Determining a fair rent model


#22

I was thinking about this redemption_period and how make it more user friendly, we can add a secret protection bid for annual renewal,

ex. my highest bid 100 ETH, second highest bid and the locked value = 50 EHT, and I’m paying 10 per year renewal now…

w/ secret protection bid you input an arbitrary number < locked value, let’s say I put 40, that means if someone make a complaint bid for an annual renewal fee of up to 40, I will automatically match him at the end of redemptions_period

in case redemption is 6 months and i’m traveling for a year having this mechanism would get me covered all this period of my trip of a year.


#23

would this be the basis of the complaint? if so, deeper pockets will just sweep away smaller people who have a genuine interest in a .eth name.
For example, if Annie has AnniesApples.eth and BigCoApples doesn’t like Annie and her apples, BigCo would file a complaint at a price little Annie can’t afford. Annie needs time to develop in the marketplace and her resources are very limited. How do we protect Annie from BigCo, and should we?

Maybe the ENS system should not care about little old Annie and let the complaint be driven by BigCo’s value assessment? I worry that over time, this would reward a BigCo mentality to limit mass adoption of .eth domains for smaller entrepreneurs.


#24

Scott a hostile takeovers would be limited dramatically by

  1. long period of transfer up to 6 months redemption_period (during this period current owner incentivised and has the option not the obligation to respond) + 6 months grace or pending_transfer_period the new bidder with complaint has to lock his bid for that period 2. current owner which actually using the name based on the tx_volume_discount will still has an edge if he is true honest holder of the name. (he has like 2/3 discount on rental)

anyway BigCo they always have an edge in a pure vickrey auction or reverse dutch auction, and nothing wrong with that, however little old Annie she has only AnniesApples.eth theoretically she could assign (self-assessed) true_value and deposit locked_value amount much higher than domain squatters looking to register 100s, and the tx_volume_discount would always give an edge to honest user, emphasize the concept that property should be put to its most profitable use.

and with tx_volume_discount no scammer or squatter would ever be able to match the true honest use of MyEtherWallet.eth, or Apple.eth and eventually on a long enough timeline (one day) when somebody could monetize Apple.eth way more than Apple company doing, well good for them they should be the new owner of Apple.eth!


#25

This was never a hidden cost. Staking, and other stuff that you can do with your money was always advertised the “real cost” of locking up ether. The reason that I’m against using that mechanism purely today (and prefer using locked funds as prepaid rent that can be withdrawn later) was when we saw that legitimate users that wanted to keep a name safe forever would be paying 100% of the funds, since they couldnt retrieve it, versus squatters paying only a small % opportunity cost for a few years.

There’s no good way to judge either a name is being “actively used” and tx count is specially a bad measure: you can point your name to a particularly active account, or just make lots of transactions to yourself. And a name with 0 tx to their username could be a super active one too: don’t forget ENS is also meant as a shortcut to read IPFS and Swarm websites.

I find interesting that we are sort of coming back to this proposal of the fee being some sort of harberger tax. I think the changes in which the tax is log of the value, a long auction period, and to only valid for names that were in dispute. are interesting changes that might prevent some forms of abuse.

This scheme however does prevents people from reserving a name for a long time. When buying domain names, I often buy them for 2-4 years and I want to able to forget about them, not have to take action every six months.


#26

MyEtherWallet has a transaction volume of 0, and an attacker can likely walk away with significantly more money than MEW can make in a year if they execute their attack well. Stealing someone’s keys could net you an instant payout of millions of dollars, while MEW makes its money (I think) on affiliate links which is a small stead stream of revenue.


#27

We need to think carefully about the reasons for a fee - our goals, and nongoals. These are what I have in mind; others may differ:

Goals:

  1. Simple registration and ownership of names for end-users.
  2. Registration and/or renewal fees that are as low as possible without compromising other aspects of the system.
  3. Actively discourage mass registration of domains for speculative purposes (‘squatting’)
  4. A strong preference for stability of name ownership; a name changing hands can potentially lead to lost funds if handled poorly, or if a ‘hostile takeover’ is possible.
  5. Minimise manual intervention by trusted parties in setting rent prices.

