Domain name business is booming against the market trend. Can BNS take over ENS?

In the bear market, Web 3 domain name transactions have become a hot business, especially ENS.

ENS domain names with three-digit and four-digit numbers and Emoji expressions are highly sought after, and the transaction prices continue to rise; many whales create and buy ENS domain names in batches, and attach website links to domain names for personal use, and start domain name sales business. Data shows that 378,442 new ENS domain names were registered in July, exceeding the previous record of 365,652 in May, setting a new record; as of now, the total number of ENS domain names created has exceeded 2 million.

This trend has also spread to other public chain ecosystems outside of Ethereum, and each company has gradually launched its own domain name services. Recently, Odaily Planet Daily noticed a domain name protocol called Binance Name Service (BNS), which fills the gap in the BNB Chain ecosystem market.

Like ENS, BNS also supports wallet address mapping, enhanced domain name ownership and reverse resolution services. Users do not need to remember lengthy and disordered addresses, and can transfer transactions from one domain name to another conveniently and quickly. More importantly, BNS considers the loopholes in the design of ENS and prohibits zero-width hyphens at the contract level, ensuring the uniqueness and authenticity of the domain name.

In the future, BNS will build a Web3 social platform based on BNS domain names (similar to Quora), where users can set and display personal information and add Avatar avatars in their domain names. In addition, BNS will also launch a Web3 user information distribution center based on domain name identities, where any builder can define user behavior characteristics; after users follow each other, they can share their friends' on-chain behavior information; and they can deliver smart messages, extract and convert on-chain information into targeted, timely smart messages, and convert it into a social network where users can exchange and interact.

As a rising star in the domain name track, can BNS integrate the ecological advantages of BNB Chain to overtake ENS and grow into the next leader in the domain name field?

1. Domain name is the social pass in the Web3 era

Users who have been in Web3 for many years must have had this experience: when you want to transfer money to a friend on the chain, you first need to obtain their on-chain address, which is usually a long, irregular and unmemorable string. If you are careless and miss or enter a letter by mistake, it may cause a transfer error and you have to repeat the above steps.

In order to facilitate on-chain user transactions, Web3 domain names came into being, which convert disordered on-chain addresses into memorable text or symbols. Taking ENS (Ethereum Name Service), a decentralized domain name protocol, as an example, a common Ethereum address is a combination of numbers and letters starting with 0x, which can be converted to xx.eth (xx can be your name or other symbols) after using the ENS domain name service.

In the past year, domain name services have successfully ignited Web3, especially as the market entered a bear market, the domain name business has become increasingly hot.

Take ENS as an example. The number of registrations has been rising over the past few months. Data shows that the total number of ENS domain name registrations has reached 2.073 million, of which 70% are newly added after the beginning of this year (1.453 million); the number of independent holding addresses has reached 532,000, of which nearly 60% are newly added after the beginning of the year; among them, the number of ENS domain name registrations in July this year exceeded 370,000 per month, setting a record high.

(ENS registration data)

Why is the market so fond of domain name services? What is the real role of domain name services in the Web3 era?

The ease of use mentioned above is one of the core values ​​of domain names, but more importantly, domain names such as ENS and BNS make Web3 more humane and personalized, lowering the threshold for understanding.

"For ordinary wallet addresses, domain names are not only convenient for transfers, but more importantly, they can be used to label the user's on-chain identity. Personalized settings will lower the threshold for new users to understand. We have always been making products from the user's perspective." Alger, head of BNS business, explained that if Alipay users can only perform transfer operations through a long string of Alipay IDs, the probability of transaction errors will increase exponentially, and the corresponding convenience will be greatly reduced.

Furthermore, Web3 domain names have certain economic value. Like traditional Web2 domain names, Web3 domain names such as ENS and BNS are available for trading. Users can collect rare domain names and profit from transactions. A good domain name is even more valuable than some blue chip NFTs.

For example, on July 4, the "000.eth" ENS domain name was sold for 300 ETH, setting the second highest ENS domain name transaction price record in history; the ENS domain name with the highest transaction volume in history is "paradigm.eth", which was sold for 420 ETH. The Paradigm corresponding to this domain name is a well-known crypto investment fund.

In addition, various three-digit, four-digit and Emoji ENS domain names have been highly sought after recently, and the transaction prices have continued to rise; many whales have created and purchased ENS domain names in batches, and attached website links to the domain names for personal use, starting a domain name selling business.

