Rethinking ENS Domain Pricing: A Crucial Conversation

Hey everyone. Long term community member, first time forum poster. :wave:

Let’s talk about that one thing. You know the one… the most recurring point of debate within the ENS community: Renewal Fees for 3L and 4L .eth Domains.

To get things started I’d like to highlight that the conversation about renewal fees is not just a passing concern. This topic has repeatedly surfaced as a key issue, indicating a deep-rooted call for change and evolution. There are several indicators of this with the most recent being strong feedback from community driven polls and even insights from thought leaders like Vitalik.eth all of which drive home one point: ENS is a critical infrastructure, and it needs to be affordable.

Poll

ENS has established itself as a key pillar in blockchain domain naming. However, its current pricing structure appears to pose significant challenges to its potential and accessibility. This proposal aims to address and rectify these challenges, seeking balance between the community’s long-term concerns as well as the foundational principles ENS was built on.

Identifying the Key Issues

A primary concern expressed typically revolves around the high renewal fees for 3L and 4L domains. While originally meant to preserve domain exclusivity and reduce speculation, these fees have inadvertently hindered the broader application and innovation within the ecosystem.

Additionally, the adoption of Unicode characters in ENS has greatly expanded possible domain combinations, but the vast majority of these combinations will remain unclaimed due to high costs, undermining ENS’s goal of being an accessible and diverse naming system.

Rationale for Proposed Pricing Adjustments

  • Community Feedback: Reflecting on the community’s continuous input, it’s evident that a shift towards a more modern, inclusive, and equitable pricing model is crucial to meet evolving needs and expectations.
  • Balancing Accessibility and Anti-Squatting: Our goal is to maintain accessible renewal fees while effectively deterring large-scale domain squatting, a strategy crucial for upholding the integrity and dynamism of the ENS ecosystem.
  • Impact of Unicode Inclusion: With the addition of Unicode characters, the scope of 3 and 4L domains has grown exponentially, rendering the high uniform fees increasingly exorbitant. Such a broad spectrum of possibilities should not be restricted by such steep pricing, as it discourages the registration of many innovative domains, narrowing the field of what’s accessible within the ecosystem.
  • Encouraging Active Domain Use: The objective is to enhance the usage of 3L and 4L domains within ENS, thereby cultivating a more dynamic and inventive environment, and dispelling the long-held fallacy that ‘nobody NEEDs a 3 or 4L domain.’

Proposed Pricing Structure

  • 3L Domains:

    • Initial Fee: The initial fee for registration remains at $640, a deliberate threshold to preserve the prestige of these domains and prevent speculative short-term holding. Furthermore this fee must be paid in full at the time of registration, with no option for monthly payments, to ensure a serious commitment from registrants.
    • Renewal Fee: After the initial one-year full payment, I propose reducing the annual fee to $160. This reduction aims to make premium domains more accessible for continued use and development, while still upholding a viable and proven pricing model. This new fee, applicable after the first year’s commitment, is designed to encourage lasting engagement within the ENS ecosystem.
  • 4L Domains:

    • Initial Fee: Maintained at $160, required to be paid in full at registration.
    • Renewal Fee: Set at $80 to align with broader industry standards, supporting wider use and active development within ENS while maintaining a more expected pricepoint for premium domain renewals. It also keeps the math simple.
  • 5L and Longer Domains:

    • Option A: Increase to $10, doubling the effort required for speculative holding, yet remaining modest and reasonable for individual users. This change seeks to enhance the DAO’s revenue and aligns with the overall strategy to dampen the effects of widespread domain squatting.
    • Option B: Keep renewals at a flat $5 for greater affordability and inclusivity, ideal for diverse participation. The less is more approach.

Recommended Post Transition Refund Mechanisms

  • Option A: ‘The Right Thing’ – Automatic refunds for domain holders who have maintained their domains for at least one year, in recognition of their commitment.
  • Option B: ‘The Smart Thing’ – A snapshot and claim process, balancing fiscal responsibility with the engagement of active ENS participants. This option seeks to minimize treasury losses.

