# Where the value sits: the TLD and the names beneath it > In the DNS, value lives in the second-level domain. Onchain, a whole TLD can be held. How value distributes between the two levels. Source: https://hush.partners/where-value-sits-tld-and-names-beneath-it Category: Market & ICANN Published by Hush Partners. --- Every practitioner who has spent time in domain investment carries a set of instincts built from the second level: secure the string that matches the brand, hold a few keyword names, let the registrar renew the portfolio each year. Those instincts are well earned. They also become a liability the moment you shift your attention to a top-level domain, because the mechanics of value are different in kind, not just in degree. This article maps how value distributes across the two levels in the Domain Name System (DNS) and then onchain. It explains what a TLD holder controls that no name registrant can control, why a name under someone else's TLD carries a structural dependency that no contract can fully remove, and how revenue flows from the lower level back up to the top. By the end, you will be able to reason at both levels without applying second-level reflexes where they do not belong. The article does not address prices or sales figures. It addresses structure: who holds what, and what that holding actually means.
1,616applications still in the running in ICANN's 2026 round for new generic TLDs
USD 227,000evaluation fee expected for each of them, advisers and registry operations not included
Noneyearly renewal fee owed by the holder of a TLD on Freename

Application cost from ICANN's new gTLD program pages, application count from trade press reporting, renewal rule from the Freename registry.

## How the DNS concentrates value at the second level In the DNS, the second-level domain (SLD) is where almost all commercial value has historically lived. The string to the left of the dot is the asset you register, license, police and litigate over. The TLD to the right of the dot, whether one of the long-established generic extensions or a country code, is the infrastructure beneath it: always present, never yours. That concentration of value at the second level is not accidental. It follows from the structure of how names are resolved and how they are remembered. A user types the full string and the second-level portion carries the identity signal. The TLD is, for most users, a suffix they accept and not a choice they make. As a result, registrants have spent decades competing for memorable second-level strings, while the TLD itself receded into the background of attention. The economics follow the same line. The registrant of a second-level name holds a contractual right to one string for as long as the registration is renewed. Scarcity is created one string at a time: there is a single registration of a given string under a given extension, and the people who want it must deal with whoever holds it. Markets, appraisal habits and negotiation practice all grew up around that unit. This structure has practical consequences for brand protection teams. The names to watch, the abuse to detect and the complaints to prepare under the UDRP (the dispute policy that lets a trademark owner challenge an abusive registration) all concern second-level strings. The [glossary](/glossary) sets out the terminology precisely, but the operating principle is simple: in the DNS, the second level is the unit of value and the unit of risk. ## Why TLDs were structurally out of reach The TLD was always the more powerful position, since everything registered beneath it depends on it. It was also inaccessible to most organizations. ICANN, the nonprofit that coordinates the DNS, decides which new generic TLDs enter the DNS root, and it does so through application rounds that are rare. The round ICANN opened in 2026 came more than ten years after the one before it. Trade press reporting puts the number of applications still moving through that round at 1,616, and ICANN's new gTLD program pages set the expected evaluation fee at USD 227,000 per application, a figure that leaves out advisers and the cost of running a registry afterward. That fee, combined with long timelines, technical requirements and contractual obligations to ICANN, means that operating a DNS TLD is a commitment for well-capitalized registry operators and large enterprises. A brand can apply for `.yourbrand` as a dotBrand TLD and keep the namespace under its own control, but the process involves evaluation, possible objection and possible contention with other applicants for the same string. The [comparison between a dotBrand and an onchain TLD](/dotbrand-vs-onchain-tld) sets out those differences in detail. Notice what an applicant obtains at the end. A DNS TLD is not owned in the way a second-level investor would understand the word. It is delegated to a registry operator under an agreement with ICANN, for a term, with duties attached. The operator runs it; it does not hold it as a free-standing asset that can change hands without the coordinating body. For most of the DNS era, then, the TLD level was not a market that an investor or a brand strategist could enter. It was a regulated service, and the reflexes of the profession formed one level below it. ## Onchain, ownership shifts to the TLD level Onchain TLDs change the unit of ownership. On the Freename registry, the record of a TLD is a token, a unit recorded on a blockchain, and that token sits in the wallet of whoever holds the TLD. Holding the token means holding the TLD. Freename charges its TLD holders nothing by way of annual renewal. The registry record is public, and anyone can check it on a block explorer, a website that displays what a blockchain has recorded. This is a structural change, not a cosmetic one. In the DNS, no private party holds a generic extension outright: a registry operator runs it under