Handshake has a handful of features to address squatting:
- Alexa 100,000 domains are reserved. This removes the most valuable names from the pool.
- Trademark claim process prior to mainnet launch further reduces the number of names that squatters want to buy.
- The 15 day auction process incurs a significant cost for all participants when you consider the time-value of money.
- In combination with 3), masked bids make it harder for squatters to accurately assess their operating costs.
These four features mitigate squatters’ abilities to acquire names, but they do little to address the near-zero marginal cost of owning a name.
If a squatter buys 10,000 Handshake domains, those names are essentially gone from the network forever. From that point forward, you would need to transact with the squatter to acquire those names. Per the group/element median theorem, we would expect that most names are owned by individuals that own a lot of names (i.e. a squatter). Which leads to my question:
How can we increase the marginal cost of domain ownership without economically burdening the average user?
We want the marginal cost to be high for squatters to prevent them from squatting 10,000 names for a very long time. At the same time, we want the marginal cost to be low for the average user so that Handshake is widely accessible.
- Re-open the auction yearly. In order for the incumbent owner to keep their name, they need to win their auction again.
- For the first-time owner of a name, re-open the auction after X months. If they become a two-time owner of that name, re-open it for 2X months. Then 3X, and so on. Make it easier for them to keep their name as time goes on.
- Artificially inflate the incumbent owner’s bids by 10x. If they bid 10 HNS and someone else bids 95 HNS, their virtual bid is treated as 100 HNS and they will win their name, paying 95/10 = 9.5 hns.
Reasoning for each idea:
- Requiring more auctions to renew a name means squatters increase their exposure to market forces, requiring them to pay market-value for the names that they acquired early below-cost.
- Squatters don’t want to hold on to their names forever. They decrease risk by selling. Only people that truly want to use a name will want to hold onto it for many years (i.e. you and your favoriate username).
- This gives us a tunable parameter that controls how much Handshake favors incumbents. This feature reduces the cost for the average user while still exposing squatters to market prices.
I previously asked “how can we [deal with this potential problem]?”, but it’s also worth discussing, is this a problem worth dealing with?
Are there any stupid simple changes to Handshake’s renewal process that noticeably improve its resilience to squatting?
Do you have any other ideas?