Wrapping Up

This proposal isn’t just about tweaking fees to satisfy speculators; it’s about unlocking untapped potential within ENS. We’ve heard the community’s overwhelming concerns loud and clear: the high current renewal fees for 3L and 4L domains are prohibitive, while the low fees for 5L and longer domains have unintentionally encouraged squatting.

By lowering the fees for 3L and 4L domains, coupled with the prerequisite of an upfront premium commitment, we aim to address these concerns directly. Our goal is to widen participation, spur innovation, and enhance the richness of the ENS ecosystem while maintaining its overall integrity.

In addressing the community’s most persistently raised issue, this revision of the fee structure for 3L and 4L domains is not just a nod to their continued expressions. It’s a strategic and thoughtful approach to a concern that has been at the forefront of community discussions, aiming to make the ENS ecosystem more accessible and innovative for all.

We can do this better. :yellow_heart:

Thank you.

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I think your plan is clear, fair, and balances making ENS more affordable with the community’s needs, all while thoughtfully preserving DAO revenue.

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i’m assuming you want to propose this on a per address / registrant basis?

If a domain lapses and re-enters the registration phase, it will necessitate the payment of the initial premium fee once more to reclaim it.

Why don’t we simply handle this as part of the expiration cycle?

All existing owners accepted the high renewal fees when they first registered. If these owners want to keep their names, then they should not get a price break. If they don’t feel the high cost is justified, then they shouldn’t renew the names.

But, if one of these names do expire, then we could then change the renewal pricing. The name would go to auction, just like it works today for expired names. This approach would maximize potential revenue for the DAO for those names valued more than the current fees. These names (and only these premium names) could then have lowered renewal pricing.

For premium names not yet registered, then these go through an auction first before receiving lowered renewal pricing. Again, this would maximize revenue for the DAO.

3 Likes

There was a discussion about something similar recently that I personally liked on this topic: A method to increase the effective number of ENS users

It’s a good resource to have here along with this discussion and I encourage everyone to read it as we work towards a solution that would benefit all parties involved.

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I think what you are proposing will actually promote squatting of the shorter names

Reducing the fees after a year by that much will only make it more likely for someone to hold onto a name than let it go / sell it onto an actual user

However, if you bought 10 or 20years worth or registration in one go I would agree that it would be a good reason to give a discount, not as much as you are proposing, but it would make sure that people are either building on it or if they are speculating, which many still will, then they need to pay a big initial hit.

It would be a loss to the DAO compared to not having the reduced fees coming in yearly, but with compounding taken into consideration then it should work out even if the numbers are done right.

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I agree with this

Anyone who owns a name, has basically signed a contract saying they are willing to own this name for X amount of time, and if they want to extend it then this will be the ongoing cost

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Your proposal prioritizes maximizing revenue at the expense of current loyal users, which could inadvertently create a negative sentiment within the ENS community.

Implementing a change only after domains expire seems punitive to existing users who have shown faith in ENS by paying the higher fees.

Our aim should be to reward their commitment, not penalize them for early adoption. A more inclusive approach that lowers renewal fees across the board acknowledges their support and encourages continued participation, ultimately fostering a stronger, more united community around ENS.

This approach, while it might slightly reduce immediate revenue, has the potential to attract more users in the long run, benefiting the DAO in terms of growth and diversity of participation which I believe we can all agree would be ideal.

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A fair way would be to break down each character length category into various sub-sections, this will help what ENS strives to be, and it will promote creativity, which is why things like emojis and other characters were introduced to ENS in the first place and it did not just go with the standard DNS characters

As DNS examples are brought up so often I’ll use them.

