I’ve been thinking a lot about how to handle rent fees and where they should go to. We’ve solved it in the current registrar by burning fees and locking up ether but it seems new registrar discussions are increasingly in favor or having fees go to a main foundation. It’s important to analyze the checks and balances on that institution to make sure they remain relevant and don’t start any rent seeking behavior in the future. I don’t have a solution here but I would like to start with a few premises. The premise 0 of all these is that we have a single entity, let’s call it ENS Foundation, that gets all the automatic fees:
- Forking ENS is the ultimate measure users can adopt to “fire” the ENS foundation. Anyone can fork ENS with no fees or fees to other entities, which effectively removes all the money to the foundation if they do some behavior considered bad
- Forking is a behavior that reduces overall utility of all namespaces. If there’s only one ENS, everything is simpler and easier. If there are multiple competing ENSs, then the usability starts to require more complexity. If one ENS fork becomes as big as the main one, then suddenly the usability creates large problems, as we need in practice to create a new namespace for namespaces (foobar.eth.1 vs foobar.eth.2)
Therefore the goal of ENS governance should be:
Add mechanisms that allow people to voice their grievances on ENS foundation, and to be able to eventually replace it without needing to fork ENS itself.
Of course, these are similar governance challenges than ethereum itself, but I would say we have some unique opportunities here to experiment on better systems. I would argue that the most valuable ENS should be the only one that needs to exist, but there are two caveats:
- Any mechanism for finding the value of a name can be abused (people overbidding their own domains) if that has secondary benefits, such as giving you voting power
- An ENS system in which names are more expensive is not necessarily a better one
I don’t have any proposal on how to solve this governance system but I have a few suggestions on what it looks like:
- ENS contenders are mostly competing for the “eth” registrar, not the ENS contract itself, so we should encourage all contenders to somehow be built using the same mechanisms, specially under the “eth” namespace. So contenders to replace the ETH should all be built using a registrar of something.eth and they would bid to go up and replace the main namespace.. We could even generalize it further and say that if some very good solid solution emerges in a few years, it could even replace the root registrar.
- Fees should be locked for a few years and any new contender should only start getting fees generated at least one year after being active, but preferably only get them even later, so that if someone manages to abuse and hijack it, the market should react accordingly and the fees by then would be much smaller
So here’s the basic scaffolding I see for ETH namespace governance:
- Any contender for the ETH namespace governance should register a name on the currently active namespace and deploy a sub registrar there, that can be already used instantly
- Once step 2 decides on a new registrar becomes the active one, but current name holders are grandfathered in and have 2 years to migrate to the new one
- All new fees generated to the new registrar are locked for one year before being released, so effectively the new registrar will take up to 2-3 years to receive the full profits of being the new registrar, and by then if it’s seen as a bad entity, people can either try to change it again or fork ENS in its entirety
As you can see, the governance is 75% solved, I just need some help figuring out the step 2.