Domain DeFi is the application of decentralized finance to domain names, treating domains as on-chain assets that can be tokenized, traded, collateralized, or fractionally owned. Instead of just being “addresses,” domains become financial primitives that can plug into DeFi protocols. This enables new models like domain-backed loans, leasing markets, and revenue-sharing. It bridges the traditional domain industry with Web3’s composable financial infrastructure.

In Domain DeFi, domains are typically represented as NFTs or similar tokenized assets that map to ownership rights in DNS or blockchain-based naming systems. For classic DNS domains, specialized custodial or semi-custodial systems may hold the domain and issue a corresponding token. For native Web3 name services, the domain already exists as a smart contract asset. In both cases, the token acts as the “key” that DeFi protocols can understand and interact with.

Core use cases include domain trading on decentralized marketplaces, domain-backed lending and borrowing, leasing/rent-to-own models, and fractional ownership for premium names. Domains can also be bundled into portfolios and tokenized as index-like products. Over time, domain-linked revenue streams (e.g., parking, email, subdomain sales) can be routed on-chain, enabling yield strategies based on real domain cashflows.

For domain investors, it adds liquidity, new financing options, and more transparent price discovery. High-value domains can be unlocked without selling them outright, using them as collateral or fractionalizing them. Registrars and other service providers can tap into new revenue streams by integrating with Web3 rails, offering DeFi-native products (like leasing, revenue-sharing, or portfolios), and attracting a new class of crypto-native buyers and builders.

For Web3 projects, domains provide a bridge to the legacy internet, helping users discover and trust decentralized apps through familiar naming. For DeFi protocols, domains are a new category of unique, scarce collateral with strong real-world utility and brand value. Integrating domains can diversify collateral types, enable innovative products (like domain vaults or domain-backed stablecoins), and bring in domain capital that has historically stayed outside the crypto ecosystem.