Happy Friday, everyone. I recently spoke with Nick Johnson, a former Google engineer who is now the lead developer of Ethereum Name Service, an offering that is akin to GoDaddy but for Web3. Known in the crypto world as ENS, it lets users replace the long jumble of characters that represent a crypto wallet address with a handle that is easy to read and remember. In my case, for example, I can use my ENS name—@jeffroberts.eth—in place of 0x82630Ea599D20147694E3113BD501D1c638A252F.
ENS got its start in 2017 but really took off in early 2022 when people were registering more than 30,000 domains a month. Demand has since tapered—as is the case for everything amid crypto winter—but today ENS says it has registered over 2.5 million names on behalf of more than a half million buyers.
The primary purpose of ENS today is to streamline crypto payments but, according to Johnson, this just the beginning. He foresees an era where I will build a social identity around @jeffjohnroberts.eth—adding an avatar, a social graph, and more—and use it to log in and explore apps across the emerging decentralized internet. This will be akin to the way many people use their Facebook or Google accounts to conveniently log in to websites, but without all the data gobbling and privacy horrors that go with the Web 2.0 business model.
As for the business model of the Web3 domain name business, that too is still emerging. ENS is governed by a DAO that is sitting on over $60 million worth of Ethereum and $2 million in stablecoins it has accrued from selling and renewing domains. It also has its own token. Meanwhile, its main competitor—an outfit called Unstoppable Domains—is a traditional corporation that doesn’t offer .eth names, but instead suffixes like “.wallet” or “.nft”. The latter’s strategy also revolves around selling to brands and helping them protect their IP in Web3.
The issue of IP has already led to brewing tension between the two competitors, though not over the question of brand names and trademarks. Instead, Johnson cites Unstoppable’s move to acquire patents—including over elements of Web3 he says are obvious and unprotectable—as a risk his rival will resort to patent trolling. For its part, Unstoppable rejects the allegations, saying its patent efforts are purely defensive and intended to protect it from being mugged by the Web 2.0 giants.
The IP issue, however, should not distract from the larger story here. Namely that both ENS and Unstoppable are building another important pillar of Web3 that will make the decentralized web less intimidating and more approachable for ordinary people.
Johnson says that ENS is aware that the current user design of most Web3 products is clunky and unappealing but adds the service, for its part, is making rapid efforts to improve this. It is hardly the only one doing this. In recent months, Coinbase’s decentralized Wallet service has taken huge leaps forward in terms of design, and there is a quiet consensus among other Web3 players that the experience must get better if the technology’s promise is ever to catch on.
All of this, I suggest, is cause for broader optimism about the future of crypto. During every previous crypto winter, the best companies and projects have used the absence of hype and speculation to quietly build better products. The result has been, that when winter begins to thaw, users discover the entire industry has taken a giant leap forward. I predict that this is about to happen—with outfits like ENS helping to lead the way.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
Billionaire Tim Draper turned up in troubled Sri Lanka wearing a Bitcoin tie to evangelize crypto but got a frosty reception from political leaders and the central bank. (Bloomberg)
Marathon Digital sold 1500 Bitcoins in January, suggesting it and other companies in the embattled crypto mining section will get some much-needed cash as prices perk up. (Coindesk)
The shares of embattled crypto bank Silvergate took a new hit in the wake of a report that the Justice Department is investigating its handling of FTX accounts. (Bloomberg)
Blockchain analysis firm Chainalysis laid off 5% of its staff but predicted hires in the coming year will more than offset that. (Forbes)
Controversial internet personality Logan Paul got hit with a class action for allegedly rugging participants in an NFT project called CryptoZoo. (Decrypt)
MEME O’ THE MOMENT