In DNS, digits domain names command a high value, but basically, nobody builds on them or uses them in any way. The market is run by speculators looking to gain value over time, to use a store of value or to use in money laundering etc, but never actually used as they were intended / made for

This is what ENS doesn’t want in my view, but it has fallen into it slightly with the current pricing structure

To date Fracton own 484 x 4 digits names, which is just under 5% of the total supply in their public wallet, they have a Coin that directly relates to this - hiENS4

They also have a lot of 3-digit names in their public wallet and also another Coin for this - hiENS3

When you own over 5% of a token you can price manipulate easily, up or down at any point for your own gain

This goes against what ENS wants to be in my view, a reduction in fees is funding speculation and will drain money from the community

The main selling point of the 999 club and the 10k club is the ‘flex’ of having the name, so let them flex, but make sure the DAO are making bank from it, it will actually make the ‘flex’ bigger as people will know how much you pay to keep that name / yr compared to others

I would propose a pricing structure like below:

Pure Digits (0-9) x 3
Pure Letters (A-Z) x 3
Single Emoji with 3 code points
Rest x 3 characters

Pure Digits x 4
Pure Letter x 4
Single Emoji with 4 code points
Rest x 4 characters

Pure Digits x 5
Pure Letters x 5
Rest x 5 characters / code points

This is just a list and NOT in order, a 4-character length name may price above a 3-character length name etc

I’m not adding prices as this post is about pricing structure to make ENS reasonably appeal to the masses.

If priced up correctly it should keep speculation / squatting down and if it does happen then the DAO makes bank, it will inspire creativity and allow people to have short names if they want at a reasonable price per year

Question:

If someone registers a name for the shortest possible time (0.8 of a year) and then sells it

Who pays the premium for the 1st year ?

While the idea of a tiered pricing structure based on domain types might seem appealing, it introduces unnecessary complexity and subjectivity into the ENS ecosystem. Assigning different values to domains based on characters like letters, digits, or emojis goes against the ethos of simplicity and uniformity that ENS stands for.

However, the case for Unicode domains does potentially warrant a separate consideration. Given the challenges they present, such as standardization conflicts and the complexities introduced by Punycode, there is some merit in revisiting their pricing. These technical issues potentially justify a differentiated pricing strategy for Unicode domains allowing them to be more easily accessible to a wider array of people.

Simplicity is ideal here I think, but there probably is a valid argument for lowering Unicode domain pricing.

Yet, even with these valid concerns, I believe the most equitable approach for ENS might still lie in a simpler, more uniform system.

Focusing on character count rather than the specific nature of the characters can provide a more balanced and straightforward solution. By maintaining this approach, we align with the core goal of supporting ENS as an accessible and user-friendly platform for everyone, regardless of domain type.

The proposal addresses this concern by requiring the prerequisite that users must pay for the first year in full.

This is designed to deter unserious short-term squatting while rewarding those that actively participate within the ecosystem long term.

Not sure if that can be done?

Currently you can only mint a name on the official ENS app for a min of 1 year, but on other providers you can mint for 0.08 of a year (correcting the typo above)

You can also mint from contract yourself if you have the skills

The current capacity to register domains for less than a year, including as little as approximately one month, is an oversight that promotes short-term speculation.

This was particularly evident during ‘ENS Summer’ 2022, where we witnessed a surge in these shorter registrations. Such practices allow 3L and 4L domains to be temporarily secured at a fraction of their annual cost, including padded time during the grace period.

This loophole undermines the intended value and prestige of these domains and detracts from the long-term health of the ENS ecosystem. Therefore, I believe enforcing a minimum one-year registration period is crucial to preserving the integrity and intended purpose of these premium domains.

If technical limitations do not allow for a minimum registration period of one year I propose the reduction in price should only go into effect following the completion of at least one year of maintenance.

It wouldn’t be too hard to categorise names into groups, every marketplace does it

Only letters a-z, length 4 = grouping ____
Mix characters, length 3 = grouping ____

You mention that the easiest way is by character count, so does that mean that single emoji names should be priced higher than 3 digit names? Or do you mean code points?

