Best Practices: Domain & DNS Security for Crypto, DeFi and Web3 Platforms

Why Web2 is the back door into compromising your ecosystem security (And how to seal that hole forever)

 

By Mark E. Jeftovic, co-founder, easyDNS Technologies Inc. & CEO, Domainsure Risk Intelligence Corp.

TL;DR:

Your crypto project is only as strong as its weakest link — and for most Web3 platforms, that’s the domain and DNS layer.

Attackers don’t need to hack your blockchain to steal funds; hijacking your domain or DNS settings lets them re-route users to phishing sites invisibly.

If your domains aren’t secured with registry locks, DNSSEC, monitoring, and takedown protection, your door is wide open.

DomainSure seals the Web2 back door before attackers can open it.

👉 Download the free Domain & DNS Security for Crypto, DeFi and Web3 Platforms white paper now.

__

 

Abstract

 

The decentralized revolution is upon us and we’re experiencing a Cambrian explosion in blockchains, Layer 2s, DEXes, CEXes, DeFi platforms and myriad Web3 applications.

The permutations are endless – DePIN, DAOs, DAAPs – but they all have one common Achilles Heel: a doorway into their ecosystem from the legacy Web2 world that they must rely on, but when left unguarded can lead to security breaches and catastrophic losses for ecosystem users.

The unguarded doorway is the legacy internet naming system: domain names and DNS.

This paper outlines a framework of best practices to safeguard the entry points into your project from the Web2 world.

 

Who Will Benefit

 

This paper is designed to protect your interests if you are responsible for the security and operational continuity of any crypto project. It is also intended for founders, executives, controlling stakeholders, strategic or early-stage investors, and directors who have a vested interest in these ventures.

The risks outlined here are directly relevant to any project in the digital asset space, if it involves custody, conversion, or transfer of value—such as through tokens, smart contracts, exchanges, DeFi or Dapps, and is accessible over the internet – then this paper is essential reading.

Our experience and research highlight an operational blind spot in the digital asset space, and our campaign is largely focused on raising awareness.

This paper assumes some basic foundational knowledge of how the internet functions but is accessible to both non-technical and technical readers who have “skin in the game” with regard to one or a portfolio of cryptocurrency initiatives.

If you are not involved in the day-to-day operations of your projects, you would do well to read and understand the risks outlined below before passing this on to your CTO, Director of Technology, CISOs, or op/sec teams.

We are always here to help and are happy to answer any questions and demystify this part of your attack surface.

—

Crypto projects win when they protect their access points.

Grab your free copy of Domain & DNS Security for Crypto, DeFi and Web3 Platforms — and get the blueprint for securing your domains against hijacks, phishing, and DNS exploits.

Download now.

 —

Overview 

For too many organizations, domain names and DNS are viewed as commoditized services for which one provider is as good as the next.

 

“a company can spend thousands, hundreds of thousands, even millions of dollars on redundancy, high availability, firewalls, disaster recovery plans, and even cyberthreat insurance – and yet the entire technical infrastructure of the organization is held up by a couple of unpatched, forgotten nameservers. Or perhaps the DNS infrastructure is beyond solid: anycast deployments, DDoS mitigation, hot spares, uptime monitoring, and 24×7 NOC support; but the portfolio of domain registrations is managed haphazardly or on an ad hoc basis.”

 

That passage was from the preface of Managing Mission Critical Domains and DNS, which was written by the author and published in 2018.

In the Web3 era, we can add to the list of security measures that projects may employ: testnets, smart contract audits, and bug bounties, and yet these same naming-related security weaknesses not only linger today, but owing to the nature of blockchain projects, their risks are amplified.

Web3 ecosystems can have millions, even billions of dollars of TVL in the form of digital assets in custody, being staked, loaned, collateralized or tunnelled between blockchains.

The consequences of security breaches can be enormous. Yet far too often, the web2 backdoors from which threat actors can teleport themselves instantly to within your firewall are left to commodified, unspecialized, disinterested or even hostile vendors.

These providers lack the depth of experience and affinity with the crypto-economy that would enable them to provide adequate safeguards.

