Kassey Lee explains the concept of Chip domains.
Remember the Chip boom in 2015/2016? Chip was the talk of the town when it was introduced to the domain circle as a new investment theme. Even today, there are many investors trading in this category. The question remains: what is really special about Chip domains?
Chip stands for “Chinese premium”. It refers to a name which does not contain the letters A, E, I, O, U, and V. While such names can be of different lengths, investors often focus on 4-letter domains because of historical reasons. Some investors also write the term in its plural form “Chips”.
In China, letters can be used as acronyms for Pinyin words. Therefore, a Pinyin-based company can use a matching Pinyin or acronym domain. A good example is Jing Dong, the third largest internet company in the world. Jing Dong owns both JingDong.com and JD.com. The name “Jing Dong” is 2-pin (two Pinyin words).
If a company name is 4-pin (or longer), then its acronym becomes very useful because of its length. Investors are attracted to 4-letter domains because these domains have genuine demand from corporate China as acronyms.
Among 4-letter domains, Chip domains are most valued because of one reason. Generally speaking, a Chip domain can represent more names than a non-Chip domain. In other words, a Chip domain may be sold to more companies. This is seen in the following table.
|A||Yes, but very limited|
|E||Yes, but very limited|
|O||Yes, but very limited|
|Others||Yes, many possibilities|
Although investors value Chip domains more, non-Chip domains are still used in China. For example, Yi Xi Wei Wei (伊西威威) is an ecommerce startup which recently raised Series B+ funding. Its corporate domain is ECVV.com (two Vs not W). The domain is used because ECVV rhymes with Yi Xi Wei Wei.
Because Chip domains can shorten long Pinyin names, they have genuine use in corporate China and therefore will continue to be in good demand.