How prices form in a market without comparables

Onchain top-level domains present a familiar difficulty to anyone who has priced a private company, a spectrum license, or a significant work of art: the asset is singular, trades rarely, and leaves almost no public record when it does change hands. The instinct, when facing an asset with no quoted price, is to look for something comparable. In this market, that search often fails. The comparable either does not exist, is not public, or differs on the one dimension that matters most.

This article explains how prices actually form in markets with these characteristics. It draws on the economics of thin markets generally, not just onchain TLDs, because the mechanisms are the same. By the end, you will have a framework for reading a proposed price with the right tools: not as a point derived from a data set, but as a range established by a logic that you can test and challenge. That is the standard of care here, and it is achievable.

What makes a market thin

A market is thin when, at any given moment, the number of willing and informed buyers and sellers is small. Thinness is not the same as small size. A market can be large in aggregate value while remaining thin in activity: private equity, commercial real estate in secondary cities, and broadcast spectrum all have these properties. What defines thinness operationally is that a transaction takes time to arrange, that the pool of counterparties is narrow, and that each transaction is individually negotiated rather than cleared against a standing order book.

For onchain TLDs, these conditions hold in an unusually concentrated form. Each TLD is a unique string, recorded onchain as a token held in a wallet. The registry record is public and anyone can check it on a block explorer, but the record shows who holds the token, not what it is worth. There is no market maker and no ask price that updates continuously. A holder who wants liquidity must find a specific buyer for a specific asset. A buyer who wants a specific TLD must reach its specific holder. Neither party can easily substitute one asset for another, because the value in question is precisely the name, not a category of names. A buyer who wants .yourbrand cannot settle for .yoursector, even if the two would sell at similar prices in a hypothetical liquid market. The specificity collapses the pool.

Thinness has a direct consequence for price formation. In a liquid market, price is the equilibrium of many simultaneous signals. In a thin market, price is the outcome of a bilateral negotiation, shaped by the information each party holds, the alternatives available to each, and the pressure of time. The mechanics are closer to those of a private sale of a company than to those of a stock trade.

Why averages and indices mislead here

When a market produces few public transactions, the temptation is to treat those few transactions as representative. That temptation should be resisted carefully.

A reported sale price for an onchain TLD, even if accurate, is a single data point with unknown conditions attached. You do not know whether the seller had time pressure, whether the buyer had a strong strategic need, whether the negotiation was competitive or bilateral, or whether the price reflected a motivated outlier on either side. In a liquid market, these idiosyncrasies average out across a very large number of trades. In a thin market, each transaction is its own event, and the conditions that produced it are usually private.

The art market illustrates this structural problem at scale. Even in that much larger and older market, many transactions happen away from any public record, through private dealer arrangements and direct sales between collectors. Art valuation leans on comparable sales, and the comparables that would matter most are often the ones nobody outside the deal can see. The same dynamic appears in the onchain TLD market, which is younger and smaller and produces an even thinner public record. An index built from the few reported transactions would be statistically uninformative, and possibly misleading, because the selection of which transactions become public is not random. Sellers and buyers who are pleased with a result have more reason to let it be known than those who are not.

There is a related problem with using averages across different strings. A TLD whose string is a common English word with broad commercial application is not comparable to a TLD whose string is a specialized industry term, a personal name, or a character string with no dictionary meaning. Averaging their prices produces a number that accurately describes neither. Any analysis that applies a market average to a specific asset is performing a calculation that looks precise and is not. The correct unit of analysis is the individual asset, valued on its own terms.

Liquid and thin markets: how price formation differs

The table below sets out the principal differences in how prices form, not to suggest that one mechanism is superior to the other, but to make explicit the different tools that each requires.

The right column is the operating environment for onchain TLDs. Every valuation method and every negotiating posture should be calibrated to it.

Value to a specific buyer against market value

Standard valuation theory distinguishes between two figures. Market value is what a hypothetical willing buyer would pay a hypothetical willing seller. Investment value is the value to a specific buyer given that buyer’s particular circumstances. In thin markets, the gap between these two figures can be large, and knowing which one you are discussing matters.

Consider a fictional mid-sized manufacturer that has spent a decade building a brand, and suppose the onchain TLD that matches it is .yourbrand. For that organization, the TLD is the natural extension of an established identity. It could carry names such as pay.yourbrand for payments, and other names for the functions the organization wants to present under its own brand. The value of those use cases is specific to an entity that already has the brand to activate them. A purely financial acquirer with no relationship to that brand would value the same TLD far lower, because it cannot activate the same use cases without a brand it does not have.

