
SNS: Building the Identity Layer for Solana's Next Million Users
A deep-dive on Solana Name Service
The Solana Renaissance
The 2024-2025 crypto cycle will be remembered as Solana's resurrection story. What mainstream media dismissed as an "Ethereum killer" has emerged as the most compelling Layer 1 ecosystem. Solana now processes more daily transactions than all other blockchains combined, sometimes exceeding 50 million transactions per day compared to Ethereum's 1-2 million. The ecosystem hosts over $60 billion in total value locked, supports the fastest-growing DeFi protocols, and has become the undisputed memecoin capital generating billions in trading volume.
Within this renaissance sits an undervalued infrastructure play: Solana Name Service (SNS). At its current valuation, with minimal market cap presence, SNS trades at a significant discount to its utility value in this $60B+ ecosystem.
The Identity Bottleneck
Long before social media, domain names, or crypto wallets existed, our phone numbers were the original portable identity system. But numbers didn't have a 0-to-1 moment in isolation. The infrastructure surrounding them - area codes, international dialing, number portability - evolved gradually to support increasingly complex communication networks.
Digital identity faces a similar challenge today. While we have sophisticated systems for managing online presence, they remain fragmented and controlled by intermediaries. Consider the current state:
Web2 Domains: 360 million registered, $10 billion annual market, but users lease rather than own
Social Handles: Platform-specific, revocable, subject to arbitrary policy changes
Crypto Addresses: Permanent ownership, but unusable for traditional applications
Email Systems: Universal but centralized, vulnerable to service provider decisions
Each system serves specific needs but none bridge the growing divide between traditional internet infrastructure and blockchain-native applications. This fragmentation creates friction exactly where businesses and users need seamless experience.
Despite crypto’s $4T market cap, the industry suffers from a fundamental UX barrier that has persisted since Bitcoin's inception. Users navigate between applications using incomprehensible wallet addresses that look like this:
9WzDXwBbmkg8ZTbNMqUxvQRAyrZzDsGYdLVL9zYtAWMM
The infrastructure gap hinders adoption, as even a single character error can result in lost funds. BlackRock's on-chain transactions demonstrate this problem in real-time: recent blockchain data shows the BlackRock BUIDL Fund making multiple small test transactions before larger transfers. If a $60B asset manager needs "training wheels" for copy-paste wallet addresses, mainstream adoption is impossible without human-readable naming infrastructure.

The Current State of Web3 Name Services
The blockchain naming space has seen significant development, with four major players:
Ethereum Name Service (ENS) established the category with elegant simplicity - replacing complex wallet addresses with human-readable names. ENS domains provide true ownership and strong ecosystem integration, but face Ethereum's inherent limitations: high transaction costs, slow confirmation times, and most critically, complex regulatory barriers for traditional internet integration.
Recent analysis of ENS's path toward ICANN integration reveals substantial challenges. The application process for .eth as a generic top-level domain would require approximately $185,000 in non-refundable fees, complex compliance infrastructure, and significant legal entity formation. Even if successful, operating a blockchain-based registry within ICANN's framework creates tension between decentralized principles and centralized oversight requirements.
SuiNS launched with the advantage of native blockchain integration and lower transaction costs. Built directly into Sui's infrastructure, it offers seamless user experience within that ecosystem. However, Sui's smaller developer and user base limits the network effects essential for naming service adoption.
Solana Name Service (SNS) occupies a unique position in this landscape. Currently, SNS has registered 460,000 domains among 130,000 unique wallets, generating $10 million in total registration revenue. While smaller than ENS's approximately 1.3 million domains, SNS benefits from Solana's speed and cost advantages while maintaining design flexibility that could prove crucial for traditional internet integration.
Unstoppable Domains offers both web3 domain names and is an ICANN-accredited registrar, offers permanent, NFT-based domain ownership with no renewal fees across many different chains.

Key Insights:
SNS already demonstrates superior unit economics ($25-35 vs ENS's $20-25 revenue per domain)
Transaction costs 100-5000x lower than ENS, enabling practical daily usage
Settlement times 30x faster than ENS, crucial for real-time applications
Market cap significantly undervalues these operational advantages
The Convergence Catalyst
SNS stands at an inflection point. Imagine if a community proposal was currently under consideration that would fundamentally alter the protocol's economics by introducing renewal fees - bringing it closer to traditional domain registration models while maintaining blockchain ownership benefits.
Current SNS Model:
One-time purchase: $20-$750 depending on domain length
Permanent ownership with no recurring fees
Pure crypto-native experience
Proposed Hybrid Model:
Registration fee + annual renewals (similar to traditional domains)
Renewals potentially paid in SNS tokens
Compatible with traditional domain management systems
The implications extend far beyond revenue generation. By adopting familiar Web2 patterns while maintaining Web3 ownership guarantees, SNS could become the first naming protocol that enterprises can deploy for both traditional websites and blockchain applications simultaneously.
