domain Survey Results
- 85.05% of the sales go to domain names that have a range between 3 to 8 characters.
- 85.23% of the sales go to domain names with single words – 11.74% for two words – 3.03% for three words.
- 80.82% of the sales go to domain names with singular forms – 19.18% with plural forms.
- 65.98% of the sales go to domain names with nouns – 14.18% with emoji- 5.41% with an acronym.
- 40.46% of the sales are purchased for Iconic reasons – 18.04% for brands – 13.4% for terms – 19.59% for Identity.
Highest selling web3 domain names are :
- Characters between 3-8
- Single words in the singular form
- Nouns and emojis
- Most frequent purchase reasons fell under the “icons” category. This shows that people are mostly interested in the collectible aspect of domain names.
9 Tips to Make Money From Web3 Domains
Alas, we reach the part that got you opening this article in the first place. Truth be told, I slipped most of the tips throughout the text already, so let’s see if you can spot them. Here’s a handy checklist to help you make the most money from web3 domains:
Tip #1- Research and Learn:
I purposely started the article with background information about domain names. If you really want to make a single buck from anything you must understand it first. So before you go seeking quick-money-grabbing domain name advice, do your own research on the technology. REMINDER: The data provided at the beginning of this article only serves as the START of your search.
Tip #2- Be Patient
Patience is key to every hurdle, especially when it comes to the industry of domain names. Don’t expect your investment to be fruitful immediately, because it will take time and most probably years.
Tip #3- Set Realistic Goals
This is really important and directly links with the first tip because you can only set realistic goals when you understand the web3 domain market. Don’t immediately expect to retire and have an endless money stream from web3 domains. It’s true that web2 domains were a great success, but keep in mind that every tech-savvy knows those tricks too. So play smart, not hard to cut down on long-term disappointments.
Tip #4- Start Slow
Don’t go buying on a hype craze and waste money on 100 different web3 domain names. That’s not how you make money. If you choose one right domain, it may end up getting you money more than 100 worthless domains combined.
Tip #5- Learn From Web2 Domains
One interesting tip would be to re-check the list of the most expensive web2 domains ever sold and buy their web3 alternative. It may be the most obvious move in the game, but there’s a chance that everyone is overlooking it because of how obvious it is.
Tip #6- Pick A Good Domain Name
I think the survey displayed in the previous section proves that people are attracted to a specific kind of domain name. Always stay on the lookout for trending domain names. This survey is one year old, trends do change over time. So, make it your goal to fact-check trends with time. Don’t stress about making money from a good web3 domain, start gathering data slowly in a sheet and build on it day by day.
Tip #7- Choose the Right Blockchain
It’s very important to understand that buying web3 domain names highly depends on their respective blockchain. Therefore, their success depends on that of the blockchain. The leading blockchain currently is Ethereum, but if Ethereum’s value drops to zero tomorrow, no one will be interested in Ethereum-based domain names. Always stay on the lookout for blockchains that may have future potential. For example, Solana-based web3 domains may be profitable.
Tip #8- Anticipate Future Success Projects
One good strategy to make money from web3 domains is to anticipate the success of a business. It could either be an existing small business or a prediction of a business that might be successful in the future. For example, let’s say there’s a really good bakery business doing so well and has an online presence. You might register a domain in its name and sell it to them when they need it later. If that sounds too harsh, you can imagine what kind of web3 business ideas are needed, come up with catchy domain names, and mint them before anyone.
Tip #9- Numbers Are a Big Deal
There’s a mystery in numerology, make it your goal to learn it. It’s probably why numbered domain names could be a good investment. I can go on and on to tell you how much money numbered web3 domain names make. But, I will save you time and just mention how “000.eth” sold for 300 ETH (worth $321k at that time).
Is Investing In web3 Domains Worth It?
Chainwitcher gives you the data, insights, and sly remarks but the decision should always be yours to make. Web3 is essentially based on blockchain technology, which has a million question marks around it. If you don’t fully understand every aspect of the blockchain, then don’t expect to succeed in your quest to make money from web3 domains. I don’t know how to stress this enough for you, research, learn, and when you understand research again. You can not make a single penny from web3’s potential if you don’t truly understand every nook and cranny of it.
I can’t deny that the success of web2 seduces us to plunge into web3, but this hype is the trap used to waste your money. Just, be careful and choose the best web3 domain providers. Now since we’re on the money-making topic here are 7 tips on making money from NFTs on OpenSea.