Rethinking the registration/renewal model for ENS

I’d like to start a conversation on what sort of registration and renewal system best fits ENS. The current scheme is very similar to that used for DNS - it charges a fixed fee per year for a domain, which is sent to the ENS multisig. If you don’t renew your domain, it becomes available for registration again after a grace period.

This model has a number of advantages:

  • It’s familiar and straightforward
  • It ensures that if the account that controls a name is “lost”, the name eventually returns to circulation.
  • Users who want to keep a name more or less indefinitely can renew for an unlimited period of time.
  • It makes it expensive to squat on a large number of domains in the hopes of reselling them.

It also has several drawbacks, the most notable of which is the risk that people forget to renew their domains. We’ve built and integrated notification systems in an attempt to mitigate this, but there’s still a substantial risk that users accidentally allow names to expire, which can have dire consequences if the name is still being actively used. Being a decentralised system with no reliable contact details for users, our ability to reach out and warn people about this is limited, too.

When ENS first launched, it used a deposit model - names were auctioned off, and the winner deposited an amount of ETH that was held by a smart contract for as long as they wished to retain the name. It had its own advantages:

  • Users don’t have to remember to renew their domains.
  • There’s a direct incentive to release names you’re not using - so you can get your deposit back.
  • You can own a name indefinitely as long as you don’t release it.

But several significant disadvantages:

  • Losing the credentials for the account that controls the name means it’s now permanently unavailable.
  • It’s perversely cheaper to squat on a name than to own it: squatters only have the cost of locking their ether up until they sell the name, while end-users have to consider the ether permanently gone.
  • In the absence of a “land rush” for new domains, it’s not clear how to set the deposit at a useful level.
  • The deposit must either be in a stable currency, in which case we add dependencies on external systems, or if it’s in ether, has to respond in some way to the changing price of ether.

I’d like to start a conversation in the ENS community about whether there are changes we could make to how names are registered and renewed that make things better for users - especially in ways that make it less likely that users will accidentally lose control of their names, as well as reducing the costs associated with maintaining a domain in this era of high gas fees.

Any proposed solution has to bear in mind a few constraints. All registrations are mediated through the .eth registrar contract, which is impractical to replace (and may soon be locked in so that it cannot be replaced). The registrar exposes an interface to “controllers” - privileged contracts that handle registrations and renewals - that allows them to register or renew a domain by specifying an expiry date for it. Until that expiry date is reached, nothing other than the owner of the name can change its ownership - including the controller smart contracts. This is a safety mechanism, but it does make it difficult to implement some possible registration strategies. For anyone interested, the code for the registrar can be found here.

Also, it’s worth bearing in mind what our goals for the overall system are. These are also open for discussion, but what we’ve historically agreed upon has been along these lines: ENS exists to provide the most useful decentralised naming service we can offer. That means that we aim to make the system as easy to use and available as possible for end users who register names with the goal of using them to name decentralised resources. Since the goals of squatters are directly opposed to this - they seek to extract rent from end-users without contributing to the system - we also aim to design the system to discourage squatting, which makes the system less liquid (eg, makes it harder to find the name you want) and less affordable for end users.

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One proposed solution is to substantially discount registration fees for years after the first. For example, we could increase the registration fee for the first year to $20, but configure discounts so that doubling the duration always costs a fixed amount. So it would look something like:

  • 1 year: $20
  • 2 years: $40
  • 4 years: $60
  • 8 years: $80
  • 16 years: $100
  • 32 years: $120
  • 64 years: $140

This should force squatters, who will generally want to register only as long as is needed to onsell the domain, to pay a proportionally higher fee than end-users, who will generally want to register for a long period - and the steep discount curve makes registrations that last longer than a human lifetime affordable, so users can have effectively unlimited duration ownership of a name.

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4x increase for the average user is a lot.

  • 1 year: $10
  • 2 years: $20
  • 4 years: $40
  • 8 years: $60
  • 16 years: $80
  • 32 years: $100
  • 64 years: $120
  • 128 years: $140

EDIT: I prefer prices are not increased for “1 year” registrations.
…I do like the idea of discounts for longer term registrations.

It’s only a 4x increase if the average user registers for only a year - which I don’t think is the case. I’d rather not argue about specific values for one proposed change, though - the right time to do that is after considering if it’s the best solution.

