Renewal fees for names as a % of the decaying price premium they were reserved at

This isn’t a formal proposal but I wanted to introduce the idea to hear what criticisms or feedback my idea had from the community.

There are many “high-value” expiring names reserved for a high premium directly from the ENS site, “FBI.eth” comes to mind which was reserved via the decaying price premium for 33.1 Eth when eth was roughly $3,000, so for nearly $100,000 USD at the time.

Under the current model, this person pays $640 a year to renew the name. The system I’m proposing is to tack on an additional % of that 33.1 Eth reservation fee (as a dollar amount at time of reservation) as an additional renewal cost.

Lets continue to use Fbi.eth as an example, who’s reservation fee was about $100k. When adding the additional percent as 1%, yearly renewal would jump from $640 to $1,640, at 2% $2,640 and so on.

The reason I would promote this over other methods like harberger tax is there’s no way to get around the fee, since there is only one venue to reserve expired ETH names. One criticism I have of renewal fees based on prices bid on Opensea or anywhere else is they are vulnerable to a flash-loan bid attack (someone placing a momentary bid of 1000Eth just in an attempt to disrupt someones ownership of a name). Names could also just be sold off-chain or indirectly to avoid the harberger model.

It’s a valid argument to say including this added % gives and unfair advantage to people who reserved their names early, but you could make the same argument about the *updated decaying price premiums in general, which I believe has had a positive effect for ENS.

In conclusion, I believe adding a % of the decaying reservation price premium as an additional yearly renewal cost promotes ENS names being used towards their intended purpose, and effectively discourages long-term squatting of many high-value names moving forwards. Looking forwards to hearing what other people think about this idea.

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Was the above a carry over from another thread? There isn’t anything like this implemented on the ENS App currently. Maybe you were bringing up some previous ideas others had in solving this? You could link to the other thread where this was proposed. I may have missed it.

Meaning this would only affect names that have fallen into the Premium auction, and are registered before it expires? So if a name never expires, it’s not affected by what you are proposing?

It’s an interesting idea though. Thanks for posting, see it’s your first. Welcome! :partying_face:

Right- this would only affect previously registered names that have fallen into the decaying Premium auction, so names that are always renewed on time, or names where the premium auction has ended would not be affected. It would also not affect “new” names that had never been registered.

This idea may have likely been discussed in a thread somewhere, but it’s more riffing off some ideas Vitalik proposed in this article about ENS recently: Should there be demand-based recurring fees on ENS domains?

Also thanks for the welcome!

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This is a really interesting idea. At the extreme, you could eliminate the premium entirely, and have the annual renewal fee be 100% of the price; names would sell for much lower prices but with renewal fees that directly reflect their value on the market.

It would be nice to be able to apply this as an alternative to the higher fees for 3- and 4- letter names, but with no way to assess existing names it would work out as a huge incentive to keep those names registered indefinitely, entirely counter to the purpose of the fee.

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I don’t agree with the proposal, because the OP insinuates someone has rights over FBI.eth other than the person who has purchased it on a free market and has transferred it to their wallet, the irony of this proposal are multi dimensional and I will list just two!

i:the argument for squatting an ENS could be flipped in the same way to say that early adopters of Ethereum could be seen as squatting ETH only to extort a buyer at a higher price later on who instead of sitting on said asset would actually use it. This in itself is against decentralisation, the early adopters of ENS are literally funding the DAO.

ii: the example used “FBI” is a really poor choice because if you search the British trademark registry for companies using this exact combination there is 99 entries registered as FBI not all are active though. Never the less, with this example we can prove that the proposal does not follow a capitalist decentralised free market instead it is punishing early adopters and is a type of tax.

I believe this would harm the DAO and for this reason and others I have posted my opinion for what it’s worth.

If I have misunderstood I apologise but as an owner of many domains be it .com or .eth never in my years of buying TLD’s have I heard anything like this. If a specific domain is deemed to breach a trademark it is not down to the DAO to police that as the DAO is neutral.

Lastly I can guarantee you if this even went to a vote most people would extend registration of their valuable ENS long before the results were in.

All the best

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@Nick.eth, thanks for taking the time to read through my long post! I will throw this out there: Since 2 letter and below names have not been created yet, maybe this is the model that can be used for 1 and 2 letter names when they are made available. That way it has less chance of incentivizing people to stretch out their reservations on existing names.

that being said, I believe there may be a sweet spot for adding this % tax to newly expired 3-4 letter domains without over-incentivising existing names being reserved out for decades.

Maybe:

$160 + 1% for newly expired 4 letter names

$640 + 2% for newly expired 3 letter names

It does incentivize 3 and 4 letter .eth squatters to stretch out their existing domain reservations if they can, but I don’t see them reserving much beyond the date they intend to sell the name, because it’s already fairly pricy to do so especially at scale. But what this does do is make newly expired high interest shorter names expensive to hold on to, which isn’t very practical unless they’re being actively used for some economic purpose.

@TobesVibration, thanks for your thoughts! I didn’t intend to imply anyone has special rights to FBI.eth, apologies if it reads that way. I just picked it because it was one of the larger auction sales I saw. I agree with your sentiment that FBI.eth could be legitimately used by many different people/entities, I’m mainly interested in whoever wins the auction on a high interest name like that moving forwards paying a renewal fee that is more in line with the market value of the name.

Hey, no problem at all. I just wanted to highlight the situation with names which some people deem as intellectual property, but actually when you look further into it you find that it’s not as straightforward as people think.

Could I ask you what is the main purpose behind your proposal. Is it to raise more funds for the Doa or simply to stop people squatting domains.

If it’s for the latter, I can’t agree that that’s an appropriate position because when somebody owns rights to property, it isn’t fair to start trying to extort money out of them via a tax. You could compare it to property purchased 50 years ago which is now worth 100 times the original price. Would it be fair that a property taxpayer paid more than his next-door neighbour because they bought the property at a different time in their lives?

Fair dues I think the debate is worthy. Not sure , the community agrees because it seems to attack those that have actually pumped ENS the most, and they purchased under the impression that this was an open market in a decentralised autonomous organisation.

All the best

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Agreed. To be clear, when I said it would incentivise hanging on to names, I was referring specifically to the case in which this system was used instead of the higher prices for 3- and 4-character names.

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