Consider the transformative potential: A company like Stripe could register stripe.sol and use it for both their traditional website (stripe.sol resolving to their servers via DNS) and their crypto operations (payments sent to stripe.sol, smart contract interactions, Web3 authentication). Users would experience unified identity across platforms while retaining the security and ownership benefits of blockchain infrastructure.
Market Dynamics and Competitive Position
The total addressable market for digital identity spans multiple sectors:
Traditional Domain Market
360 million domains registered globally
$10 billion annual registration and renewal revenue
Average renewal cost: $17.44 annually
Blockchain Naming Market
ENS: ~3 million domains, estimated $500 million protocol value
Various other protocols: <2 million total domains
Total market size: ~$100 million
The Convergence Opportunity: SNS could potentially capture revenue from both markets by serving as infrastructure for traditional internet identity and blockchain-native applications. No existing protocol addresses both use cases effectively.
This positioning offers several competitive advantages:
Technical Infrastructure: Solana's sub-second transaction times and penny-cost fees make SNS practical for high-frequency traditional internet operations. ENS transactions can cost $10-50 during network congestion; SNS transactions cost fractions of a penny.
Regulatory Positioning: Rather than fighting ICANN's existing structure, SNS could work within it while providing blockchain benefits. The renewal model aligns with enterprise procurement expectations and traditional domain management workflows.
Developer Experience: Solana's growing ecosystem creates natural demand for naming services, while Web2 compatibility expands the potential integration surface area.
Financial Analysis and Valuation Framework
Using comparable analysis methods similar to recent DeFi protocol valuations:
Revenue Potential
Current SNS revenue: $10 million lifetime (one-time registrations)
Traditional domain renewals: $10 billion annually
Theoretical capture at 1% market share: $100 million annual recurring revenue
Protocol take rate (assuming 10%): $10 million annual token demand
Valuation Multiples
Based on comparable naming protocols and infrastructure tokens:
ENS trades at approximately 100-200x protocol revenue
Infrastructure tokens typically command 50-150x revenue multiples
Conservative estimate: 50x applied to $10M ARR = $500M protocol value
Risk-Adjusted Scenarios
Bear Case (30% probability):
Renewal proposal fails community vote
Limited Web2 adoption
Competitive pressure from native Solana solutions
Estimated value: $50-100M
Base Case (50% probability):
Moderate renewal adoption
Some enterprise Web2 integration
Continued Solana ecosystem growth
Estimated value: $200-400M
Bull Case (20% probability):
Successful Web2-Web3 bridge becomes industry standard
Major enterprise adoption
Significant market share capture from traditional domains
Estimated value: $1-2B
Current active user base (~130K) compared to addressable Solana ecosystem (millions of users) suggests early-stage network effects. Using modified Metcalfe's Law with market adjustments for competition suggests 25-50x value increase as network matures.
The Distribution Advantage
SNS solved crypto's biggest tokenomics problem: giving tokens to speculators instead of users. 40% went to existing domain holders who already proved they value Solana identity. Another 20% distributed through the LFG campaign rewards actual ecosystem participation. No VC dump risk.
This distribution model creates sustainable adoption incentives while aligning token holders with protocol utility rather than pure speculation.
ENS Competitive Dynamics: The Declining Leader
Recent data reveals concerning trends for ENS that create opportunity for SNS:
ENS Retention Declining
Registration counts peaked in 2022, now showing consistent decline
Renewal rates dropping as users face high Ethereum transaction costs
Developer mindshare shifting toward lower-cost alternatives
Market Attention Shift
Ethereum ecosystem growth stagnating relative to Solana
Limited new ENS integrations compared to SNS's 150+ partners
SuiNS launch demonstrates market demand for ENS alternatives
This competitive weakness creates a window for SNS to capture market share during Solana's growth phase.
Conclusion
Solana Name Service stands at a unique intersection of proven technology, market timing, and strategic positioning. The protocol's potential to bridge Web2 and Web3 identity represents genuinely novel infrastructure that could capture value from both traditional and blockchain-native applications.
For investors and builders in the space, SNS represents both the opportunity and uncertainty inherent in infrastructure investments. The potential returns are significant, but they depend on successfully executing a vision that no protocol has yet achieved: seamless integration between blockchain ownership and traditional internet infrastructure.
The next chapter in web3 identity will likely be written not by replacing existing systems, but by enhancing them with blockchain ownership guarantees while maintaining operational compatibility. SNS has positioned itself to lead this convergence.