A Thought on an Equitable Way to Handle Expiring Domains

hello frENS

The Set the temporary premium start price to $100,000 proposal generated a lot of debate. Full disclosure I voted in favor the snapshot, since I believe this improves the situation.

The purpose of this post is to present a long-term solution to the underlying problem this is trying to solve.

The solution makes several assumptions that should be made explicit.

  1. The price of an expiring domain should be set at market
  2. Given a choice between intermediaries profiting of expiring domains and ENS profiting of them, it is preferable that ENS does.

Napkin sketch of proposal:

All domains that expire after their grace period in a given month will be batched auctioned off via a vickrey auction one month following expiration with a 1 week duration.

Example for clarification:

Let’s say that throughout January 100 domain’s registrations were schedule to lapse post their grace period. Instead of having a temporarily premium set at 2k or $100k as the proposal indicated, we transfer all of those domains to ENS.

Then on the first week of March, we hold a mass vickroy auction for all names for 7 days.

With this there would be at least 30 days where people/organizations/daos could:

  1. raise awareness that a valuable .eth is soon to be available
  2. coordinate the raising of funds for said domain

Each name would be individually bid on, with the winning bid paying the second highest bid.

In addition to fairer price being paid for each domain, the surrounding hoopla of each auction would further increase awareness of ENS and drive community engagement.

Lastly, bolded words are ones that could potential have ambiguous definitions, at this stage of the discussion it did not make sense to define them concretely.

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Oh god, please no more Vickrey auction, been there, done that, horrible pain :slight_smile:

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People will get confused, loose their bids, get angry and so on, we want maximum adoption as fast as possible, for that it has to be super easy, less rules = faster adoption

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@SpikeWatanabe.eth has it been described in the way mentioned above?

Bulk auctions with education on a cadence.

If so, I’d love to see so of that discussion if you can point me there.

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What’s the purpose of batching them rather than having them happen when the name expires?

I agree Vickery auctions have nice properties - we used them for the initial allocation of ENS names. But, aside from being more complex than a Dutch auction, they have terrible UX, which can and will lose to lost funds amongst other issues.

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no, but thats not the point, Vickrey auction is pretty much complicated dutch auction, same story

I can see why you would want to have bulk auction, its like an event, which is scheduled, maybe even quarterly, and everyone can get ready for it and yes everyone can be aware for it. Althgouh cost implementation for such system seems to be prohibitively high.

this

Frankly I like current system, very simple elegant dutch auction. My only object is to raise bar even higher, like to 200kUSD or 300kUSD. Very simple, easy to understand, elegant, cheap gas relative to other implementations - fantastic. I wouldn’t even want anything else in place of current system.

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And I’m not fan of non-liner price decay, because it adds more complexity to calculation, I want for anyone to be able to open standard calculator and figure out what the price will be on any given day, more transparency, better for the market

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I don’t think anybody would be doing that, they would just use the ENS manager which has a very nice UX for this already. You enter the price that you’re willing to pay and the UI automatically shows you when that will be. You can also click anywhere on the graph and see what price will be on any given day. It’s very transparent in my opinion!

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yes and no, I agree that you can always use the UI, but its much easier on the brain if its just linear, and if you don’t have to use UI, if you can just calculate it in your head, thats my point

I’ve seen this situation with some more complicated protocols, where user initially was required to monitor very simple calculation, but then they tried to modify it to some more complicated formula and it just makes things more difficult for everyone

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I don’t think anyone is going to want or need to calculate this in their head, especially when there is already a good UI that does all of this for them.

Whatever marginal “mental math” complication this adds, I think it’s well worth it for the benefit of a non-linear decay: Having a long tail on the premium so that there is a longer period in which the price is much lower, and thus giving more time and more granular control to the smallfolk to get the domain at the price they want.

With a $100k premium, the price goes down by $150/hour, which is a lot of money to the average person! And with a linear decay that would be true whether it’s the first hour or last hour of the auction! Meaning that if someone wants their name under a hundred bucks or so, they have a very small window in which to register it. Personally, I think most people would appreciate the benefits of a non-linear decay and I don’t think hardly anyone would be complaining that “but I can’t calculate it easily in my head!”

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tldr

  1. Easier to create and promote an awareness campaign where hundreds names are going up for auction than promoting each name individually

  2. Allows for splitting the user experience between advance and casual users

Longer Explanation

Let’s ENS split the user base into advance vs. causal users and provide the appropriate customer experience for each.

Causal users want to buy a .eth and they buy whatever is available, and it is probably better that they don’t see that desired_name.eth has high cost since it might give the wrong impression about ENS.

Advance users know what they are doing and they are aiming to profit from their activity. Now, if (this is a big IF) we agree that splinting the user base like this is good, then having a different a customer experience for advance users makes sense.

An additional assumptions about advance users is that they are well financed and have a degree of tech/web3 savviness.

From an advance user perspective this is what they would see:
Screen Shot 2022-01-09 at 10.51.08 PM

By having something like this regularly happening every month web3 media would write about it. With more eyes the more likely the names would go for their fair respective value. I see a future where DAOs form to bid on the best names and retain them for their proper owners.

I also naively assume that a batch process is likely to be more gas efficient in aggregate.