contract, and registrants hold second-level names under that arrangement. Onchain, an individual or an organization can hold `.yourbrand` itself, in the same wallet as any other onchain asset. The TLD becomes the primary unit of ownership. That shift has two immediate consequences. First, the TLD becomes transferable: it can be sold, acquired or held as a long-term asset without an application round. Second, the entire namespace beneath the TLD, every name that could ever exist under it, flows from that single holding. Nobody can create `pay.yourbrand` without you, because on Freename the power to issue a name under a TLD belongs to the holder of that TLD and to no one else. The limits deserve the same plain statement. Onchain names resolve outside the ICANN DNS root, so software has to support them before they work, and that support is partial. On reach and familiarity, the DNS is simply better. What the onchain model offers is a different thing: the top level as an asset one party can hold. If you are considering [how a TLD is valued](/valuation), note that this position, control over an entire namespace, is one of the inputs that makes valuation at the TLD level a different exercise from appraising a second-level name. ## What the TLD holder controls that a name registrant does not The holder of a name controls one string. The holder of a TLD controls the layer from which every string beneath it is issued. That distinction runs through several dimensions. ### Issuance and rules Issuance comes first. A name registrant cannot grant anyone else a name under the same TLD. The TLD holder can, and decides whether to do so at all. The holder also decides the conditions of issuance, within what the registry's terms allow: who is eligible, which names are held back, what a name may be used for. A name registrant has no equivalent power. They hold their own name on the conditions that applied when it was issued, and they cannot alter those conditions for anyone else. ### Architecture and transfer The TLD holder decides whether names beneath the TLD are offered to the public, reserved for internal use, granted to partners or not issued at all. A name registrant makes none of those decisions. They occupy one position in an architecture they did not design and cannot reshape. The TLD, as an onchain token, moves as a single asset. When it moves, the authority to issue under it moves with it. A name registrant transfers one name; a TLD holder transfers the position from which all future names come. What the incoming holder may do about names that already exist is a separate question, answered by the registry's contracts and terms, and it is taken up below. [Operators](/operators), meaning organizations that run a market TLD as a namespace and issue names to third parties, exercise these controls actively. [Holders](/holders) who keep a TLD to protect a brand may never issue a single name, and they retain the same controls regardless. ## The economics of a name under someone else's TLD Consider a registrant who holds `name.yoursector`. They have a useful identifier: it can resolve in the wallets that support the registry, it can carry a website where the tooling is in place, and it signals membership in whatever community has formed around `.yoursector`. That is real value. It is value of a different order from holding the TLD itself. The value of `name.yoursector` depends on what `.yoursector` does and continues to do. If the TLD gains recognition and adoption, the name benefits from that lift. If the TLD is neglected, or passes to a holder with different priorities, the name is affected by consequences its registrant had no part in causing and no power to prevent. This is not a criticism of holding names. It is a description of the dependency. In economic terms, a name registrant resembles a tenant: they occupy space in a namespace they do not control, on terms set by someone else, and the value of what they hold moves with the standing of the namespace around it. There is a second difference, less visible than the first. A second-level investor in the DNS can compare one string across many extensions and treat each registration as an independent position. Under an onchain TLD held by one party, positions are not independent. Every name under `.yoursector` shares the same holder, the same rules and the same fate. A portfolio of ten names under one TLD is one exposure counted ten times, where ten strings under ten unrelated TLDs would be ten exposures. If you apply portfolio thinking to names, apply it to the TLDs they sit under first. The [subname revenue calculator](/subname-revenue-calculator) estimates what the names issued under a TLD can bring to its holder. Read from the other side, it shows the registrant where they stand: they pay for the name, and they have no part in deciding how what they pay is shared. ## Dependence: a name follows the rules of its TLD In the DNS, the registrant of a second-level name benefits from a significant body of protection: ICANN's policies on transfers between registrars, the agreements that registrars and registries sign with ICANN, the UDRP, and the law that governs the registration agreement. These protections have been applied for a long time and practitioners know how they behave. Onchain, the equivalent protections are still forming. What a registrant can rely on is defined by the registry's contracts and terms and by the rules the TLD holder has published, and both vary. The UDRP binds registrars and registrants inside the ICANN system by contract, so it does not extend on its own to a registry that operates outside that system. A team that builds a payment address or an operational endpoint at a name under a TLD it does not hold is exposed to the rules, and to the continuity, of whoever holds that TLD. This dependency is not a defect peculiar to onchain systems. It is the reality of any