This divergence is not a flaw in the market. It is a structural feature that creates the possibility of a transaction: the seller may be willing to sell at a price that is above market value in the abstract but below investment value for the specific buyer. The zone of possible agreement exists precisely because the two figures differ. The practical implication is that a buyer’s valuation work must start with its own use cases, not with a generic market assessment. A holder’s work starts from the other end: who the natural buyers are, and what the string would let each of them do. A private valuation can make that reasoning explicit before a negotiation begins, which is the appropriate place to do it.

For an investor, the distinction has a second consequence. If you hold a TLD for resale, the figure that matters at exit is somebody else’s investment value, not yours. A string with one obvious strategic buyer and a string with many plausible operators are different propositions, even if a generic assessment would place them side by side. The first depends on one organization’s decision. The second depends on the string’s commercial breadth.

The role of the next best alternative

In any negotiation, each party has a walk-away point. Below that point, the party is better off without a deal than with one. The technical term is the best alternative to a negotiated agreement. In thin markets, this concept does more work than in liquid ones, because the alternative to this deal is often much worse than the alternative to a deal in a liquid market, where the next counterparty is one quote away.

A buyer who cannot acquire .yourbrand onchain faces limited substitutes. It might apply to ICANN for a dotBrand TLD, a route that is available only in an open application round and that carries a substantial evaluation fee before any advisory or registry costs. It might choose a different string. It might do nothing and accept that the name stays with someone else. Each of those alternatives has a cost and a timeline, and that cost and timeline set a ceiling on what a rational buyer will pay. A buyer who has carefully mapped its alternatives will know whether it should accept a given price or walk away. A buyer who has not will either overpay or fail to close.

For the seller, the next best alternative is usually holding the asset. On Freename there is no annual renewal fee on a TLD, so holding does not cost a recurring registry charge. It still has a cost: the opportunity cost of capital, the possibility that the buyer’s interest fades or moves to another route, and the practical reality that a thin market may not produce another serious buyer for a long time. A holder who understands these costs will price more accurately than one who simply holds out for an abstract maximum.

The dotBrand versus onchain TLD comparison is directly relevant for buyers who are assessing the ICANN application route as an alternative: the two paths differ materially in cost, timeline, and what the resulting asset actually delivers. An alternative that does not deliver the same thing is only a partial substitute, and its cost is only a partial ceiling. Understanding that difference sharpens both sides’ assessment of their walk-away positions.

Information: who knows what, and why it matters

In a bilateral negotiation, information is asymmetric by construction. The holder knows things the buyer does not: whether there have been prior approaches, what the holder’s own plans for the TLD are, and whether there is time pressure to sell. The buyer knows things the holder does not: the exact use cases it intends, the budget available, the internal urgency, and whether it is considering alternatives.

Neither party will disclose all of this. Nor should they: in a negotiation, revealing your walk-away point is the same as surrendering it. But the information gap creates a risk for both parties. A buyer who does not know whether a TLD has had other serious approaches may pay for competition that does not exist. A holder who does not know how much the buyer needs this specific string may accept a price that leaves value on the table.

The practical implication is that process matters. A structured approach to a negotiation, in which disclosure is managed and each side’s information is not inadvertently given away, produces better outcomes than an ad hoc conversation. This is one reason why mandated intermediaries are common in thin markets across asset classes. The intermediary can speak for one party without revealing the details that would weaken that party’s position.

Why private sales dominate

The dominance of private sales in thin markets is not accidental. It follows from the structure of the market itself, and it has consequences that any participant should understand.

When a market has few buyers, a public offer provides little price discovery and considerable downside. Offering an asset openly can signal that the seller is motivated, which weakens the seller’s negotiating position. It may also generate approaches from parties who are not serious, which consume time and attention. In a liquid market, a public price competes with other public prices and attracts many buyers, so the transparency is valuable. In a thin market, the same transparency may produce no additional buyers while degrading the quality of the negotiation.

Private sales also allow the parties to manage confidentiality in a way that public processes do not. The identity of the parties, the terms of the transaction, and the price can remain between them. This matters for onchain TLD transactions in particular, because the strategic purpose of a TLD, meaning what the buyer intends to build with it, may be commercially sensitive. A buyer whose interest is public before terms are agreed has revealed part of its investment value, and the price can move against it.

