The decentralized web, or Web3, can seem a bit intimidating, especially considering the boom in NFT domain registrations that’s occurred over the past 5 years.
In this blog post, our resident NFT and Web3 expert, Shane Layman, guides you through what your corporation needs to know about this emergent digital landscape.
What are NFT domains?
First things first, what exactly is an NFT domain?
An NFT domain is a non-fungible token domain name existing on various blockchains. A blockchain is a digital form of record keeping and the underlying technology behind cryptocurrencies. It’s the result of sequential blocks that build upon one another, creating a permanent and unchangeable ledger of transactions (or other data). For example, .eth is a Web3 TLD operating on the Ethereum blockchain while .crypto is a Web3 TLD operating on the Polygon blockchain.
What makes Web3 TLDs and NFT domains different from traditional DNS or Web2, aka the Internet as most of us know it?
These NFT domains are minted to the blockchain and then minted to an individual’s wallet to fully custody the domain. So, rather than paying renewals on a domain name through the traditional DNS model, owners of NFT domains pay a one-time registration fee to own and mint the domain, and then depending on the blockchain either don’t pay another fee or pay a gas fee to continue ownership of the domain.
Now that we’ve outlined a bit about how NFT domains work, what they do, and so on — let’s explore what corporations must consider regarding the decentralized Web and how Markmonitor can help.
Drive informed corporate Web3 decisions with Markmonitor
To kick things off, Markmonitor is customer-driven in everything we do.
We’re here to help our customers solve problems and make their lives easier when it comes to managing their domains to protect their brands online. We believe it is in the interest of Web3 stakeholders to seek a better understanding of the needs of trademark holders and brands if they want to protect end-users by creating a more trusted environment and drive adoption of their technologies.
That said, the first step we recommend our clients to take is this: identify your top brands, whether they be well known trademarks or trade names, and register those names in the most popular spaces.
Web3 currently lacks any form of rights protection mechanisms, so being proactive rather than reactive is advised. There is nothing stopping infringements of well known trademarks or misleading websites in Web3. A key component of Web3 domain and IP strategy is getting ahead of the problem before it manifests into something bigger by protecting and securing your brand strings in this emerging market.
Secure your NFT domains while minimizing corporate risk
Ye be warned: Not every Web3 marketplace is created equal.
To minimize your corporate risk, let’s have a chat about identifying valid Web3 enterprises (and identifying Web3 organizations to avoid at all costs).
There are 3 major players in the Web3 space distributing NFT domains and they’re the most popular registration marketplaces: Unstoppable Domains, Ethereum Naming Service (ENS), and Handshake Naming Service (HNS).
However, keep in mind that with Web3, anyone and everyone who wants to can create a Web3 TLD, mint it to a blockchain, and offer second level registrations from the “TLD” they’ve minted. That begs the question, “Is this someone with a server in their basement allowing for registrations or is this a trusted entity that I know has my best interest in consideration?” And here is where due diligence and homework come into play.
We’ve vetted many Web3 registry operators to determine which ones are worthy of engagement. “How so?” you might wonder. We leverage our experience and expertise to conduct proper checks, including reviews of any terms and conditions and policy documents, and by engaging with executives and c-suite level employees of these companies. This due diligence ensures our clients are protected, and that Markmonitor continues to provide that extra layer of security for our clients.
How to manage your corporate NFT domain assets
Now let’s discuss aspects of asset management particular to NFT domains.
For many companies, the risk involved with asset management isn’t necessarily worth it. When we refer to asset management, essentially, we’re talking about securely storing your NFT domains within either a self-custody wallet or a custodial wallet.
With self-custody, you take on the risk of managing your private key and security passphrase, meaning if these are ever lost, all assets in that wallet are unrecoverable until the private key is recovered. When you outsource to a custodial wallet, the custodian of the wallet becomes the holder of the private keys and assumes the risk of managing your NFT domains.
Both are valid options, so to determine which is better for your corporation, ask yourself, “What level of security and risk management is my company comfortable with?”
Markmonitor is here to advise and guide your NFT domains strategy
For corporations trying to navigate this new and emerging market there are many things to consider.
We’ve discussed a sampling of those considerations — from identifying top brand strings and ensuring those are registered and owned by you as the corporation, to vetting the vendors that you’re looking to register names with, and understanding the risks involved with the various asset management options that exist. Keep those in mind to set yourself and your organization up to thrive in the Web3 space.
The best part?
You can always rely on Markmonitor for expert advice and white glove service when it comes to management of Web3 NFT domains and Web3 domain and IP strategy. If you’d like to learn more about Markmonitor’s NFT Domain Protection Service or have a chat about some of our best practices, contact us using the button below.