Web3 domains have been marketed for years as an alternative to traditional internet addresses. The appeal lies in their single purchase model, meaning the name is yours without the need to disclose owner information. However, when Unstoppable Domains sought to integrate .crypto, .bitcoin, and seven other domain zones into the conventional DNS, it became clear that these promises clashed with the existing system's regulations.

To enter the global DNS root, the owners of more than 4 million already issued names would need to re-register them and pay an annual renewal fee. Additionally, their ownership details would become public. Consequently, Unstoppable Domains abandoned its integration plans on August 25, 2026, citing ICANN's requirements and the costs associated with the program.

Since 2019, these domains have been sold with the assurance that they would eventually function in regular browsers alongside .com domains. The complications surrounding their entry into the foundational internet addressing system are explored in a recent ForkLog article.

Understanding the Internet's Addressing System

To comprehend why accessing a top-level domain is so costly, it's essential to understand how this system operates.

In 1983, American scientist Paul Mockapetris proposed the Domain Name System (DNS), detailed in RFC documents 882 and 883. A year later, RFC 920 formalized the top-level domains: .com, .edu, .gov, .mil, .org, and .net.

The first commercial domain, symbolics.com, was registered on March 15, 1985.

The DNS operates as a distributed, hierarchically structured database. The naming structure reads from right to left:

  1. The root (denoted by a dot, which is not shown in the browser's address bar).
  2. The first level or domain zone (.com).
  3. The second level — the main domain or simply "domain" (website name like forklog, google).
  4. The third level — subdomain (internal portal pages requiring additional names such as .blog).

Each level interacts solely with the next one, and the request's path flows as follows: the browser queries a resolver — a server that seeks the answer. It then asks the root server where to find the .com zone, receives the address of its registry, identifies the specific domain, and finally locates the corresponding IP address.

According to Root-Servers as of September 17, 2026, the system comprises 13 root servers globally, managed by 12 operators and 2045 nodes.

The domain market consists of three participants:

  • zone operator — the owner of the domain name registry;
  • registrar — the seller;
  • registrant — the buyer.

The registrant pays an annual fee to maintain ownership, which involves disclosing personal information.

Top-level domains (TLDs), numbering around 1440, are categorized as follows:

  • ccTLD — 248 names designated for countries and territories with two-letter codes from ISO 3166 (.ru, .de, .io);
  • gTLD — about 20 classic, sponsored names (.com, .net, .org);
  • New gTLD — over 1000 zones introduced since 2012 (.shop, .tech, .club);
  • IDN — around 150 national domains written in Cyrillic or other non-Latin scripts;
  • special domains — such as the infrastructure domain .arpa.

The scale of the network can be gauged from the DNIB report for Q2 2026: out of a total of 401.6 million registered domains across all zones, .com and .net account for 179.1 million, while ccTLDs hold 148.6 million.

Top 10 TLDs by registration count as of June 30, 2026. Source: DNIB.

However, it is not possible to freely register a name in every gTLD; only around 638 zones are open for registration, while the rest are reserved for brands like .google.

From a Text File to an International Corporation

Initially, all internet addressing was contained in a single text file called hosts.txt, which was manually maintained by the Stanford Research Institute's network information center. The list grew faster than it could be distributed over the network, leading to the realization by the early 1980s that the scheme was not scalable. The problem was resolved with the introduction of DNS.

Until 1995, domain names were distributed for free until Network Solutions, under contract with the U.S. National Science Foundation, introduced an annual fee of $50. Since then, DNS has operated as a market with a single vendor.

The first rebellion against this monopoly occurred in July 1997 when Eugene Kashpurev, founder of the alternative registry AlterNIC, hijacked public DNS servers' cache and redirected visitors from the official InterNIC site to his own. This ended with a lawsuit from Network Solutions, Kashpurev's arrest in Toronto, and a guilty plea to federal fraud charges.

Six months later, a similar issue was resolved peacefully. At that time, American computer scientist and internet pioneer John Postel managed the registries and distributed domain zones through IANA. Established in March 1988 at the University of Southern California's Information Sciences Institute with U.S. government funding, the project lacked a bureaucratic structure or staff.

In January 1998, Postel distributed a request to root server operators to switch to his machine. Eight of the twelve complied due to personal trust in the "god of the internet." The experiment was shut down a week later after a clear response from the U.S. government, but it demonstrated a crucial point: the root is governed by people and their relationships.

This realization that the entire network architecture depended on a single individual prompted the U.S. Department of Commerce to expedite the creation of the nonprofit corporation ICANN, which took over IANA's functions following Postel's unexpected death in October 1998.

ICANN's Exclusive Club

Since December 9, 2024, ICANN, headquartered in Los Angeles, has been led by Kurt Eric “Curtis” Lindqvist. The organization is funded through fees derived from domain name registrations that it sets itself.

The root servers are divided among 12 organizations, ranging from U.S. universities and NASA to Europe’s RIPE NCC and Japan’s WIDE project. Two of the 13 nodes belong to Verisign, which is the primary beneficiary of the entire structure, holding the registries for .com, .net, and .web.

