Copy trading Paradigm: Why they abandoned launching a new chain and shifted focus to this new track.

Written by: Luke, Mars Finance

Recently, the crypto market has fallen into a strange calm in a bear market, with mainstream narratives being extremely scarce. At this time, the news that Paradigm led a $25 million Series A financing for Doma (formerly D3 Global) exploded like a deep-water bomb, opening up a new crack in the RWA track.

At first, most people thought this was just another boring story about a “domain trading platform.” But when we peel back the layers of Doma's technological onion, especially when we delve into the pricing model of its inaugural asset software.ai, you will find that Paradigm's ambitions go far beyond that. They are actually avoiding the crowded U.S. Treasury and real estate tracks, betting on a brand new asset class: DomainFi— the chain reform and financialization of top internet domain names.

The $15 million lesson: Why Web2 domains are the real RWA?

To understand Doma, we must first recognize a harsh reality: Web3 domains (like ENS) are cool, but Web2 domains (.com/.ai) are what hold value.

Last year, OpenAI paid Dharmesh Shah over $15 million for chat.com. Block.one spent $30 million to acquire voice.com. These are not just news; they are real market pricing in cash.

However, this hundred billion dollar market has been in the “Stone Age” for the past 30 years.

Very poor liquidity: Selling a top-level domain typically takes 6 to 18 months.

The threshold is extremely high: ordinary investors cannot even touch assets like ai.com or safe.com, which are worth millions of dollars.

Pricing Black Box: No K-line, no order book, prices are entirely determined by brokers privately matching.

This is the “arbitrage opportunity” that Paradigm sees.

Many people confuse the difference between ENS and Doma. In simple terms: ENS is a wallet nickname, addressing the issue of “convenient transfers”; while Doma is anchored to Web2 top-level domains, solving the problem of “business entry points”. Companies will not use apple.eth for their official website, but they will definitely stick to apple.com. The former is a license plate number, while the latter is prime commercial real estate in the city center.

The core logic of Doma is to move these “commercial land” pieces that have huge commercial value, are legally protected, but have exhausted liquidity, onto the blockchain for fragmentation and securitization.

Mechanism Deconstruction

Why did previous attempts at “domain fragmentation” fail? Because they could not resolve the legal dilemma of separating “control” from “ownership.”

Doma did not attempt to subvert the existing DNS system with blockchain, but chose a very pragmatic approach: the “Trojan Horse” model.

Off-chain Custody (D3 Global): D3 itself is a compliant domain registrar. When a top-level domain (such as software.ai) is put on-chain, it is first legally hosted under D3's real-name account and is protected by ICANN (Internet Corporation for Assigned Names and Numbers) rules. This ensures the legal validity of the asset in the real world.

On-chain confirmation of rights (Doma Protocol): On-chain, domain names are converted into two types of tokens:

DOT ( Ownership Token ): Represents ownership. By holding it, you can receive dividends and vote on whether to sell the domain name. This is the subject of our trading.

DST ( Service Token ): Represents usage rights. By holding it, you can modify DNS resolution and determine where the website points.

This separation is highly ingenious. It means that even if ten thousand retail investors hold fragments of ownership in software.ai, not a single one of these retail investors will arbitrarily change the DNS resolution to cause the website to crash. The operational rights can still belong to a professional management team.

software.ai Practical Application

To demonstrate this logic to the market, Doma launched its flagship asset: software.ai. This is not just a domain name, but a meticulously designed financial product.

Let's break down its mathematical model, which contains the mechanism design that Paradigm excels at:

1. The initial fully diluted valuation (FDV) of software.ai, launched with a bonding curve, is only $25,000. This is an extremely undervalued price—almost a giveaway for a top-tier AI suffix in the industry. As funds flow in, the price will automatically rise along the preset curve until the market cap reaches $250,000 (Bonding Cap).

Game point: At this stage, it is a purely PvP (Player vs Player) game. Early participants are essentially grabbing “original shares.”