Non-goals:

  1. Charging rent just to make money.
  2. Basing rent prices on the amount a user is willing to pay.
  3. Requiring frequent user interaction to retain their domain or minimise their costs.

Proposals to base a domain’s rent fee on the amount others are willing to pay for it are somewhat in conflict with non-goals #2 and #3. There is an argument for charging more rent for ‘high value’ domains such as particularly short domains, because there are fewer of them, and a stronger disincentive against squatting is needed, but I think we need to carefully distinguish that from domains that are popular or valuable because of the domain owner’s own efforts. EG, ‘foo.eth’ should probably cost more than ‘foobarbaz.eth’ because short domains are more valuable, but ‘myetherwallet.eth’ probably shouldn’t cost more than ‘somenonsense.eth’, because the additional value was built up by the owner; it’s not ‘intrinsic’ to the name.

Likewise, harberger taxes have the problem that they contravene non-goals 2 and 3. Implemented simply, where a user defines the value of the domain and the rent is a function of that, users would all have to update their rent price every time there is a significant fluctuation in the value of ether, or risk either overpaying or under-insuring their domains. If implemented as a periodic, rather than continuous operation, they still complicate matters for users and require manual intervention to avoid losing a domain.

I like the idea of systems like harberger taxes simply because they’re a very simple and robust feedback mechanism; users set the price for us, and have an incentive to set it accurately. Still, I think the downsides outweigh the upsides.

That’s only one suggested mechanism. The overall point is to construct a feedback loop that organically sets the correct price.

Any well designed system would need to have a slow rate of change, to prevent this - fast enough to adapt to changes in Ether price, but slow enough not to provide this sort of irrational short-term variation.

Because the price of Ether is highly volatile. If we fix prices in ETH, domains may quickly become incredibly expensive or incredibly cheap.

Anyone is welcome to deploy their own ENS with their own registrar.

Growing usage is absolutely a goal. In my mind, part of that is minimising the incentive to squat on unused domains.


#28

Sorry to say this but in my opinion ENS is centralized AF when you have the power to set up a rent model!

Everyone who bid on the vickrey auction model did not consider to pay a rent in the future because of the new registrar. Where is the decentralized part, when you have the power to set up a rent model ? People bid for it and it is their domain, I repeat even if it is a squatter it is his names and it gives you not the right to set up a rent based model. You should have mentioned that rent based model before the auction!

Also, you could have thought of squatters before setting up the ENS auction process or not even start the whole ENS System.

Its even more redicolous to set up a rent base model because most of the people can not use ENS Names because of the massive lack of support for ENS Names. So, I should pay a rent for something I can not use ??? There will be a massive drop of ENS Names because people do not pay for something they can not use. So, what was the point of the whole ENS auction process again? Massive registration and later because of the rent base model a massive deregistration of ENS Names?

In my opinion you should spend your time to get more adoption for the ENS System on exchanges and make the process more simple to set up a resolver and so on for non programmers (e.g. better User Interface).


#29

The technology is decentralised - you’re welcome to deploy a new root if you don’t like this one. You’re also welcome to propose an alternative to rent that accomplishes the goals!

It was made quite clear to everyone that registered that the registrar was an interim one, and the rules for registration would change when the permanent registrar is deployed. The system is deliberately designed such that anyone who doesn’t agree with the new rules can recover the entire amount they deposited to acquire the name originally.

The system is transparent, distributed, and verifiable. Nobody can be signed up to a set of rules without their explicit agreement - migrating to the permanent registrar will require the buy-in of each domain owner, as described above.

We did - the deposit-based auctions were one attempt to minimise the incentives for squatting. No system is going to be able to entirely prevent name squatting, however.

If you have suggestions on how to improve the system, this is the place to offer them.


#30

This is a very important point. A point which must be coupled with trademark law. All trademarks in the USA have a class of registration (product class). Foreign countries have their own systems. Every mark and every .eth registration will have to deal with “who really should control” questions.