I only ask as you are promoting “single character names” on X, so just wondering if you can confirm

I’ve previously clarified this concern. It’s essential to understand that categorizing domains based on character types shifts our focus to speculative valuations, a path the DAO should cautiously avoid.

Our aim is a fair, unbiased pricing model for the entire ENS community without fragmenting it by domain types.

Although there’s a case for adjusting Unicode name prices due to standardization and punycode complexities, a simpler, more equitable approach lies in making 3L and 4L domains broadly accessible to all users.

Also, it’s important to note that ‘Single Ethmojis’ aren’t actually single-character domains. Their inclusion in this debate is a diversion, shifting focus away from the main issues we’re addressing. I hope that my personal activities and speculation outside of this forum do not overshadow the validity of the argument we’re presenting, which is grounded in the broader interests of the ENS community and DAO as a whole.

I know single emoji names are not character names, they are made up of 3+ code points, I just wanted you to clarify your status on that

From all your points I still don’t see how it will reduce the current squatting or reduce it in the future

All all it is going to do is make it cheaper for those currently squatting to keep the names for longer, it doesn’t allow for creative people to make a creative name, it does not make getting an ENS name/names more appealing for new users

Every single name that ENS has made or will make in the future is categorise, it’s either a 3 character, a 4 character or a 5+ character name

This hinders creativity

In my view, those categories should have sub categories to make ENS more appealing

ENS is affordable. A 3- or 4- character name is a luxury good, not a neccessity.

[citation needed]

These are emotive terms, but I don’t see any evidence for them. What makes the current naming antiquated, noninclusive, and inequitable?

Pricing was originally set on a character length basis because it was easy to implement and limited the impact of people sweeping up high value short names ‘first in, first served’. I think that at this point it’s worth reconsidering the value of adding some complexity to the pricing algorithm to account for the relative scarcity of names with different character sets. 3 characters of Hirigana should not be considered as short or expensive as 3 characters of the arabic alphabet.

I think some actual analysis is required to justify this. My first reaction is the same as @Theth.eth - that a higher initial registration price will discourage registration of new names, in favor of retaining existing names, thus perversely incentivizing squatting further.

Increasing the minimum registration period from 90 days would serve a similar purpose without skewing incentives in the same way.

I don’t think there’s any reason to refund existing registrations. Aside from being a huge expense, it’s not a reasonable expectation for people to have - any more than you get a refund on your couch when it goes on sale a month after you bought it.

This is a smart idea. Unfortunately, I don’t think it’s practical to implement under the current system without additional data storage, which would increase gas costs and add complexity to the registrar controller contract.

On the contrary. Length-based pricing is a crude version of pricing names based on rarity / desirability, and serves the same purpose: to ensure that speculators cannot buy up and resell at high prices every name in a category.

6 Likes

Thank you for taking the time to respond so thoroughly, I will respect you by doing the same and going over each of your points individually.

The characterization of 3L and 4L domains as luxury goods is contingent on their current pricing and availability. With the advent of Unicode, the sheer volume of permutations for these domains expands into the trillions, which suggests that the ‘luxury’ label may not be exactly apt.

The current high-fee structure artificially enforces scarcity, transforming these domains into luxury items by design rather than by inherent value. Additionally, this approach overlooks the fact that the significant price discrepancy with 5L domains has unintentionally led to even more speculative hoarding, undermining the intended balance of the ecosystem.

This idea that 3 & 4L aren’t ‘necessary’ largely misses the mark for fostering continued growth and broader use within the ENS ecosystem and I can personally see no valid argument for not wanting to expand and promote continued use across varied character lengths.

ENS has been live for over 5 years now. At a certain point this bird must be let free to fly.

You can see above my screenshot of a recent community poll in which the overwhelming majority of voters showed dissatisfaction with the current pricing structure.