No, it’s still a 4x increase if the user registers for two years.

I think most users will want to keep their domains for more than two years. Let’s not get bogged down in the details of the fine tuning of one particular proposal, please - all of that can be argued about if there’s agreement that it’s the best option.

This is going to backfire for the average user–A squatter will register the URL for 64 years, while the average user will only pay a few years at a time. (Love Everyone, OR, Hate Everyone)

You may be right if the squatter is a flipper, and/or, if they are cost adverse. (This will proposed system is better than the current system; and will favor anyone who values “their particular name” for the long term.) Nevertheless, there is no stopping second market strategies or free markets.

With exception: “Increasing ENS Rent” for plebs = “The Optics” of the Proposal. ( $5/year (ENS Now) vs. $20/forever (ENS Proposed) ) ( $40/two years (ENS Proposed) vs. $40/forever (UD Now) ) …people will see it as a step backwards; a down-round; a promise taken. In econ practice, it’s a dangerous prospect to increase costs to consumers, …especially when compared to competitors consistency and promise.

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I don’t think they will. Let’s run some example figures. As a squatter, let’s say I have $1000 to use on squatting domains. I think that I will probably sell 10% of my names within a year, for $1000 each.

If I register names for one year, I can register 50 names - meaning on average 5 will sell, netting me $5000 for a profit of $4000.

If I register names for 64 years, I can only register 7 names. Rounding up, one will sell for $1000, netting me a profit of $20. I can probably convince the buyer to pay for the cost of the remaining registration period - another $120, for a total of $140 profit on my $1000 investment.

Obviously I’m pulling these numbers out of thin air, but they’re intended to be representative; the same economics applies as long as you believe that a squatter will mostly either sell or release domains within a few years of buying them, which seems like a reasonable assumption to me.

All squatters aim to “flip” their names - that’s what squatting is. It doesn’t matter how “cost adverse” they are; this impacts the cost-effectiveness of squatting by making short-term registrations proportionally more expensive.

I would like ENS to be very affordable. I think 1 usd per year is great.
So people can have their domain for 50 usd 50 years.

Because the gas fees are very high. I don’t think we will have problem of a domainer to buy them all.

I also believe that will be very cool to creste a token for ENS community.
It could be use to buy templates/ dwebsites.

I would like ENS to develop a system similar to Origin Protocol.
This is a great example of a way to inventive the use of a token.
:v:

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Current situation:

  1. Recently gas fee is very high which is already scaring some potential users away because ens cost them much.
  2. Majority of ens users’ register or renewal period is 2 years.

Now you want to raise the annual price for all within 4 years’ registration/renewal, and you saying you are doing this for the interest for the ens users? Remember, there are 160USD 4 digi and 640USD 3 digi domains, that annual expense could be a fortune to someone. I have to say, if this is applied, ENS will be dead immediately, because you are scaring more potential users, and lot of existing users will follow the leaving.

I think you team should communicate and learn more from the traditional TLDs, lots of TLDs have premium renewal, some even very expensive unit rate, like .xyz, 123.xyz will cost more than $50,000 annually to renew. You can discuss the open auction for short domain on opensea, you can setup the premium price for drop catch, but you just can’t change renewal rate/policy DURING the race, because this is the foundation of a domain. It is already announced to the whole blockchain world that ens is $5 annually, $160 for 4L, $640 for 3L, if you change that easily, then everything of ENS can be changed, this will no longer be any decentralized project, nor you guys are non-profit group anymore.

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I think you’re again focused more on trying to prevent squatters but not really thinking it out. First, what amount of income is needed? Desired? Wanted? If any! Knowing that then a reasonable price structure for users be developed. Keep in mind if a person renews for 20 years and decides to sell it in the first year, the value of the 20 years already paid for is simply added to the price. You could say that if ownership changes hands then the extended years is lost but then what if one is transferring to his son or daughter or then friend or now Aunt or now friend of friend? I question the non-profit status of the group collecting the funds for renewals in the past. Where did the money go? What do they need to continue as non profit? Why charge users more than is need to operate? Is the PriceStructure going to be different for 3,4,5 letter domains? From what I’ve seen, no. I’m ok with that. I wasn’t ok with the exorbitant prior fees for 3 and 4 letter domains. I have a 3 letter .com domain that cost 1/75 the cost of a three letter ENS name per year as it was. So guess what? I didn’t get it. The idea of protection preference of existing .com domains owners to own the same name ENS was good but ENS costing 75 times the yearly cost of a .COM was not close to non profit and hurt legitimate users. If person had 3 or 4 letter .com or .net or .org, there was no excuse or reason to worry about squatters in those cases yet that exorbitant price was set. My suggestion is to up to say 5 or 10 domains to be allowed per user and after that price doubles etc to prevent squatters if that’s really still a worry.