Secondly, Web3 domain names are symbols of identity and status and have brand value. ENS and BNS domain names can be regarded as a business card in the Web3 world, representing the identity of individuals, companies, and even countries. They can also be displayed in combination with numbers, letters, emojis, and symbols, conveying personality and brand value. More importantly, users with the same domain names have a sense of identity, and various domain name clubs have emerged recently.

From the perspective of practical application, Web3 domain names are becoming the standard for traditional institutions and large enterprises to enter Web3. Last year, Budweiser purchased beer.eth for 30 ETH; after the luxury brand Gucci acquired gucci.eth for 12 ETH in March this year, it began to accept cryptocurrency payments in some stores in the United States; the jewelry brand Tiffany purchased the tiffany.eth domain name for 29 ETH (about US$50,000).

Finally, for project organizers and investment institutions, domain names are a high-quality track with a proven business model. According to the data, in the past year, ENS's total revenue reached nearly 54 million US dollars, of which 10% to 20% came from renewal fees and the rest from registration fees, indicating that users have high stickiness and strong willingness to pay and renew.

From the perspective of track development prospects, the annual sales of traditional We2 domain names have reached tens of billions of US dollars, and the domain name sales in the US market alone will reach 6.7 billion US dollars in 2022; while the current scale of Web3 domain names is relatively small - the sales of the most popular ENS are less than hundreds of millions. The entire Web3 domain name industry is in its infancy and still has a lot of room for development with a high ceiling.

In general, in the Web2 era, traditional domain names such as DNS were used as a channel to connect individuals and companies/enterprises; in the Web3 era, crypto-native domain names such as ENS and BNS have become a social pass for Web3, a symbol of identity for individuals, companies, and even countries. As Web3 advances, some domain name projects may develop into business cards for the entire industry, just like ".com".

2. Building Web3 social networking based on BNS domain name

As the domain name business is booming, this trend has also spread to other public chain ecosystems besides Ethereum, including Solana, Avalanche, Polkadot, Tezos, Flow, Evmos, etc., which have also begun to gradually launch their own domain name services this year. However, both the transaction volume and the number of registered users are far behind ENS. One important reason is that the ecosystem behind these domain names is developing slowly, and the user activity is far lower than that of Ethereum, so the rigid demand for domain names is not strong.

In view of this, the BNS development team chose to build a domain name service based on BNB Chain.

"For entrepreneurs, Ethereum is indeed a good playground for innovation. After all, it has a richer ecosystem and more complete infrastructure. But as a Builder, the BNB Chain ecosystem gives me opportunities, and we are willing to open up a grassland. The advantages of BNB Chain are also obvious. In front, Binance officials continuously guide it, and in the back, there is the influence of the law of time machines. The infrastructure on the Ethereum chain will exist in the future." Alger told Odaily Planet Daily.

Judging from various data, BNB Chain is indeed gradually surpassing Ethereum: BNB Chain processes 2.8 million transactions per day, reaching a peak of 3.7265 million on March 16 this year, while ETH processes 1.3 million transactions per day; the number of active addresses for transactions on the BNB Chain continues to set new highs. Last week, the number of unique addresses on the BNB Chain increased by 1.5719 million, reaching a total of 143 million, a growth rate of 2.7%, while ETH's growth rate last week was only 0.87%; in terms of locked assets, the total locked value of BNB Chain is US$5.5 billion, making it the second largest crypto ecosystem after Ethereum.

On the other hand, BNB Chain currently lacks domain name services. According to a sample survey, 99.5% of users do not have domain names among the 200,000 sample addresses. The entry of BNS fills the last gap in the market. As the largest and most active ecosystem outside of Ethereum, BNB Chain is becoming a new battlefield for domain name competition and ushering in a new wave.

"BNS can connect every Web3 user, connect to all mainstream platform scenarios, help every user connect to his identity and assets, and help BNB Chain connect to more customers." This is how BNS is introduced on the official website. What are the differentiated advantages of BNS, the first entrant?

Like ENS, BNS also supports wallet address mapping, enhanced domain name ownership and reverse resolution services. Users do not need to remember lengthy and disordered BNB Chain addresses, and can transfer transactions conveniently and quickly from one domain name to another.

More importantly, BNS took into account the loopholes in the ENS design and banned the "zero-width hyphen" at the contract level, ensuring the uniqueness and authenticity of the domain name.