There are three distinct elements of concern when it comes to your legacy (“web2”) naming infrastructure:

 

1. Domain registrars – who are responsible for the registration, maintenance and access to the domain names upon which your ecosystems are built. This aspect presides over your nameservers but is not necessarily the same as your DNS operator.
2. DNS operators – provide the name-to-address translation, as well as other metadata functions. This may also be handled by the domain registrar, or could be delegated to another vendor, handled internally, or some blend of both.

 

In any case, this delegation is ultimately controlled by the domain registrar:

 

 

3. External Actors – DDoS attacks, phishing campaigns directed against your users, Business Email Compromise (BEC); these are just a few areas of concern for all online endeavours – but are particularly acute with regard to Web3 and crypto ecosystems.

This paper will introduce the best practices that will protect your Web3 / crypto projects from all three areas of concern.

 

—

Think your project is secure? Double-check your blind spots.

Our free white paper, Domain & DNS Security for Crypto, DeFi and Web3 Platforms, breaks down where crypto teams are most vulnerable — and how to seal those gaps fast.

Download it here.

—

 

Domain Registrar InfoSec

Most domain registrars are ill-equipped to effectively mitigate against an APT (Advanced Persistent Threat Actor) even in general cases. They are at an even worse disadvantage when it comes to crypto domains.

Some registrars are themselves hostile toward crypto projects, and for all practical purposes, become threat actors in their own right:

Arbitrary domain suspensions and takedowns are not isolated incidents, they are routine. There are countless examples of Web3 projects being deplatformed by their own registrar for the most nebulous of reasons.

If that did not pose enough of a risk, there are just as many incidents of registrars being compromised by their inferior security readiness and cavalier attitude toward social engineering attacks.

Noteworthy incidents have been publicly disclosed on crypto Twitter and are thus fair game to enumerate here:

• MyEtherWallet
• ETH.limo
• ETH.link
• Balancer.f
• Equalizer.exchange
• Beets.f
• Yearn.Finance

 

The list goes on.

The reasons they were taken down range from:

• Arbitrarily seizing the domains in order to “park” and monetize them via Pay-PerClick ads.
• Suspending them without notice for unspecified AUP violations or “community standards”.

 

And in one notable case:

• Disallowing a domain renewal so that it could be sold off at auction.

 

In another instance, the domain registrar complied with a “takedown request” ostensibly requested via court order – on a Friday night, headed into a long weekend, with no notice to the domain owner.

The domain taken down was not subject to the court order; it was never even mentioned in the document.

The attacker simply emailed the domain registrar, told them the attached court order directed them to take down the domain name, which they did, obviously without reading the relevant documents (or even caring, if they actually did).

In instances where the domains weren’t taken down by hostile domain registrars, severe lapses in security protocols enabled external hackers to commandeer the accounts and successfully penetrate the projects:

• Nameserver hijacks: changing the nameservers so that the attackers can serve their own DNS instead of the delegated DNS provider.

 

• Account takeover: changing the DNS settings in place from the registrar, or DNS provider offering that functionality.
• Domain slamming: transferring the entire domain itself to a third-party, often out-of-country rogue registrar.

 

Minimum Viable Domain Registrar Security Features

 

The following elements are minimal must-have capabilities for managing your domain registrations:

 

• Multi-factor Authentication
• Domain (Transfer) Lock
• Private Whois with proxy
• Event notifications
• Account level ACLs

 

We can expand on the above points:

 

Multi-factor authentication is a must-have; some methods are better than others, but any approach vastly reduces the risk from having none at all. The recent Squarespace vulnerability that successfully compromised multiple DeFi platforms was possible 1 because 2FA was disabled system-wide as part of the acquisition process from Google.

At a bare minimum, email – but if the inbox is compromised, then so is the second factor. Phone numbers aren’t much better, as crypto industry participants are frequently targeted via SIM swap attacks (it turns out phone carriers suffer from the same institutional lethargy as some of the more monolithic domain registrars).

More effective in terms of safety are dedicated authentication apps such as Google Authenticator or Authy, followed by hardware devices like YubiKey.

 

Domain (Transfer Lock): These are available at the registrar level across most Top Level Domains (TLDs); when enabled, any attempt to initiate a domain transfer to a new registrar will automatically fail.

These should be enabled at all times, save for when actually transferring out to a new registrar.

Nameseserver delegations can still be changed or updated while the transfer lock is enabled. This is important to know, and as we’ll discuss next, comes with some tradeoffs.