The ‘ENS Summer’ of 2022 showcased a pronounced decline in long-term commitment to 3L and 4L domains post-speculation. This trend strongly suggests that the current high fees, while successful in deterring fleeting speculators, also act as a barrier to those interested in meaningful, long-term use of these domains. The data from this period illustrates that when faced with prohibitive costs, even genuine users hesitate to invest in domains they cannot afford to maintain, ultimately leading to a reduction in active, valuable domain usage across the board.

Furthermore, I’m surprised that you, Nick.eth, would inquire about these citations when you yourself probably understand the long-term cries from the community regarding renewal fees better than anyone. You have historically acted as a lightning rod of sorts about this topic and have anecdotally received a brunt of the feedback regarding renewals.

These are not just emotive terms but signal a disconnect between ENS’s mission and its current pricing structure.

‘Antiquated’ points to a pricing system that hasn’t adapted to the evolving web3 landscape, especially with the integration of Unicode and all of the domain possibilities that come along with it that are prohibited by current costs.

‘Noninclusive’ arises from high fees that exclude potential users who might otherwise contribute in a valuable, more long-term capacity. My thinking is the notion that nobody ‘needs a 3 or 4L ENS’ is bad thinking and discourages further creativity and usage.

‘Inequitable’ highlights a pricing disparity where steep fees deter squatting on shorter, “premium” domains, yet the affordability of 5L+ domains encourages their speculative accumulation. This creates a skewed domain landscape where hoarding is shifted to the less expensive, lengthier domains, thus contradicting the intent to evenly discourage speculation across all domain types.

Thanks Nick.eth, I appreciate your receptiveness to the idea of a more refined pricing model and I’m encouraged that we share a vision for an ENS that reflects the diversity of its user base.

Indeed, the advent of Unicode domains presents an opportunity to rethink our approach and introduce a pricing system that acknowledges the uniqueness of different character sets.

However, venturing into categorization based on character types introduces a new layer of complexity that may lead us down a path of subjective valuation. What may seem valuable or distinctive to one individual or culture may not hold the same weight to another. This subjectivity in valuation could lead to inconsistencies and a never-ending cycle of revisions as perceptions and values shift over time.

To avoid these pitfalls, this proposal maintains a length-based pricing model, which is straightforward and equitable. It reinforces the concept of premium domains through an initial full-year payment, a commitment that reflects a user’s serious intent. In return, we reward this commitment by making subsequent years more affordable, thereby nurturing long-term stewardship of the domain.

This approach isn’t about penalizing current holders or gatekeeping new entrants; it’s about acknowledging and incentivizing sustained engagement with ENS. We aim to strike a balance between upholding value and encouraging a thriving, dynamic domain ecosystem.

I personally find it difficult to argue against the desire to seek a more diverse range of character groups maintained across the ecosystem.

While it’s true that this proposal would make it easier for current speculators of 3L and 4L domains to hold their domains for longer periods of time, I believe it’s even more important to understand that this would allow for a more accessible entry point into the ecosystem thereby allowing for a wider array of user participation.

The reality is that squatting is already prevalent within the web3 space, and ENS, as a part of this ecosystem, operates under the same capitalistic principles that often stimulate such activities and insisting on high renewal fees to shield ‘premium’ domains from squatters is less compelling when noting that traditional DNS services achieve similar deterrent effects at much lower prices.

The problem with this thinking is that these domains ALREADY have the high initial price you speak of.

By adjusting our current model to a one-time-fee that must be paid upfront we are actively discouraging frivolous short-term domain squatting as users will have to think twice before making this commitment.

They are then further incentivized to maintain their domains for long-term as to not lose their initial commitment.

This portion can be argued several different ways but I would personally like to see that users that have paid several years in advance are not penalized for their early adoption and commitment to the ENS ecosystem.

I do not believe it is wise to penalize early adopters.