The structural preference for private sales means that the public record of this market will always be incomplete. Participants who rely only on what is observable cannot infer from it either the level of activity or the range of prices that have cleared. For funds and family offices evaluating an onchain TLD as part of a portfolio, this has direct implications for how the asset is reported and carried: the observable data will not support a mark-to-market approach, and a defensible valuation will require a reasoned analytical process. How such an asset is treated in accounts and for tax varies by country and is a matter for your own auditors and counsel.

How ranges replace point prices

In liquid markets, a price is a point: the last trade, the current bid, the middle of the spread. In thin markets, a price is a range before it is a point. The range is real, not a hedging device. It reflects the genuine uncertainty that attaches to a unique asset negotiated bilaterally with incomplete information.

A valuation in this context does not output a single number. It outputs a floor, a ceiling, and a central estimate, each with a stated rationale. The floor is anchored in the seller’s alternative: what holding the asset is worth to the holder, including any income the TLD can produce as a namespace. The ceiling is anchored in the buyer’s side. It is the buyer’s investment value, capped by the cost of achieving a comparable outcome through another route, because a rational buyer pays no more than its best alternative would cost. The central estimate reflects the likely zone of agreement given both parties’ information and alternatives.

This structure is intellectually honest in a way that a single-point price is not. A single-point price for a unique asset implies a precision that the underlying analysis cannot support. A range, with its components made explicit, allows the parties to understand what would need to change for the range to move. If the buyer’s use case becomes more valuable, the ceiling rises. If a credible alternative emerges for the buyer, the ceiling drops. If the holder finds a way to earn from the TLD while holding it, the floor rises. The range is a working instrument, not a fixed conclusion.

A range also gives you a practical test for any figure put in front of you. Ask where it sits between the floor and the ceiling, and which assumption it would take to move it. A proposed price that cannot be located in a range, because nobody can say what the floor and the ceiling rest on, is an assertion and not a valuation. A proposed price whose supporting range is very wide is not a defect of the analysis. It is an accurate description of an asset whose value depends heavily on who buys it.

This is also why the sequence of valuation work matters. A valuation conducted before a negotiation begins, based on the buyer’s or seller’s own circumstances, is more useful than one constructed after the fact to justify a number already on the table. The reasoning shapes the outcome. The outcome should not be allowed to shape the reasoning retroactively.

Reading reported prices with care

Every market with thin liquidity and private transactions develops a folklore around reported prices. A number circulates, becomes a reference, and then functions as an anchor even when the conditions that produced it were exceptional. The discipline required is to interrogate every reported price before using it as a data point.

The questions to ask are structural. Was the transaction bilateral or competitive? Was the seller under time pressure? Did the buyer have a specific strategic need that an average buyer would not? Did the price include other consideration, or other assets? Is the report itself reliable, or is it secondhand? Appraisers in older thin markets apply the same discipline. A result may be public while the things that explain it are not: how many parties competed, whether one determined buyer drove it, and whether the same asset would fetch the same price again.

Used with that discipline, a reported price still has a role. It is evidence that transactions occur and that some buyer, in some circumstances, found a string worth paying for. What it cannot do is determine the price of a different string, for a different buyer, under different conditions. The analytical work is to keep these two uses apart and to weight each accordingly.

For TLD holders who receive unsolicited approaches, this matters in a direct way. The approach price is itself a data point: it tells you something about where the buyer chose to open, and nothing reliable about the buyer’s ceiling. The absence of public comparables means you cannot easily calibrate whether the approach price is reasonable. That is precisely why a structured analysis, conducted before responding, is the professional standard.

What would make this market thicker

A thicker market would benefit buyers and sellers both. More transactions, more participants, and shorter negotiations would all reduce the uncertainty discount that attaches to any asset that is hard to price and hard to sell. It helps to be clear about what would produce that thickening and what would not.

The first constraint is on the demand side. The pool of organizations that both understand what an onchain TLD enables and have the internal readiness to act is limited. As the practical capabilities of onchain TLDs become better documented (payments to a name, website publication, resolution in wallets, identities for AI agents), more organizations can make an informed business case for an acquisition. The limits belong in that case too. A valuation has to count the fact that an onchain name is resolved outside the ICANN DNS root: without support an ordinary browser will not open it, and the wallets and browsers that do offer support cover it only in part, with that coverage liable to change. A buyer who prices a TLD as if it resolved everywhere will be wrong about its investment value. The capabilities that are live, with their sources, are a more useful input than general claims about future potential.

A second constraint is process. Thin markets become less thin when participants have a clear, trusted way to execute a transaction from first contact to close. Uncertainty about how a negotiation runs and how the transfer is handled raises the effective cost of participation. A standardized process (a mutual NDA that covers every exchange, a clear mandate, onchain escrow at closing) reduces that friction without requiring the market to be made public.

