BitNames - DNS Auction

[bytemaster]

I have come up for a new take on name registration which I believe is superior to Namecoin and would like to get some feedback on it.   Before I describe my solution I would like to review my design criteria:

1) No artificial rate limits.
2) No price fixing.
3) Minimal carrying costs.
4) Everyone benefits when a new name is registered.
5) Names should be put to the highest economic purpose.
6) Initially 100% of all potential names belong to the network.

Based on those criteria I have identified the following system:

1) When someone wants to register a new name, it goes up for auction to the highest bidder.  
2) After X days with no bids the name is now owned by the highest bidder.
3) Proceeds from new name auctions are split between the miners and BitName (the backing currency) holders.  In effect, you are paid dividends simply for holding BitName in your wallet.
4) Names that are already owned may be transfered or put up for auction.  When they go up for auction again the proceeds go to the prior owner rather than the miner.
5) Once per year everyone must prove they still control the private key or the name is released.

The result of this system is that mining BitName is like getting a share in all unclaimed names.  Names are like real estate and if you want to 'buy' a highly in demand name you will have to outbid everyone else who wants that name.  Those who mine early and often will get additional purchasing power ensuring they are able to buy the names they want in the future.  Those who attempt to 'squat' will end up paying more for the 'good names' and running out of funds.  They would be forgoing dividends once they purchased a name and have to rely on the appreciation of the name they just bought (and paid the highest price for).  In other words, squatting would make no financial sense under this system.

Lastly names like:  Bytemaster31415 would probably be very cheap to acquire as no one would have any profit motive to out bid me.  If they did, I would just change my name to Bytemaster4321 and leave them stuck holding an almost worthless name.

Thoughts?

[snailbrain]

.....

[virtualmaster]

Biding at least for short names could be interesting if the implementation is not to complicated.
However mining Bitnames sounds very confusing.
If there is a biding for .bit names then it should be something understandable otherwise very little people will participate.
As you also stated for longer names it would be just a waste of time to make biding.

[domob]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

[bytemaster]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

It really depends.  There is profit to be made by bidding up names and playing the game of price-is-right.   Of course the names will only be cheap while the currency is cheap, so the question remains which will appreciate more, the names you picked or the currency you gave up to acquire those names.   

Sure, some people may try to squat, they will lose money, and in the end people will learn and squatting will not continue.

[domob]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

It really depends.  There is profit to be made by bidding up names and playing the game of price-is-right.   Of course the names will only be cheap while the currency is cheap, so the question remains which will appreciate more, the names you picked or the currency you gave up to acquire those names.   

Sure, some people may try to squat, they will lose money, and in the end people will learn and squatting will not continue.

I'm not sure whether you understood my concern (probably I did express it badly).  The point is that when you launch your system, only very few people will be involved and those will probably also not have much capital to invest ("risk") in it.  Consequently I think that at the very beginning, even with your theoretical competition for the "real value" of names, you will be able to get names like "apple" or "x" much cheaper than what the market would price them after BitNames is somewhat adopted by more people.  Thus I'm pretty sure that however you implement the auction system, the very best names (like one-letter ones) will always be gone right from the start and will always be given comparatively cheaply to those who are very first adopters.

[bytemaster]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

It really depends.  There is profit to be made by bidding up names and playing the game of price-is-right.   Of course the names will only be cheap while the currency is cheap, so the question remains which will appreciate more, the names you picked or the currency you gave up to acquire those names.   

Sure, some people may try to squat, they will lose money, and in the end people will learn and squatting will not continue.

I'm not sure whether you understood my concern (probably I did express it badly).  The point is that when you launch your system, only very few people will be involved and those will probably also not have much capital to invest ("risk") in it.  Consequently I think that at the very beginning, even with your theoretical competition for the "real value" of names, you will be able to get names like "apple" or "x" much cheaper than what the market would price them after BitNames is somewhat adopted by more people.  Thus I'm pretty sure that however you implement the auction system, the very best names (like one-letter ones) will always be gone right from the start and will always be given comparatively cheaply to those who are very first adopters.