 

Registrar Locks vs Registry Locks: we just covered the former. The latter is implemented at the TLD registry operator itself, yet facilitated by the registrar.

When the registry lock is enabled, the nameserver delegation is immutable. It can’t be changed without a multi-layer authentication process that often includes a verbal confirmation, through a limited set of whitelisted contacts both at the registrar and the domain registrant (the domain owner).

This preempts nameserver hijacks specifically – which is changing the listed nameservers on a domain to those of an attacker, which then direct users to a hostile website or application.

However, there are some tradeoffs. Registry lock means that changing your nameservers on-the-fly or with minimal lead time is off the table. Many registry locks need at least 24 hours to arrange and confirm, and if your nameservers are down over the period – say because of a vendor outage or DDoS attack – you are stuck. 24 hours tick by painfully slow when your systems are offline and your customers are screaming or leaving.

Registry locks thus preclude the use of mechanisms like our own nameserver failover ,2 which monitors your DNS in real time and automatically switches your delegation to pre-arranged hot spares in the event of an outage (then reverts them after functionality resumes).

Which is better? In our 25+ years’ experience, we’ve seen more nameserver outages than hijacks – however, we do recognize that the Bitcoin, crypto and DeFi space has a higher risk profile for hijacks than average.

Through a combination of partnering with a particularly attuned registrar, employing best practices, along with proactive monitoring, it is possible to effectively mitigate hijacks while retaining optionality for business continuity in the event of DNS outages.

 

Whois privacy with proxy means that the entity in front of the underlying domain registrant must actively screen, process and forward relevant communications to the domain holder. The default for many privacy proxies is simply to discard everything – even legitimate communications from real law enforcement or regulatory bodies.

This is because the true function of whois privacy with many registrars isn’t actually to protect the underlying registrant from spams and scams – it’s to lock the domain into the registrar and leverage the ICANN rules around changing the domain record to make it much more difficult to transfer away.

(If you’ve ever wondered why so many domain providers offer “free” or massively discounted whois privacy, that’s the reason).

 

Event Notifications: Usually there are several steps involved in a successful hijacking operation and having awareness at the early stages can often thwart an attack.

 

Many providers stop at login notifications, but that’s not enough, if only because ops personnel may become numb to those notifications. Especially with more remote teams and VPN usage, a login from Bulgaria may not be as anomalous as it used to be.

Ideally you’re getting notified of domain events that signal changes such as:

• Whois record changes (updating the admin contact is a major shift in control)
• Nameserver delegations
• DNS edits and updates

However the problem with event notifications is that they usually occur via email, and that poses a couple of issues:

 

1) If the email account attached to the vendor account is compromised, notifications can be intercepted.

2) “Email blindness” tends to set in: dev-ops start to filter automated and transactional messages and can lead to missing important notifications.

 

In an ideal setting, there are additional notification channels to email (and SMS) such as Slack, Mattermost or even custom web hooks. And yes, we may as well tell you, Domainsure facilitates all of these.

Going beyond this base level of features would include:

 

• Enhanced authentication (i.e Yubikey)
• Account ACL lists
• Sub-accounts, roles and permissions
• Geo-based login restrictions

 

Beyond this – although we can’t speak about the following in general terms, because the only domain registrar that does the following is Domainsure – we have:

 

Proactive credential scans: The practice of obtaining and filtering credential leaks and dumps from the dark web, in order to scan for:

1. a) compromised credentials within your organization.
2. b) your downstream users employing compromised credentials to access your system (i.e. re-using passwords).

 

We do this by proactively monitoring hacker forums, various dark web scanning techniques as well as through our membership within informal IT security intelligence sharing networks.

 

Blockchain-based governance: Domainsure will work with your organizational structure, including your DAO, to draft and implement a protocol for authorizing critical changes to your domain account – such as password resets, or other mission critical functionality.

 

BIP-58. Via BeethovenX Governance DAO

 

DNS Best Practices for Security & High Availability

High Availability

Functional DNS is a base requirement for all online infrastructure. While decentralized domain ecosystems like ENS, Handshake, Stacks, Tezos Name Service, BNS et al exist – and are making strides in adaptation – the legacy, IANA-based DNS root will be the de facto, functional root of the global DNS system for the foreseeable future.