A third constraint is the information environment. The market cannot price what it cannot see. Better documentation of what TLDs can do, what the transfer process looks like, and what a rigorous valuation involves all lower the barrier to participation. None of that requires price transparency. It requires operational transparency.

Over time, markets with these characteristics do tend to develop more structure. Markets for stakes in private companies and for fine art developed valuation conventions, appraisal practice and specialist intermediaries without becoming public exchanges and without a public price for every transaction. Nothing guarantees that the onchain TLD market follows the same path, and an investor should not price an asset on the assumption that it will. But the route by which a thin market thickens is well understood, and it runs through participants and process rather than through a ticker.

Where to take the analysis from here

The next step depends on which side of a transaction you are approaching.

If you hold a TLD and have received an approach, or are considering whether to seek a buyer, the first task is an assessment of your own asset: what it enables, what the realistic buyer pool looks like, and what your walk-away position is. Do that work before you answer, because your first reply is itself information. If you then want a buyer found for you, a sell-side mandate is the arrangement under which a holder mandates the desk to do that.

If you are an organization that wants a TLD matching your brand or sector, the first task is to assess the alternative paths available and their costs, and then to map the investment value of the specific TLD you want. With those two figures you have your own ceiling before anyone names a price. A buy-side mandate covers finding and approaching the holder on your behalf.

If you are judging a price that someone else has proposed, apply the tests in this article in order. Ask whether the figure is a market value or a value to one buyer. Ask what each side’s next best alternative is and what it costs. Ask what the range is and what it rests on. Treat any reported sale offered in support as a weak signal.

In a market this thin, the desk a party mandates is Hush Partners, a private desk whose field is onchain TLDs, and a standard mutual NDA covers every exchange a party has with it. The stages of a file, from mandate to transfer, set out how a negotiation runs through to closing in onchain escrow.

Questions people ask

Is the absence of public prices a sign that the market is not functioning?

No. Private markets for unique assets routinely operate without public price discovery. Stakes in private companies, fine art, and commercial real estate in thin locations all change hands at prices that are not publicly reported. The absence of a ticker is a structural feature of the market, not evidence of dysfunction. It does mean that you carry more of the analytical work yourself.

Can I use an ICANN gTLD application as a benchmark for valuing an onchain TLD?

With care. ICANN’s new gTLD program pages give an expected evaluation fee of USD 227,000 per application in the round that opened in 2026, before advisers and registry operations. That sets one reference for what an organization might spend to pursue a string through the DNS. But the two assets are materially different in what they deliver and how they function, and a DNS TLD resolves in every ordinary browser where an onchain TLD does not. Using the application cost as a ceiling for an onchain TLD valuation is a legitimate analytical move only when the buyer genuinely has the application route available as an alternative, which requires an open round and an eligible string.

How does the royalty program on Freename affect valuation?

It enters the valuation as possible income. Under the royalty program that Freename runs, each registration fee paid for a name under a TLD is shared with the holder of that TLD; the share is advertised at up to half and is subject to the registry’s current terms and activation conditions. Where a TLD has genuine commercial potential as a namespace, meaning organizations or individuals would pay to register names under it, that income is a component of value that a discounted cash flow analysis can capture. The assumptions required for that analysis are significant: the number of registrations, the share that applies under the registry’s terms, and the effort required to activate the namespace. The cash flow also has to be taken net of a cost: a Freename TLD carries no annual renewal fee, but participation in the royalty program has an annual cost set by the registry, to be deducted from the projected income. A valuation also has to note the terms a TLD was registered under: certain earlier terms include the program for life, and the registry should confirm before closing whether a buyer inherits them. The arithmetic is simple. The assumptions are the work.

What happens to price discovery if more onchain TLD trades become public?

More public transactions would improve the quality of comparables available to both buyers and sellers. They would reduce the analytical burden on individual parties and narrow the uncertainty that attaches to any given valuation. They would also, over time, reduce the advantage that well-informed participants hold. Even then, the comparables would remain imperfect, because each string is unique and each buyer’s use case is its own.

At what point should an organization take advice on an onchain TLD transaction?

Before responding to an approach or making one. The first move in a thin-market negotiation carries information regardless of what is said: it signals interest, urgency, and, if poorly calibrated, budget. Preparing your range before the first substantive exchange, and making sure that exchange is covered by a confidentiality agreement, is the appropriate order of work. On legal and tax questions, your own counsel decides.