Sen’s liberal paradox is meant to demonstrate that when autonomous agents act with complete freedom, it is impossible for the agents to produce an outcome that is a net improvement to everyone. While this is not to argue for government intervention, it is to say that a pareto optimal improvement and libertarianism cannot coexist. In other words, the paradox shows us that the invisible hand of the marketplace is incapable of producing net improvements in welfare for a given society.
When you think about the domain industry in the context of the liberal paradox it makes sense why everyone is so unhappy.
Domainers are a generally libertarian group of people with regards to the domain business. They don't want people regulating what they can and cannot do.
The people who complain about the domain system argue about fairness and efficiency in a larger sense. However, they cannot present a pareto optimal solution for the domain business.
So, here we are, stuck in a world with two different world views that are completely incompatible. It makes sense why so many of those arguments degenerate into a free market versus efficiency argument now.