hierarchical namespace, in which the lower level exists by permission of the upper one. The DNS manages it through contract and policy. Onchain, it is managed through the terms written into smart contracts (programs recorded on a blockchain that execute as written) and through published rules. The difference is one of maturity: the ICANN arrangements are well understood after long practice, while onchain arrangements are less standardized and differ from one registry to the next. For a strategist, the consequence is practical. A name is a sound choice for an identifier you could replace without serious harm. It is a weaker choice for anything that customers, partners or payment flows will depend on for years, unless the terms give you what you need or you hold the TLD yourself. How those terms apply to your situation, and under which country's law, is for your own counsel to decide. ## Revenue from the lower level flows up to the TLD The position of the TLD holder includes something a name registrant never has: a claim on what is paid when names beneath the TLD are registered. Freename runs a royalty program for this purpose. When a name is registered under a TLD, part of the registration fee goes to the holder of that TLD. The registry advertises that part at up to half, and both the share and the conditions for activating the program follow the registry's terms as they stand when you read them. A worked example shows the mechanism. Three assumptions, all invented for illustration: the royalty program is active for the TLD, each registration of a name carries a fee of USD 20, and the holder receives one half of that fee, the top of the advertised range. Each registration then brings the holder USD 10. With 100 names registered, the holder receives USD 1,000. With 500 names, USD 5,000. With 1,000 names, USD 10,000. With 2,000 names, USD 20,000. These amounts are gross. A Freename TLD has no annual renewal fee, but taking part in the royalty program carries an annual cost set by the registry, which the example leaves out and which must be deducted from each figure. For some TLDs the program is included for life, because they were registered under earlier terms, and anyone valuing such a namespace needs the registry to confirm, before closing, whether those terms pass to a buyer.
Royalty to the TLD holder by number of names registeredWorked example: USD 20 fee per registration, one half to the holder
2,000 names registeredUSD 20,000
1,000 names registeredUSD 10,000
500 names registeredUSD 5,000
100 names registeredUSD 1,000

Illustration only. The fee and the share are assumptions, not Freename figures; the example counts registrations and nothing else, and the annual cost of the royalty program is not deducted.

Two things stand out. The first is that the amounts scale with registrations, not with the quality of any single name. A second-level investor looks for the one exceptional string; a TLD holder who opens the namespace looks for breadth of demand. The second is that the revenue is conditional. It requires a namespace that people want names in, and that takes work: a clear purpose for the TLD, rules that registrants trust, and usefulness in the software where names resolve. A TLD that nobody registers under earns nothing from the lower level, whatever the terms say. The name registrant is on the other side of every one of these payments. They pay the registration fee and receive no part of it. ### The four positions side by side The table below places the four positions next to one another. It is not a valuation guide. It is a map of what each position holds. | Position | Who holds it | Authority over names | Revenue from below | | --- | --- | --- | --- | | DNS second-level name | Registrant, by contract, while renewed | One string | None | | DNS TLD | Registry operator, under agreement with ICANN | Every string under the TLD | Registry fees | | Onchain TLD on Freename | Holder of the token, no annual renewal fee | Every name under the TLD | Royalty share on registrations | | Onchain name | Registrant, under the terms of the TLD | One name | None | The pattern is the same in both systems: the TLD level carries authority over the namespace and a claim on revenue, and the name level carries neither. What differs is who stands above the TLD (a coordinating body in the DNS, the registry's contracts onchain), how the holding is evidenced, and how it changes hands. ## What this means for a brand: hold the level that controls A brand that holds only names, even a large portfolio of them, holds assets that sit inside namespaces it does not govern. A brand that holds the TLD holds the namespace itself. The two levels serve different purposes. Names are for use: the public address, the website, the payment endpoint. A TLD is for control: the authority to decide whether names are issued under your mark, to whom and on what conditions. A [trademark TLD](/trademark-tlds), a TLD that corresponds to a brand's trademark, extends that control to the onchain namespace in the way a dotBrand extends it in the DNS, without an ICANN application. Consider a scenario with an invented party: a mid-sized manufacturer that holds a registered trademark and wants onchain names as identifiers for its distributors. If it issues those identifiers under a TLD it does not hold, it accepts that someone else governs the rules, the continuity and the cost of that namespace. If it holds `.yourbrand`, it sets the rules itself. It decides which distributors receive a name, and it can reorganize the scheme to the extent the registry's terms allow, without asking a third party. The reasoning is similar for a brand protection team. A brand that holds `.yourbrand` knows that `pay.yourbrand` can only come into existence by its own decision. A brand that does not hold the TLD matching its mark is in the position of watching a namespace that another party controls, and