2. Automated Market Making and DEX Liquidity Once it reaches a cap of $250,000, the token will “graduate”, and the liquidity will automatically migrate to the Decentralized Exchange (DEX). At this point, the price will be completely determined by market supply and demand.

3. Killer Feature: The Buyout & Drag-Along Mechanism This is Doma's most disruptive design. If you purchase NFT fragments, what is your biggest fear? It is the liquidity dropping to zero, leaving everyone trapped inside without a way out. Doma introduces the real-world “Drag-Along Rights.”

For software.ai, the smart contract has set a minimum buyout price of 2.5 million USD. This means that if one day in the future, Microsoft, OpenAI, or any SaaS giant set their sights on this domain name, as long as they pay the contract 2.5 million USD (or more), all on-chain token holders will be forcibly liquidated.

The system will automatically withdraw your tokens.

The system will allocate this 2.5 million dollars to you proportionally.

The ownership of the domain name is legally transferred to the buyer.

This mechanism completely solves the “exit path” problem. Investors no longer need to look for the next “greater fool,” as their ultimate counterparty is a technology giant in the real world. For current buyers, this is equivalent to holding a call option with a strike price of $2.5 million. If the current market value is $250,000, the potential risk-free arbitrage space is 10 times.

Market Size: Reviewing History, Finding Coordinates

Why does Paradigm dare to double down on this track? We need to review the historical data.

2000 Internet Bubble: Business.com sold for $7.5 million. At that time, there were less than 400 million internet users.

2010s Mobile Internet: Insurance.com sold for 35.6 million dollars.

2024 AI Era: Friend.com sold 1.8 million dollars, Chat.com sold over 15 million dollars.

The global domain name market has a stock of over 360 million, of which approximately 160 million are .com. This is a dormant market worth hundreds of billions of dollars. Currently, the annual turnover rate of these assets is very low.

What Doma does has a precise counterpart in financial history: REITs (Real Estate Investment Trusts). Before the emergence of REITs, only tycoons could buy skyscrapers; after REITs appeared, ordinary people could also buy shares of the Empire State Building. Doma is the REITs infrastructure in the digital real estate sector.

It aims to monetize Web2's “existing assets” through Web3's “high liquidity.” If it can capture 1% of the top domain name market share, its TVL (Total Value Locked) will easily exceed 5 billion dollars, a scale sufficient to rival existing top RWA and LRT protocols.

Conclusion

Although it is logically appealing, the risks of DomainFi are equally obvious:

Centralized custody risks: Doma is not a purely decentralized asset like BTC. Its underlying relies on the reputation of the registrar (D3). If D3 goes bankrupt, defaults, or is shut down by regulators, the tokens on the chain will become worthless. This is the original sin that “semi-decentralized RWA” cannot escape.

UDRP Legal Arbitration: There is a special risk for domain names called UDRP (Uniform Domain Name Dispute Resolution Policy). If software.ai is sued and loses by a company that owns the “Software AI” trademark, ICANN will enforce the transfer of the domain name. At that time, the on-chain agreement will be powerless.

Securities Regulation (Howey Test): Splitting domain names, emphasizing expected returns, operated by a management team… this almost perfectly aligns with the SEC's definition of “securities” in the United States. Whether Doma can walk steadily on the compliance tightrope remains to be seen.

In the crypto market of 2025, everyone is tired. Everyone is fed up with the mutual liquidation of worthless coins and also tired of the low returns from on-chain US Treasury bonds.

The emergence of Doma is timely. It offers a new asset that has both “physical asset backing” (Web2 domain names) and “high odds gaming space” (Bonding Curve + 2.5 million dollars buyout).

Paradigm is not betting on a domain name dealer, but is wagering on a possibility: in the future, all digital rights (domain names, social media accounts, game assets) will be assetized in this way.

software.ai is just the first sample brick. When the gears of DomainFi start turning, we may be witnessing a key leap of Web3 from “manufacturing bubbles” to “pricing reality.”