Zero-width joiner (ZWJ) can be understood as a space. Suppose a user registers the "vitalik" ENS domain name by simply inserting a few zero-width hyphens before and after the name to obtain a domain name that looks the same as Vitalik's. The existence of this vulnerability will directly lead to the loss of domain name value. Some ordinary users may even buy "fake" domain names, which greatly affects secondary market transactions. BNS directly eliminates this problem.

On this basis, BNS will connect to BNB Chain ecological projects, including wallets, browsers, cross-chain bridges, exchanges, etc., and support the direct use of domain name services through these platforms. Officials revealed that it has currently connected to three wallet projects (MetaMask, Bitkeep, Tokenpocket Trust Wallet), eight DEXs, and two NFT platforms in the BNB Chain ecosystem, and the specific list will be announced at an appropriate time.

In addition, BNS will also build a Web3 social platform based on the BNS domain name, where users can set and display personal information in their domain names, such as ERC20 addresses, email addresses, URL links, Twitter, Github, Reddit, Telegram, etc. Users can also set the ERC-721 and ERC-1155 standard NFTs held by their addresses as Avatar avatars and display them in various DAPP applications on the chain. As shown below:

“In the future, your BNS domain name will be your decentralized mailbox. Your BNS domain name can also be your decentralized website or personal homepage,” Alger said.

In addition, BNS will also launch a Web3 user information distribution center based on domain name identity. Any builder can define the user's behavioral characteristics. After users follow each other, they can share their friends' on-chain behavior information. And they can transmit smart messages, extract on-chain information and convert it into targeted, timely smart messages, and convert it into a social network where users can exchange and interact.

For example, if a user is a MOD (administrator) of a project's Discord community, the project owner can evaluate his or her performance, and the relevant tags will be synchronized to the BNS domain name. When he or she participates in MOD recruitment in other project communities, these tags can verify his or her past contributions, thereby helping him or her gain a competitive advantage. This function can also help some emerging project owners determine the NFT whitelist and airdrop list and obtain high-quality user resources.

"From a To B perspective, BNS has a lower access cost. For the access scenario party, it only takes one person about an hour to complete the access to BNS. This also provides the possibility for BNS to leverage the market from an ecological perspective in the future. From a To C perspective, BNS will continue to surprise the community, so please stay tuned." Alger told Odaily Planet Daily.

3. Keep your feet on the ground and look up at the stars

According to the official plan, the domain name service will be officially launched in the fourth quarter of this year, and the domain name trading market will be opened. Recently, the official announced on Twitter that users who hold a set of (T1 T2 T3) Genesis NFTs will obtain the BNS domain name whitelist.

In the early stage of the agreement, the lowest registration fee for BNS is $5 per year, which is also the most important source of the project; BNS also builds a revenue distribution agreement based on Share to Earn, and users can also earn revenue by recommending friends to register domain names. After a certain number of users, social products will be launched, and domain name registration will be completely free. In the future, BNS will be fully open and truly become a Web3 traffic entrance, so that the first wallet address of every new user who comes to the crypto world is a personalized domain name, lowering the threshold of understanding and attracting more people to the crypto field.

In addition, the team will issue the BNS token after the project matures, and domain name registration will also support BNS payment. "We will use the protocol revenue to repurchase BNS tokens quarterly, taking from Web3 users and using it for Web3 users. At present, there is only an expectation, and whether to issue the token depends entirely on the progress of the project. We will not consider launching tokens when the project is not yet mature." Alger explained.

Nowadays, more and more people believe that in the Web3 world, such a decentralized domain name and account system is necessary to carry applications, websites and user identities. However, these projects are still in the very early stages of exploration. There is still a lot of room for improvement in protocol integration, user experience, and access to the Web2 world.

Whether ENS, BNS and other domain name systems can truly take on the role of the only decentralized domain name and account system for Web3 depends on their continued efforts in the ecosystem in the future. After all, both are currently only domain name services for their own single ecosystems. If we want to break the barriers of the public chain and become a domain name service provider covering the entire Web3 public chain, there is still a long way to go.

"We have a strong competitor (ENS), and people often ask us why we don't give up and choose a new track. I think if there is only one company in a field, it means that it is either too niche or the ceiling is too low. Competitors will make us stronger, and horse racing will make the top products better and better, and will also make the user experience better and better. We believe that products that are truly favored by users have experienced the dual test of time and environment. Therefore, BNS will keep its head down and keep moving, but also look up at the sky."