of relying on trademark law as it applies in each country and on whatever dispute rules the registry or the holder has published. Those may not be as settled as the practice built up around the UDRP. ## Second-level reflexes that mislead at the TLD level The instincts carried over from years at the second level do not fail completely at the TLD level, but they need recalibration. Three of them are worth examining. ### "I need to register before someone else does" At the second level, this is sound: registration is first come, first served within an extension, and registering is usually far simpler than acquiring later. At the TLD level, a given string on a given registry either has a holder or it does not. If it does, creating a near-identical alternative gives you a different namespace, not the one that matches your mark. The useful question becomes whether the TLD is held and on what basis a conversation with its holder could take place. ### "Value is in the string itself" At the second level, the string carries most of the value, and the extension mainly changes the context and the trust signal around it. At the TLD level, the string matters, but the value extends to what can be done with the namespace beneath it. An operator who builds a recognized community under `.yoursector` has created a platform, not just an identifier. Two TLDs with equally good strings can be worth very different amounts depending on what has been issued under them and under what rules. ### "Annual renewal is the cost of ownership" At the second level, annual fees are a small, predictable cost of keeping a portfolio. They are also a point of failure, because a missed renewal can end the holding. The holder of a Freename TLD has no renewal payment to keep up from one year to the next. The risk shifts elsewhere: to the security of the wallet that holds the token. Custody, access and succession planning for that wallet take the place that renewal management occupies in a DNS portfolio. ## Deciding which level your organization should hold If this analysis suggests that your organization should hold a TLD in place of, or in addition to, names beneath one, start with three questions. Does the TLD that matches your mark already have a holder? What would you issue under it, and to whom? And which of your uses could live on a name without harm if the rules above it changed? The first question can be answered from public records, since the registry record can be read on a block explorer. The [namespace exposure score](/namespace-exposure-score) is a free tool that scores how exposed a brand is onchain, and it is a reasonable place to begin before any approach is made. The second and third questions are internal, and they are worth settling before you speak to anyone, because they determine whether you need the controlling level or only a name. Where the answer is the TLD, Hush Partners is a private desk for that kind of file. An organization can mandate the desk to find and approach a holder, and a holder can mandate it to find a buyer. A standard mutual NDA covers every exchange, one named partner follows the file until closing, and closing takes place through onchain escrow on an aftermarket. ## Questions people ask ### Can a name registrant turn their name into a TLD? No. `name.yoursector` is a name under an existing TLD, and it stays one. The two levels are separate assets with separate records. To hold a TLD, an organization obtains one as a distinct onchain asset, either by registering a string that has no holder or by acquiring an existing TLD from its holder. ### Does holding the TLD mean you control resolution in browsers? No. Onchain names sit outside the ICANN DNS root, so an ordinary browser does not open them unless support has been added, for example through an extension or a wallet that reads the registry. Coverage is partial and it changes. The page on [what is live](/whats-live) follows which capabilities work, with sources. A TLD holder should not assume resolution equivalent to the DNS, and should not suggest it to the people who register names. ### What does the buyer of a TLD inherit in names already issued beneath it? The new holder takes over the position from which future names are issued and future rules are set. Names that registrants bought under the TLD stay with those registrants, while names the seller itself holds under it can pass to the buyer with the TLD if the two parties agree. What the new holder may do about names that already exist depends on the registry's contracts and terms, not on the transfer itself. That is why a TLD with names already issued beneath it calls for a legal review of those terms before closing, on the buyer's side and on the side of anyone who relies on one of the names. Your own counsel advises on the terms that apply. ### Is the UDRP available for disputes about onchain names? The UDRP is part of the contracts that tie registrars and registrants together inside the ICANN system. An onchain registry that operates outside that system is not bound by it. A trademark owner who finds a name matching its mark under an onchain TLD should therefore not count on a UDRP complaint. What remains is the dispute policy, if any, of the registry or the TLD holder, and trademark law, which varies by country. Your own counsel makes the determination. ### Can a TLD holder treat different names under the TLD differently? Within the registry's terms, yes. Deciding which names are issued, which are reserved and who may receive them is part of what holding the TLD means. Price belongs to that discretion: the holder of the TLD sets what a name beneath it costs and may price one name differently from another. Read the registry's terms before designing a scheme, since they frame the rest. The point of principle is that the holder shapes the namespace as a whole, where a registrant only ever decides about one string.