I suspect this is a bigger issue when done individually for each name than when there is a batch process. Happy to take a stab at a wire frame. I realize I may be underestimating or/and completely missing the difficulties from a smart contract that this would cause.

Lastly, without a batch process a vickrey auction is unlikely to be workable.

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Its like they sell those cars in batches, everyone know that on this date, all cars will be sold, so they all gather for the auction, I think this just might be a good idea

Although really it just complicates things, if anything I would just leave linear auction at a time of expiration and thats it.

The biggest problems we had with the original vickery auction for ENS were users losing the secret they need in order to reveal their bid, and users forgetting to reveal during the reveal period. In either case this led to loss of the funds they used to bid (for various game-theoretical reasons, you can’t refund unrevealed bids after the auction).

It’s difficult to see how we could remediate these without adding a centralised component to the system.

Why?

I find this to be a better solution.

At the time of expiration; ENS Immediately assumes custody of the expired domain.

Immediately at the time of expiration; a 168 hour timer (7 full calendar days) begins allowing the previous registrant to extend the registration time of the expired domain to remain registered in his or her name. Standard registrant prices per length of time to be registered will still apply with a 30% tax of the registering fee to be added in the total to reclaim the domain.

From the start of the 168 hour post expiration time period; for each hour that passes 2% of previous registrant total (registration fee Including the 30% then 2% of that total is added for every hour that passes without receiving payment from previous registrant)

regFee = baseFee(regTime)

regFee(0.30)

numHours=Total number of hour passed since expiration

totalDue=regFee(0.30)[1+(0.02/numHours)]^(24•7)

totalDue=Amount you must pay to reclaim expired domain if completed within seven days from the expiration.

during this 7 day period:

A sealed auction takes place. Bidders may place bids on the expired domain that the previous registrant so far has failed to re-register, but previous registrant still has the seven days or 168 hours to complete the registration extension of said expired domain. Only the bidder during this time period / sealed auction is able to see their bid amount and their bid only. If the previous owner fails to re-register the expired domain the seven days , bids will become public in the order and time and amount will be displayed in a table that shows clear and concise values and the highest bidder will assume the lead bid and is obligated to purchase the domain by staking the amount into the contract. if no other bids are placed until the auction is complete after 30 days from the day of expiration, the high bidder will assume custody and control over the registered name. If you so happen to change your mind about acquiring the domain that you have the placed your staked bid into the payment contract, you may withdraw your bid with a 25% fee of your max bid plus gas fee. When a bid exceeds the previously placed bid amount, that amount is immediately staked and bound for payment unless a newly placed bid occurs exceeding the max bid. The previous max bid is then released from its staked payment contract back to the bidder. The new max bid becomes the new amount that is staked and bound for the payment contract by the new high bidder.

mplementing this method will provide the community a fair and reasonable opportunity to assume custody and control of expired ENS Domains. For I see this as a snatch and grab bought proof implementation that is inclusive for all community members and or those who are attempting to acquire a ENS domain for the first time. @nick.eth I see what you’re going for and don’t get me wrong I think it’s a good idea but I believe that that will Exclude a huge amount of people from the competition of acquiring these domains. Now if we were to implement what you are Suggesting it would only enable the ENS community to be inclusive to those of which and only to those who know how to program and code bots, this again creating an adverse and unfair advantage.

This right now is pinnacle moment in time where this has got to be done right. This literally could be a make or break the project for ENS domains. I know that if I were trying to include myself into a community and that community already had an unfair at bandage over me trying to be a part of the community then I wouldn’t wanna be a part of that community at all. especially a community that runs on the decisions of delegates and the use of a DAO.

Why would anyone want to take part in a community where my ability to participate fairly was taken away from me before even having the opportunity to be a part of the community.

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  1. there is already 3 months grace period for current owner to extend ownership which kicks in after date of registration expiration

  2. this is essentially same Vickrey auction which existed before 2019

link bellow - ENS Is Upgrading — Here’s What You Need to Do | by Nick Johnson | The Ethereum Name Service | Medium

if you do it like this, then it doesn’t really go very well with this

because since the bid is released then bidder would know, that someone else bid higher, then by definition its no longer a sealed auction

if anything it has to be completely blind Vickrey auction, which existed prior 2019 and was subsequently abandoned

I see where you are coming from now.

The amount of education that’s needed to explain how vickrey auction work is non-trivial. I also underappreciated how much additional complexity keeping everything decentralized would add to already uncommon auction type.

I do believe the education requirement is surmountable with the right effort, but it doesn’t seem like it is worth it given all the other things we / ens can be working on.

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Please, no Vickrey auction! …

nobody understands it, people will get confused, its complicated, it will harm adoption in the long term

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Well there has to be a sort of accountability to prevent people from bidding the process up. If you bid, you must stake your money. No questions asked. I’ve done auctions for the past five years. it’s so easy to bid the price up.

i think you may have misread what I wrote.

the bids are not able to be seen during the period of time that the previous registrant has to reclaim. after that time has expired then the bids will be released for the public to see

my apologies about the sealed aspect. I think i started thinking and forgot to edit that part out.

and no this is not a victory auction because the second highest bid is not the winnee