I am not sure the ENS administrators are qualified to manage an international registry of intellectual property rights, nor should they want to. It is too complicated to solve with code because “confusion in marketplace” is the cornerstone of trademark infringement, and that is a subjective evaluation, which cannot be coded (yet).

The first come - first served Vickrey auction, with non-assign-ability is probably the “right” answer with legal protections coming from Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d), and Lanham (Trademark) Act of 1946. Meaning ENS should probably stay out of adjudicating who has the “rights” to a .eth name, unless an actual court of law makes a determination and then a legal injunction could be used as a basis for a “blacklist”.


#31

By the way, Thank u Nick Johnson and the ENS Community for the work creating the ENS System.
My recommendation would to wait with the new registrar and the rules until there is some significant amount of people really using ENS System. When people are really using ENS they are fully capable to decide if they want to stick with the ENS Name and its functions or release it. Rushing things is not the best way.

By the way, I can not see the advantages of a rent base model. This makes the mass adoption even harder because nobody pays for gmail, yahoo…If the web 3.0 (internet of value) is a internet of riches, than good night. What about 3rd world countries and ENS adoption do u really think the pay a rent? But they are the one we should establish the web 3.0 to empower them and bring them the deconomy.


#32

The basis and beauty of Ethereum is the micropayments are embedded in the protocols so it will never be “free” by nature of the system. I have no problem with a rent based model for top level domains because the subdomains can all be free if the top level owner/renter chooses to provide them for free for example joe.citywide.eth maria.citywide.eth …

Comparing Yahoo and Google as a “free” alternative is not the right examples. The models only worked because the users privacy and personal algorithms had secondary market implications. The actual value to Google and Yahoo was selling the data and attention of all the users personal and purchasing habits; a very high price to pay in my opinion.


#33

This should never be overlooked. If all goes well with web 3 - then users would capture some of the value of their online data and attention. Income from that could fund their ENS name rent. Their net “cost” would, hopefully, actually be lower than the current system.

If this were not the case, I would also take issue with affordability…


#34

that’s precisely why we have the gas fee, it should be more expensive the collective transactions cost in comparison with the discount he gets from the rental fee, but you’re right about tx count the .eth names has many uses and tx only one.

Okay, I understand, but how do you propagate your MEW transaction! If using one of their nodes and if that node address MEW.eth (or sub) can’t we quantify the usage?

The question I’ve for you and maybe @nickjohnson can enlighten us on this matter, is what can be quantifiable in relation to usage?

the traditional internet domains and from DNS resolver (or DNS root zone servers) you can get a reasonable statistic of usage, ISP has these data, and I assume Alex ranking work in similar fashion, at ENS level is there some metrics in relation to access/usage can be observed and hardly manipulated?

If yes we can use those metrics to offer a certain discount as percentage of the rental fee, that shall 1) incentivize usage -instead of me giving you my 0x address I would give myaddress.eth 2) could potentially play an important role in cases like MEW, and indirect TM protection


#35

Let me try to break down the points I’ve observed from your feedback(s), building pros and cons for each. starting from a high level, then we add items of details as needed


  • New ENS Release vickery auction
    pros: currently active // well documented // incentivize fair bidding
    cons: multisteps

  • New ENS Release dutch auction
    pros: one-step
    cons: FoMO bidding // required being online

  • Rental Model Flat Fee
    pros: simple registration // imitate current .TLDs // first come first served //
    cons: monopoly // squatting // intervention setting-up price or change

  • Rental Model Allocative Efficiency - harberger as self-declared valuation LOCKED, n % Rental fee
    pros: self-declared valuation // self-assessed rental price // economic productivity ENS passes to the hands of whom best able to put in use //
    cons: learning curve // instability of ownership //

  • Rental Currency USD or DAI:
    pros:
    cons: inherit DAI stability if MakerDAO go south ENS will follow // imply USD as an international unit, not necessarily in 10, 20 or 50 years// technically harder to implement

  • Rental Currency ETH:
    pros: native to Ethererum universe //
    cons: ENS barriers to entry correlated to ETH price (only w/ Flat Fee model)

  • Trademark Protection On
    pros: Corporate Friendly
    cons: required third-party intervention and arbitration // state territory limited - similar TM on different states etc // TM Class limited

  • ENS Usage subsidy rental discount based on usage -assuming can be quantified-
    pros: incentivize resolvers configuration and ENS productivity
    cons: Can be manipulated??