In 2025, Verisign's revenue reached $1.66 billion, with a net profit of $826 million.

The second-largest operator, Identity Digital, manages around 300 zones with 25-26 million domains, overseeing the .org, .ai, and .io registries. The company is owned by the private equity firm Ethos Capital, which secured significant institutional partners in December 2025. This move appears strategic, occurring four months before ICANN opened a new round of name expansions.

Movements of personnel from the regulator to business entities associated with DNS highlight an atmosphere of exclusivity in this sector.

Fadi Chehade, who led ICANN from 2012 to 2016, later became co-CEO of Ethos Capital. Akram Atallah, president of ICANN’s global domains division, transitioned to a top management role at Donuts and now leads Identity Digital.

A notable incident occurred regarding the .org zone. In 2019, the Internet Society agreed to sell the Public Interest Registry to Ethos Capital for $1.13 billion. The Electronic Frontier Foundation intervened and announced a campaign to save SaveDotOrg. In April 2020, ICANN blocked the deal, citing that the nonprofit registry would be burdened with around $360 million in debt.

In 2021, Ethos acquired Donuts, renaming it Identity Digital a year later. The latter now operates the very .org registry they were previously barred from acquiring directly.

The Cost of Letters After the Dot

The entry cost into the root system consists of application fees and auctions held during ICANN's domain name expansion rounds, of which there have only been two throughout DNS history: in 2012 and 2026.

In February 2012, ICANN's board confirmed that the program would include a “subsequent application window” and instructed the CEO to publish a preliminary plan for the new round. However, the review of the program, political negotiations, and planning took about 12 years.

The 2012 round had an application fee of $185,000. A total of 1,930 applications were submitted for around 1,400 unique strings. In 234 cases, multiple companies competed for a single zone. In cases where they could not reach an agreement, auctions were held: .shop sold for $41.5 million, .app went to Google for $25 million, and the record was set at $135 million for .web in a July 2016 auction. Formally, the lot was claimed by a small firm, Nu Dot Co, but the funds were provided by Verisign.

For all zones in the 2012 round, there were no price caps unlike .com, which has a price ceiling set by Verisign's agreement with the U.S. government.

Overall, ICANN's auction proceeds exceeded $240 million.

The fate of .web illustrates the slow pace of these processes. Its entry into the root zone occurred only on July 22, 2026 — ten years after the auction, with general access expected about six months later.

The new 2026 round application fee increased to $227,000. The window closed on August 12 with over 1,600 requests, more than 1,100 of which were submitted with backup strings in case of contention. Private agreements between competitors are now prohibited under penalty of disqualification; previously, losing parties could receive a settlement, but now only auctions are allowed. ICANN's list of candidates will be revealed in October 2026.

The rental price is also on the rise. For .com, it will increase from $10.26 to $10.97 on November 1, 2026 — the first hike since September 2024, which will also include an ICANN fee of $0.20 and registrar markup. The contract allows Verisign to raise the rate by 7% annually during the last four years of a six-year cycle, potentially bringing it to $13.42 by the end of the decade.

National zones operate under a separate economy, reliant on international law.

The .io zone hosts over 1.6 million sites and generates over $40 million annually for its operator, but it exists only as long as the IO code is included in ISO 3166. The fate of this ccTLD is tied to the UK-Mauritius agreement concerning the Chagos archipelago, signed on May 22, 2025, and remains politically precarious.

A similar situation applies to .ai: according to IMF, registrations in 2023 generated about $32 million for Anguilla — over 20% of the self-governing territory's budget revenue in the Caribbean.

Anguilla's income from registrations in the .ai zone. Source: IMF.

Web3 Without a Root

Numerous attempts have been made to bypass the traditional DNS root using blockchain technology. The first was Namecoin in April 2011, a Bitcoin fork with the .bit domain, serving as an early blockchain equivalent of DNS. Later, on May 4, 2017, the Ethereum-based ENS protocol was launched, where names are represented as ERC-721 tokens subject to an annual rental fee.

A similar model was adopted by Unstoppable Domains, selling names as NFTs with one-time payments, maintaining control over the registry. The most radical approach was taken by Joseph Poon and Andrew Lee with their Handshake project, which aims to replace not just domain names but the entire DNS root zone.

However, all these approaches face a common issue: no resolver recognizes these names. A gateway, plugin, or browser with built-in support like Brave and Opera is necessary.

The only alternative naming space to gain recognition is .onion, which was added to the IETF's special-use registry in 2015, achieved through standardization rather than sales.

As of mid-2024, ENS had around 2.8 million .eth names, while Unstoppable Domains had 4.2 million. Together, they represent less than 2% of the 401.6 million domains in DNS.

In 2022, Unstoppable Domains raised $65 million at a valuation of $1 billion, and by the fall of 2026, they were generating revenue from traditional domains. The company obtained ICANN registrar accreditation in 2024.

