July 19, 2022

Governance of Web3 Domains

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Our previous article stated how Web3 Domains are gaining significant traction within the domain and Intellectual Property industries, however, this technology is still far from mainstream and requires users to have an understanding of blockchain, cryptocurrency and Web3 to operate effectively.

There is an ongoing debate whether Web3 Domains will continue to gain traction or whether they are merely being used to fund the cryptocurrency market through frightened IP owners wanting to secure their trade marks within that namespace.

Either way, developing a strategic and measured approach to protecting your brand in Web3 is crucial, due to the lack of governance and standard procedures compared to traditional domains.

Traditional Domains vs Web3 Domains

Traditional Domains

Traditional domain names are overseen by the Internet Corporation of Assigned Names and Numbers (ICANN) for generic extensions like .com, while each country has an authority that manages its extension for ccTLDs. These structures provide for a Registry-Registrar model supported by a dispute resolution policy or court process. This model allows trade mark owners to engage with a registrar of their choice who would in turn be accredited with the registry to offer those services. Domain names can then be transferred between accredited registrars allowing for a centralised and regulated model that protects Intellectual property online.

Web3 Domains

Web3 Domains do not have a Registry-Registrar model and there is no organisation like ICANN overseeing policy. In short, there are no rules besides the contractual terms agreed upon when signing up with the marketplace “registry” service. Web3 Domains reside on the blockchain so once they are minted (minting moves the domain from the marketplace to the blockchain) the only party who has control over the domain is the owner. This makes it difficult, if not impossible, to identify the owner meaning that the only practical solution lies in purchasing registered domains from their owner.

Governance

As currently, the only realistic option for the governance of your brand’s IP in web3 is an effective defensive registration strategy, it is vital that it is well thought through, strategic and measured. However, thousands of Web3 domains are operating, with many more being created each day, meaning keeping track of all the extensions and registering key ones is a time-consuming and difficult process.

The key to successful governance in Web3is balancing your defensive registration strategy as, adopting an aggressive defensive registration process could facilitate the market's growth, validating the efforts of domain squatters in this area and increasing the number of Web3 infringements. Whereas, taking little or no action and ignoring the threat could expose the brand to infringements that cannot be addressed without having to pay a significant amount of money for the domain extension.

Therefore, your brand’s approach should be measured based on the assessment of each marketplace and the Web3 Domains market in general.

Summary

Despite the ongoing debate as to whether Web3 Domains will continue to gain traction or they are merely being used to frighten IP owners wanting to secure their trade marks, it is crucial that each brand has a well-planned defensive registration strategy, as this is currently the only form of defence against infringements. The registration approach should be measured based on the assessment of each marketplace and the Web3 Domains market in general, ensuring a balance between registering every domain and taking no action at all, by only registering key extensions.

To better understand the impact of Web3 domains and to begin developing your defensive strategy in this space, reach out to our brand protection team:

[email protected]