This is why this system is launched last, no names are final for the first X months of the system (all open to bid).
X doesn't need to be too long.

Lastly, I still believe that the currency would appreciate far more than any names you squat on.   Someone might attempt to buy Apple... but with enough publicity and enough time to distribute coins to enough people (through mining) to create a healthy market and no one would be able to buy apple because there would be dozens of people speculating on the value of Apple vs the BitDNS coin... you would probably end up paying a large number of BitDNS shares for the Apple name.   Those BitDNS shares may only be worth $100 at the time you bought the name, but they would represent a large percent of the BitDNS money supply.   If BitDNS market cap reached 1 Billion, then in the end, chances are that you over-paid for Apple.

[TierNolan]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

What about requiring that you pay a percentage of the current market value of the name.

So, once every year, the name is auctioned again.  The current holder has to bid too.

The money from the auction is split between the "tax" and the previous owner.

5% to the network
95% to the previous owner

People submit sealed bids.  To bid 100, you might pay 200 coins into submit bid for "somename" of hash(random number || "bid is 100").  This locks the 200 coins until after the auction is completed, but nobody knows how much you actually bid.

The bids are then checked and the winner pays the amount bid by the 2nd highest.

An auction might be

100 (owner's bid), 80, 50, 10, 2, 1, 1, 1

He only has to pay 80, since that is the 2nd highest bid.

The 80 bid is then split.  The owner gets 76 and then network gets 4.

In effect, the owner only has to pay 4 to keep his domain (5% of market value).

If someone outbids him, then he gets 95% of what they pay (and 5% goes to the network).

If the owner doesn't bid, then his public key is paid 95% of what the winner gets, but the name goes to the next highest user.

If the tax is destroyed coins, then it counts as being paid to all coin holders.  If it is paid to miners, it secures the network.  A compromise might be to split it 50/50.

[Cyberdyne]

I like the idea of trying to prevent "name squatting", but honestly I doubt this would work.  Since also in your system a name can't be "taken away" once it is registered (which I think is a highly desirable property), I think that a lot of good names will be "bought" right at the beginning ... and since then not yet many people are involved it doesn't really matter whether they are given directly to the first one interested or "auctioned off".

What about requiring that you pay a percentage of the current market value of the name.

So, once every year, the name is auctioned again.  The current holder has to bid too.

So, you buy a domain name, spend time and money building up a business on it, and have to be afraid that a competitor will outbid you and take the domain from under your feet at some point.

I'll stick to being afraid of Verisign thanks.

[virtualmaster]

"Names should be put to the highest economic purpose."
I agree.
However registered domains should have a protection also, even if not 100%.
I have proposed something similar.
Registration of a domain name should have a minimal fee but no maximum fee fixed.
You should have the possibility to register a name with 0.02 NMC as actual but you could make it with 500 NMC also for the same name.
The defense rate of the actual possessor of the domain could be 1.000 for example.(this could be discussed)
So if you registered it with 0.02 NMC somebody could contest and take it for 0.02 x 1.000 = 20 NMC
But if you was generous and registered it with 1.000 NMC then it would cost 1.000 x 1.000 = 1 million NMC to take it.
Why this:
- as you stated a potential domain name this way would serve more to a higher economic interest
- some processes which are taking place outside of the network, like paying huge amount to lawyers for trademark issues could be solved inside of the network and would be less harassment from the authorities for the Namecoin network
- the decentralized nature of the domain system would be kept and it would be a better balance between economic interest/domain owner interest

[TierNolan]

So, you buy a domain name, spend time and money building up a business on it, and have to be afraid that a competitor will outbid you and take the domain from under your feet at some point.

You have a 20 to 1 advantage in the auction.  You could make it 100 to 1 by decreasing the "rental" to 1%.

Have it as 2 steps

- auction (owner doesn't participate)
- If the owner doesn't pay 1% of the winner's bid within 60 days, the domain is transferred and the owner gets 99% of the bid (rest goes to support the network)

I don't see any other way to figure out market price without actually attempting to sell the domain.