According to the company's founder, Matthew Gould, DNS accounts for over 90% of revenue. He described blockchain names as remnants of the crypto hype of 2021, which failed to achieve widespread adoption.

https://twitter.com/mattgould/status/2033684862964519041

Web3 names have shifted from a central focus to optional search features on Unstoppable Domains' site and are now officially referred to as "wallet identifiers."

The withdrawal from ICANN applications occurred gradually. The first partner zones were withdrawn in September 2025, followed by further pullbacks in December and February, leading to 14 strings being removed in August 2026: nine of the company’s own zones (.crypto, .wallet, .polygon, .nft, .bitcoin, .dao, .unstoppable, .zil, .blockchain) and five partner zones (.privacy, .brave, .anime, .agent, .twin).

Many buyers anticipated gaining from the appreciation of their names once integrated into DNS and refused to accept buyout offers, with some viewing it as a matter of principle and belief in decentralization.

ENS has also transitioned to new market relationships. On August 11, 2026, token holders voted to transfer control of $65 million in targeted capital accumulated from .eth domain sales to the ENS Foundation. The goal is to enable dealings with institutions like ICANN and protect trademarks.

In the new ICANN round, the organization applied for the name .ens instead of the desired .eth due to the ISO 3166 standard, which assigns the three-letter code ETH to Ethiopia.

The Price of Entry to the Internet

For the 4.2 million names sold, Unstoppable Domains faces upcoming changes to operate within the general DNS, effectively transforming a one-time purchase into a subscription model with public owner profiles.

In June 2026, ICANN formed a technical working group to integrate new zones with alternative naming systems, inviting representatives from Unstoppable Domains, ENS, Identity Digital, Orange Domains, Verisign, and Public Interest Registry. A preliminary report was released on August 12 — the same day the new application round closed. The rules governing the potential integration were published precisely when the decision to apply or not had already been made.

The group proposed a set of technical requirements and opened them for public discussion until September 21, but the key point is that these requirements will lead to a standard contract. ICANN classified integration with alternative naming systems as a registry service — not an exception to the rules, but a standard position in the agreement with registries, requiring applicants in the 2026 round to include standard wording. This is not a special regime for Web3, but a clause in the contract alongside others.

Unstoppable Domains announced its withdrawal on August 25 — two weeks after the publication.

Notably, the company has shifted its policy from complete crypto identity to AI agents and social media. Unstoppable retained in its application: .agi and .robot for machine identification, .gram for Telegram infrastructure, .xmr associated with the Monero ecosystem, and .hub for the Hub Culture project.

Particularly noteworthy is .xmr: a zone named after the Monero token, which is submitted to the system with mandatory disclosure of the registrant's information.

A lingering risk remains, which will be revealed in October. If someone on the currently closed list applied for .crypto, .nft, or .wallet, millions of on-chain names could end up with DNS duplicates — with different owners and different content.

Examples of functioning hybrid models in Web3 already exist. The .locker zone, issued by ICANN to Orange Domains in January 2024, is integrated with the Bitcoin Name Service (BNS) — indicating that the issue is not one of principle impossibility, but rather of cost and regulations.

Upon purchasing .locker, users receive a traditional domain record for Web2 (for websites, email, and DNS) and an equivalent NFT (BNS on the Stacks blockchain, linked to ENS). This system operates under ICANN's rules, addressing the fraud and cybersquatting issues typical of unregulated Web3 domains like those from Unstoppable Domains.

A New Arrow in a Torn Web

In a 2022 report OCTO-034, ICANN warned that new naming spaces growing without coordination could lead to collisions and, at worst, multiple separate ecosystems instead of a unified internet. This concern has proven true in essence but misplaced in attribution: the fragmentation of 2026 is occurring along regulatory lines.

While alternative roots fought for the right to issue names, the guiding function has transitioned to a handful of public resolvers.

On March 27, 2026, the Paris Court of Appeal upheld decisions mandating Google, Cloudflare, and Cisco to block access to pirate sites through their public resolvers. The companies' argument that they serve a neutral directory function was dismissed by the court.

Three weeks later, DNS4EU, a European resolver launched with support from ENISA as a sovereign alternative to American services, was ordered to block 37 domains, with the operator's representatives absent from the hearing.

Simultaneously, in Russia, from August 2026, DNS over HTTPS and DNS over TLS protocols are being restricted to Google and Cloudflare resolvers.

The global vision of a decentralized alternative to DNS has hit a wall of rigid architecture and the bureaucracy of the traditional internet. The attempt to integrate Web3 zones into the common root required compromises that undermine the very essence of the concept. Control over the global internet remains with regulators and ICANN, while blockchain domains have shifted from a revolutionary promise to a niche option for convenient transfers within the crypto ecosystem.

For owners of Web3 names like .crypto or .nft, the rejection of integration with DNS definitively establishes the status of their assets. The domain remains a perpetual digital property on the blockchain that cannot be blocked or confiscated. However, its practical application is limited to serving as a cryptocurrency wallet identifier: accessing such a site in standard browsers like Chrome or Safari without third-party plugins remains impossible.