Owing to the inverted tree architecture of the global DNS, Single-Points-of-Failure (SPOFs) exist – there is a logical one at every zone-cut in your resolution path.

Source: Managing Mission Critical Domains & DNS. Jeftovic, Pakt 2018

 

DDoS attacks and vendor failures are the primary causes of outages here – and when they occur, every node below the failure point effectively disappears from the internet.

There are commonly used vendors who provide DDoS mitigation services; while many of them are effective, even they can be prone to system failures.

Cloudflare, one of the most commonly utilized DDoS mitigation providers, has had multiple, large-scale outages caused by internal failures (such as routing table corruption).

Every provider is a logical SPOF unto itself, so what’s needed is a method of creating redundancy at the nameserver delegation level.

Using multiple providers is a common approach to this, however if non-standard optimization techniques are being employed, that often precludes mixing vendors via secondary DNS.

The solution to this conundrum is having the ability to failover nameserver delegations in real time (as distinct from the more commonly understood “failover” which happens at the hostname level, within the same DNS provider).

Again, Domainsure is the only vendor providing nameserver failover, so we can’t speak of this in general terms. See nameservers.ai for more details.

 

__

Think your project is secure? Double-check your blind spots.

Our free white paper, Domain & DNS Security for Crypto, DeFi and Web3 Platforms, breaks down where crypto teams are most vulnerable — and how to seal those gaps fast.

Download it here.

__

 

DNSSEC

DNSSEC provides a mechanism to authenticate DNS responses such that their origin and content can be cryptographically validated; it mitigates DNS cache poisoning attacks and spoofed responses.

The specification for DNSSEC has been around for a long time and every major nameserver software (except djbdns/tinydns) implements it – yet it remains chronically under-utilized in the traditional IT world.

It is refreshing to see that DNSSEC has enjoyed somewhat of a renaissance in the decentralized naming world of Web3.

Most decentralized naming protocols make it a requirement – alas, it is still either largely unsupported or poorly implemented by many domain registrars.

Experience has taught us that the most effective way to implement DNSSEC is to take the onus of rolling keys and re-signing zones off the user entirely: our shorthand for this being “One-Click-DNSSEC”™ and “Set-And-Forget-DNSSEC”™.

It is the only way we’ve found over the years to preempt inevitable zone failures from botched key rollovers.

 

External Threats

Finding a domain registrar sensitive to the unique requirements of crypto and Web3 projects is challenging enough, but there is still the matter of external threats to the naming assets in the form of:

• Phishing attacks using look-alike domains, including homoglyphs , to trick end 4 users into logging into a fake website – or worse, entering their seed phrase into a fake wallet connection page.
• Typosquatting is a related but separate category where look-alike domains are used not to outright defraud users, but to cause brand confusion, direct traffic to competitors or harvest affiliate programs.
• Business Email Compromise, where lookalike or fake domains are leveraged specially to infiltrate and compromise the integrity of an organization’s internal communications.

 

Conclusion

 

At the risk of sounding overly critical, we’ve long maintained that the domain registrar industry is the most institutionally lethargic, rentier class of operators on the entire internet.

Thinking in terms of unit economics only, the most important element in many customer interactions distills down to “closing the ticket” at the lowest possible expense.

Worse, there are critical times in the domain registration life-cycle when the registrar’s interests are misaligned with the registrant’s – to the point where your domain becomes more valuable to them if you don’t renew it, or are somehow prevented from being able to renew it.

In that world, most legacy domain registrars are underwritten by the same system, which crypto was created to obsolete.

Thus it is vital that crypto projects, DeFi, Web3 and decentralized initiatives of any kind seek to find a domain provider whose interests align with theirs, and whose management and staff fully understand and support crypto.

Many of the projects featured as cautionary tales in this white paper have already moved their naming assets to Domainsure, learning from these brutally harsh lessons.

Your team and projects have the opportunity to do the same now—before you become a trending hashtag for all the wrong reasons.

__

 

FAQ: Domain & DNS Security for Crypto, DeFi and Web3 Platforms

 

What makes domain security critical for crypto, DeFi, and Web3 projects?

Because even if your blockchain layer is decentralized and bulletproof, your domain name — the front door to your platform — usually isn’t.