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Lots of people spent a fortune in the 3-6 length ENS domain auction, as well as the premium price for expired/released good domain names, we did so because ENS team offically announced that the price structure is $5/$160/$640 for 5+/4/3 length ENS domains, it has already been very clear to everyone. We join ENS because we acknowledged the price structure of 5/160/640.

But in all the sudden you are going to say: oops, the annual price is going to change, it will be 4 times comparing to what we said before, but there will be some discount if you register more than 4 years! And we are doing this for your interest, because we are a non-profit organization…

Price structure is the critical foundation of any domain organization, once that is changed, the house will shake. The is the worst news I hear about ENS ever, I think the only folks that excited about this is unstoppable domains(.crypto), they must be opening champagne right now celebrating competitor’s wrong strategy.

As I already said, the examples I gave are just that - examples. The point of this discussion is to evaluate ways we could improve ENS’s renewal and registration system for users, not to try and determine the exact best pricing for one possible change.

My theory for that particular proposal is that users generally want to retain names for longer than squatters, and thus will be happy to take advantage of a heavily discounted price for longer registration. I think that’s a reasonable assumption.

Any change would be announced well in advance, and the current renewal model allows you to renew your domains for as long as you like - so nobody will be caught unawares by this. The point of the proposal, though, is to reduce the costs for anyone who wants to keep their name long-term.

We very much do not want to set pricing based on some level of desired income; ENS’s goal is not to be profitable or to bring in a lot of income. Costs should be set as low as they can be without damaging the usefulness of the system.

I factored that into my example. If a squatter has to pay $20 instead of $10 for a name, and it sells for $1020 instead of $1000, that’s a substantial decrease in their profit margin.

We just published a finance blog post that answers most of these questions: https://medium.com/the-ethereum-name-service/ens-finance-report-february-2021-a66b9e531727

On the contrary; if we had priced 3 and 4 letter names at the same price as longer ones, every one of them would have been bought up by squatters and would now be available only on the secondary market, at grossly inflated prices.

Any scheme that relies on counting the names owned by an account will not work, as it’s trivial to create new Ethereum accounts.

Again, this was one possible proposal, and the figures were entirely pulled out of the air for illustrative purposes. The point of this thread is to solicit input on whether there are adjustments to the system that could be made to make it more useful for active users.

The goal of the proposal is to encourage long registrations by making them proportionally much cheaper for users than shorter ones, on the assumption that users who wish to retain domains for themselves will be willing to register for a longer period than those intending to resell.

Because ENS team already announced the 5/160/640 price structure to the whole world, that is the foundation of ENS project, and that is the reason for people who put their money and ETHs into any ENS domains beforehand. At this stage, increasing price in any circumstance during halfway seems unreasonable, because you will be hurting a batch of people anyway.

The true reasonable way from my perspective is that we remain the annual fee for short term(for example within 3 years) register/renew, while we provide discount for long term(3 year+) register/renew so that there will be some incentive/interest to drive users renew longer.

By giving the discount on long term, your direct fee to recieve will be less than before, however, one time collecting whole 4/5/10+ years fees upfront will bring you a lot other opportunies to take advantage of these money’s long term multi-interest, for example, eth staking, or related defi projects yearn farming(low risk ones). That way, users will pay less so more will choose to register for 5+ years, at the meantime your overall income increase as well because you will receive more upfront money and these additional money’s multi interest will at least break even the discount you gave. Afterall ENS is decentralized cool organization, following ethereum and defi trend should be what we are looking for…

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I have to agree with @master here. Rising prices would scare away the average customer in spite of the fact that a lot of considerably premium domains have already been renewed for many years to come (until 2025 and more) by squatters when gas fees were also low. You might not want the system all of a sudden to be… ungraceful to newcomers and those with less money to spend. Be responsible there are competitors out there.

@nhirsch your proposal is good I thought about it too but can easily be bypassed by using different wallets.