[Cyberdyne]

So, you buy a domain name, spend time and money building up a business on it, and have to be afraid that a competitor will outbid you and take the domain from under your feet at some point.

You have a 20 to 1 advantage in the auction.  You could make it 100 to 1 by decreasing the "rental" to 1%.

Have it as 2 steps

- auction (owner doesn't participate)
- If the owner doesn't pay 1% of the winner's bid within 60 days, the domain is transferred and the owner gets 99% of the bid (rest goes to support the network)

I don't see any other way to figure out market price without actually attempting to sell the domain.

Ah, I see, I guess that would be reasonable.  Sorry I originally must have TLDR'd (is that a verb?) over your post.

[phelix]

So, you buy a domain name, spend time and money building up a business on it, and have to be afraid that a competitor will outbid you and take the domain from under your feet at some point.

You have a 20 to 1 advantage in the auction.  You could make it 100 to 1 by decreasing the "rental" to 1%.

Have it as 2 steps

- auction (owner doesn't participate)
- If the owner doesn't pay 1% of the winner's bid within 60 days, the domain is transferred and the owner gets 99% of the bid (rest goes to support the network)

I don't see any other way to figure out market price without actually attempting to sell the domain.

We had a similar discussion here (and elsewhere): https://bitcointalk.org/index.php?topic=259349.0

Sending any coins to the miners will probably lead to weird incentives. It might be possible to donate the coins but probably safer to destroy.

[bytemaster]

Interesting ideas guys.   By analogy of viewing the namechain as decentralized, for-profit, business with a monopoly on all names how can it maximize its profits?

Option 1:  Sell of full title to names at auction and collect fees on name transfers.
Option 2:  Lease the names at auction, highest annual commitment wins
Option 3:  Auction 'full title' then charge property tax of X% of purchase price every year to renew.
Option 4:  Auction 'full title' then charge property tax of X% of current value every year.
Option 5:  Some combination of the above, you can either buy or lease

All 5 models would solve squatting, the question is assuming there were 5 different chains which one would be adopted by the market as the most appealing and therefore generate the most money for the decentralized naming business? 

I think the risk of 'losing your name' makes full title appealing.
I think the risk of 'taxes going up' based upon the value I add to the name is unappealing as a buyer.
I think the leasing a name makes a lot more sense if I am not sure which name of a dozen I might want.

Conclusion:  I think the chain should support both leasing and buying with bids to buy winning out of leasing assuming they are some multiple of the lease rate based upon the net-present value of the income stream of the lease. 

Good thinking!

[HeroC]

Sorry if I missed it, but what would the new root be? .bit? .bt2?

[bytemaster]

Sorry if I missed it, but what would the new root be? .bit? .bt2?

Roots?   Where we're going, we don't need roots.  

[snailbrain]

all early adopters will still be squatters?

namecoin isn't about selling premium domains?

[domob]

all early adopters will still be squatters?

namecoin isn't about selling premium domains?

Exactly, that's my problem with this proposal.  I've still not really understood how (if?) it will solve the problem that early adopters always have an advantage and will be able to squat, even if you "auction off" the names at the beginning.

[TierNolan]

Roots?   Where we're going, we don't need roots.  

Would you ban the current official roots at least?

ICANN is adding lots more top level domains, so you increase the chances of a clash. 

At least if the system only uses one TLD, you can argue that others should not use that.

Using .bt2 seems a little derivative though .  Maybe, .bns (for bit name server or just BitNames).

A DNS system that isn't widely accepted is pointless.

If namecoin becomes sufficiently popular, then people might be willing to manually add it and/or large DNS providers might support it.

If your system is incompatible with the main DNS system, then it is much less likely to gain much traction.

You could make it so that registering

my.toplevel.domain

also inherently registers

my.toplevel.domain.<standard TLD>

With sufficient traction, browsers might even swap my.toplevel.domain with my.toplevel.domain.bt2

[snailbrain]

i think should change title from namecoin 2.0 to  domain-auctions

as it is misleading people