Assuming we transition from a deposit-based model to a rent-based model as proposed in my DevCon 3 talk, a significant question is how to determine a fair rent price.
First, why do we want rent? There are two related reasons for doing so:
- To discourage mass registration and resale of all viable domains, which is likely to occur if no ongoing costs are imposed for name ownership.
- To provide an incentive to terminate registration of unwanted or unused names.
Neither of these requires a particularly high rent; only enough to impose significant cost on anyone seeking to register and keep unused large volumes of names. I believe that a cost compatible with the current registration cost for DNS domains, in the range of $10 - $100/year is likely reasonable.
The question then is how to set this price, and regulate it with variations in the price of ether. Several options have been proposed, but for now none seem sufficiently robust to be implementable as-is.
- Vlad Zamfir proposed monitoring deregistration rates, and using a feedback loop on this basis to adjust rent. This is the proposal I discussed in my DevCon 3 talk. Unfortunately, it suffers from the issue that an individual could deliberately register and deregister a large number of domains to artificially inflate deregistration rates, and thus lower prices.
- A variation of the above would weight deregistrations based on how long the domain was held before being deregistered. This would help impose a minimum cost on anyone seeking to affect the system, but would still permit some degree of manipulation. Research is needed to determine the theoretical soundness of this approach.
- A feedback loop based on net registration rate is possible, but ends up enforcing a growth rate, or a rate-of-change-of-growth-rate; neither seems desirable.
- Systems requiring manual price adjustment are susceptible to centralised control.
- Another proposal is a Harberger Tax; in this, anyone pays the amount of rent they see fit, but the domain may be bought at any time for some multiple of the yearly rent fee. This has the significant advantage that we can expect it to be self-regulating, and encourages people to value their domains honestly. However, it permits the possibility of hostile takeover of domains, relies on people accurately assessing the value of their domains, charges more for more valuable domains (even though they impose no additional burden on the system), and does not function well for ‘public goods’, where the owner of the domain does not derive direct financial benefit from the system.