Domains and DNS still depend on centralized Web2 infrastructure, meaning attackers can hijack your brand, steal user funds, and destroy trust without touching your smart contracts. If your domain isn’t protected, your entire project is exposed.

 

Isn’t smart contract security enough to protect my Web3 platform?

No.

Smart contracts only govern what happens inside your blockchain ecosystem.

Domain security governs how users access your platform in the first place.

If an attacker compromises your domain or DNS, they can reroute users to a fake front-end that interacts with a malicious contract — without touching your real contract at all.

Domain security is the first link in your entire trust chain.

 

How do attackers hijack domains or DNS for crypto projects?

There are several common methods:

• Credential theft: Phishing, SIM swapping, or credential stuffing against your domain registrar account.
• Registrar social engineering: Tricking registrar support staff into allowing a transfer or reset.
• DNS hijacking: Exploiting vulnerabilities at the DNS level to redirect traffic without touching your registrar.

And because DNS is fast but not inherently secure, these attacks often happen invisibly — until wallets are drained.

What is DNSSEC and why does it matter for crypto companies?

DNSSEC (Domain Name System Security Extensions) is a set of protocols that adds cryptographic authentication to DNS data.

It ensures that when users visit your domain, the DNS information they receive hasn’t been tampered with.

For crypto, DeFi, and Web3 projects, DNSSEC is critical to prevent DNS spoofing attacks that could redirect traffic to phishing sites.

DomainSure’s platform includes Set-and-Forget™ DNSSEC, so you get this protection automatically without technical headaches.

 

What’s the difference between a registrar lock and a registry lock?

• Registrar Lock: A basic protection that prevents casual transfers at the registrar level. It’s helpful, but can often be bypassed with weak support processes.
• Registry Lock: A higher-level, manual lock enforced by the domain registry itself (e.g., Verisign for .com domains).
  Registry locks require verified, out-of-band human interaction to modify — making them almost impossible to bypass through normal social engineering.

If you’re serious about domain security, registry lock is non-negotiable. DomainSure includes registry lock as part of our comprehensive protection.

 

How can I detect if someone is spoofing or phishing my crypto brand?

You can’t manually watch every new domain registration across thousands of TLDs.

That’s why DomainSure uses machine learning-driven monitoring to scan millions of domain variants based on your brand name — detecting typosquats, clones, and malicious lookalikes in real-time.

We also monitor blacklists, SSL issuance, and dark web chatter tied to your brand keywords.

Detection is the first step. Takedown is the second. DomainSure helps you do both.

 

What is DomainSure and how does it protect my project?

DomainSure is a domain registration, DNS management, and cybersecurity platform designed specifically for crypto, DeFi, and Web3 ecosystems.

We lock down your domains and DNS infrastructure, detect phishing and clone threats in real-time, assist with takedowns, and give you complete visibility into your domain’s security posture.

Built by the team behind EasyDNS, we combine two decades of DNS expertise with modern, crypto-native security practices.

👉 Learn more in our free white paper: Domain & DNS Security for Crypto, DeFi and Web3 Platforms

 

Can I use DomainSure if I already use Cloudflare or AWS for DNS?

Absolutely.

DomainSure can work alongside your preferred DNS providers.

You can keep your Cloudflare settings for CDN and security if you like —

DomainSure protects the registrar layer, adds real-time monitoring, and enhances your DNS setup with deeper visibility and proactive threat defense.

We don’t replace your infrastructure — we harden it.

 

What happens if my domain is already compromised?

Time is critical.

If your domain or DNS has been hijacked, every minute counts.

DomainSure offers rapid response services:

• We help reclaim domain control through registrar or registry channels.
• We initiate phishing takedown efforts immediately.
• We work with you to harden your defenses and investigate how the breach occurred.

The sooner you act, the better your chances of recovering without major brand damage.

 

How do I get started with DomainSure?

It’s simple:

1. Schedule a free Domain Threat Assessment.
2. Review vulnerabilities and opportunities with our domain security specialists.
3. Start securing your project’s most critical online assets — before attackers do.

 

—

Crypto projects win when they protect their access points.

Grab your free copy of Domain & DNS Security for Crypto, DeFi and Web3 Platforms — and get the blueprint for securing your domains against hijacks, phishing, and DNS exploits.

Download now.

—