Current gas fees already encourage renewing for more than one year and to further incentivize it by discounts on 2, 3, 5 and 10+ years should be the way to go.

You might want to rise base price to $10 though when a low gas price proposal eg. EIP-1559 will be implemented in the hard fork after Berlin. This would also reward early adopters retrospectively.

Prices for 3 and 4 chr length names are flawless though this way.

Wow, it’s only been a day, and everyone who has commented really hates the idea. They are all bringing up the same points as me, and they are warning that this could dame ENS, and help ENS competitors.

  1. This is going to backfire for the average user, imo.
  2. Price increases at the “year 1 and 2” ranges will ONLY hurt normal users. As someone said, “You [would be] scaring more potential users, and lot of existing users will follow the leaving.” This is very true for user perceptions, even if you give users ample notice.
  3. The optics of ENS (or any organization) increasing prices is very bad for ENS, & consumer perception. This will be seen as a betrayal of the ENS promise, and betrayal of the ENS sovereignty.
    –> Unstoppable Domains has actually been warning users about this as “An Attack” on ENS users. Why would you willingly fall into their trap???
  4. Unstoppable Domains (and all ENS competitors) will be very happy if ENS-prices increase, (especially while there promises stay the same; AND “inline” with all other decentralized NFTs);
  5. I think your perspective of “domain buyers/sellers” is grossly misrepresented; and also, will hurt all users of ENS; By treating squatters (as you define) as an enemy, you treat all ENS users as the enemy.
  6. Users are asking for “a token for ENS community”, so their voices can somehow be represented. They want representation, because they do not feel represented, because you make it seem like everyone is the enemy.
  7. ENS/Nick has an open discussion about ENS, but is against anyone who disagrees with him; then says to take it up with the 4/7 keyholders when there is a conflict; Users do not feel that they have a voice, or that opposing viewpoints are being heard. Everyone hates this idea, and Nick hates squatters; devs win because they hold all the keys.
  8. Discounts for longer periods are good, but do not raise costs on users. Regarding your “theory” that “users generally want to retain names for longer than squatters”, this is sometimes true, (for “some normal users” and “some squatters”), most consumers do not do this, (due to financial restraints or habits). Normal people do not have the extra money (for extended years or gas). Anyone who loves their name, AND has the money, will be happy to extend the registration years.
  9. Nick said, “The goal of the proposal is to encourage long registrations by making them proportionally much cheaper for users than shorter ones”
    –> Agreed, but do not raise rent for current users.

Final Thoughts:

  1. “Costs should be set as low as they can be without damaging the usefulness of the system.” Do not raising costs for “1 and 2 year” ENS rents. This will damage ENS, imho.
  2. Re: Users who intend to sell their names AND Users who intend to not sell their names:
    –> Make a decision: Either everyone is your friend, or everyone is your enemy.
  3. As Master said, “Afterall ENS is decentralized cool organization, following ethereum and defi trend should be what we are looking for…”
  4. As vincentkovacs Said, “Be responsible there are competitors out there.”.
    …and ENS users, too.

^ This. I think the community could use a governance token so everybody could decide if they’d rather go on squatting on a thousand more domains or have a say in proposed changes.

It’s a bit of a mistake on @arachnid that he used the example where the start price is 4 times higher. Of course, everyone reacts to it. The intention was to give a discount on longer registration, not to increase the overall price of the rent.

What do you guys think of this?

Screenshot 2021-02-24 at 15.30.20

Basically, 1st and 2nd year is exactly the same as the current and only start getting +50 USD benefit once they register for 16 years.

I will also put the proposal Nick suggested as a comparison.

Screenshot 2021-02-24 at 15.44.48

In this scenario, you get $80 discount at year 8 and I guess that’s why Nick picked $20 as a starting price.
(BTW Nick’s initial proposal gets cheaper than the current plan only at year 32).

I am actually against this exponential discount because it’s harder to comprehend in the human brain.
It may be simpler if we just say `$5 for 1-year registration but $40 for 10 years (which is $10 discount)

Having all said that, given current gas costs nearly $100, I wonder neither discount makes any difference.

First example seems pretty reasonable. The good old x years - y% off formula would be easy to comprehend imo, especially using a drop-down list. It will get much more meaningful once gas fees settle but might as well help users now seeing the $100 costs.