Kindly copy-past the post adding/removing your Pros/Cons and/or new items, the idea to start from general topics as we agree on these high-level we start adding items for details like a rental period (year/month/day) rental $ or rental % (3, 5 or 7%) etc


#36

The problem is you need to find something that is not gameable, which is really hard. If you try to track “how often do people lookup this ENS address” then (ignoring the fact that that is a local lookup) people will just spoof lookups.


#37

I was thinking about economic model / incentives.

There will be some popular, heavily contested domains.

It’s not practical for me to search the forum / github / everything for the current state of the discussion - I believe that admins and community who are more invested in the ENS will know better.

At any point in time, BIDDER who wants to obtain an already registered domain can bid 150% (or more) of the current rent amount.

The existing OWNER has 1 month to counter offer, at 25% premium of the current price. That will increase the cost of the domain.

After another 1 month, let’s call it “grace period”, the OWNER can pay 50% premium to keep the domain.

The BIDDER loses 5-10% it is to avoid frivolous bets.

In case an OWNER does not pay 25% or 50% extra, some of the money from 150% bid is coming to them.

I think that 1 month or notice should be sensible. Another month of grace period. Maybe adding some minimal timeouts - so that no new BIDDERS immediately after a previous one, say 6 months of no new bidders

•••••••

The goal of such design:

  1. ability to resolve the most popular domains
  2. setting correct incentives
  3. no “pain in the ass” with constant bidders

#38

That suggestion exists to achieve goal #3. It’s not meant for the purpose of making money hence why the algorithmic has a logarithmic curve to actively discourage people from profiting & making lots of money. Some will, that’s okay. Just like some will squat.

You could just make a flat fee for rent but I think that’s worse then letting the market decide how important something is.

I am going to write a 1.1 proposal soon after having read these comments. I do think I need clear direction on the goals. I am not sure what we’ve converged on & need some direction @nickjohnson.


#39

As I’ve said elsewhere in the thread, I’m very wary of any system that can deprive someone of their domain unexpectedly due to inaction, because in a system like this, especially where names can be used as payment handles, stable names are absolutely crucial.


#40

I had to create an account just to agree with nickjohnson here. Rent seems like a minefield, there are security, adoption, governance, and a full can of worms lurking behind a rental model. Unfortunately there is no good way to coerce the market.

I don’t think there is a real problem rental is addressing. Or one that’s worth opening the can of worms. ENS already has subdomains - this is the solution. Since it is a trustless smart contract, owning a subdomain can be just as secure as owning a top level domain.

I think rent creates problems and attempts to solve a problem that does not exist.


#41

Was chatting with @decanus this afternoon about rent models for ENS and figured I’d add my relatively simple proposal to the discussion. The key point is to modify the existing process such that by default registrations are subject to a renewal auction each year. Users can bypass this by paying a renewal fee based on a percentage registration auction’s value.

Goals:

  • Create a deterrent against mass registration and squatting domains from speculators.
  • Minimize impact of that deterrent on legitimate users.

Proposal
Vickrey style auction (eg current implementation) with the following additions:

  • By default duration is limited to one year and then a new auction process is started (using their deposit as a starting bid) to renew the domain
  • User has the option to pay a percent of the auction price as renewal fee (rent) which would allow them to automatically renew with no risk of price increases

Pros

  • First movers are not subject to hostile takeovers so long as they pay rent
  • Rent price does not ever increase so long as domain is persistently owned by the same owner. If owner acquires an uncontested domain rent would be minimal.
  • Rent is optional and really only necessary for domains that are likely to be contested.

Additional Thoughts:

  • If a squatter gets to a domain first, but does not face competition from other squatters, then renewal fee they would be charged may be too small of a deterrent. Adding a price floor for renewal could resolve this as it would have minimal impact on regular users targeting a specific domain but would significantly increase costs of mass registration/squatting uncontested domains.