.p2p auction parameter discussion

[CLains]

1) Press for the simulation/testing phase. 2) Gameify the simulation/testing phase. 3) Exploits found go ASAP 1 again.

Maybe my intellect is just too limited, but I don't see any other way to figure this stuff out than by being experimental. It is like when you sit inside too long and you go outside and become astonished at how detailed everything is.

[gamey]

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ?

Perhaps we need to agree to disagree.  My feeling is your interpretation of how it plays out is way off base.  I suspect if you experienced this model you'd quickly see it different.  Why are all these "well capitalized opponents" in such a rush to give you all this money and waste their own?  Everyone who has shares is invested in the system and profits from its success.  I don't think there will be all these people running around trying to harass people and renting domains they have no use for and which are of no value to them.  I think the "well capitalized" people will run out of money quickly with that strategy.
If someone offers you more for your domain than it's worth to you, you can take the profit and invest it in your business or use it for your non-profit objectives.  They can follow you around buying from you any domain you use, and you'll collect the profit and they'll end up with a giant pile of domains they paid tons of money for that are worthless.  You'll probably be able to go back and scoop up your original domain for cheap once they're bankrupt and you're newly wealthy.  More likely, wealthy people will be smart enough not to do this to themselves in the first place.

I never suggested an opponent would chase someone around buying every domain.  They'd buy the ones you've invested a lot into.  I just stated what will and can happen in certain situations.  You said it was a relic of the past, but  trademarks and copyrights are not allowed to be forcibly removed from their owner by an unrelated investment of capital.  I think that is a sane policy. 

You are misinterpreting my statement that there will be some entity that does this across the board.  I said everyone won't necessarily be acting on a rational economic basis.  Meaning it will be a case by case basis.

Frankly, it just adds a big unknown into the equation that would keep me from using p2p if I was looking at the p2p features.  People are coming to p2p so they don't have to worry about their domain being removed by some process out of their control. AFAIK thats the main reason.

Assume p2p was adopted widely.  People put a lot of effort into inbound links and SEO etc.  The aging of the domain etc.  There are quite a few domains where value is very transferable.  For someone to be able to come in and bid for all your SEO/inbound link work and take your labor from you doesn't seem like a selling point for p2p, even if the market incentives seem to line up better.  The alternative is you pay twice for your own work.  The inital price and then defending your domain.  It is almost like a tax to me.  I know the business I am working on the domains are actually very important.

I'm not saying that it'll be a problem for most people, but the current DNS system isn't a problem for most people either.  p2p is targeted at people who have a specific need for decentralized domain control.  I would expect the businesses to be the exception to things in general and not fall under a general case.

The whole point of p2p to me is to be uncensored.  You've just removed the largest selling point for me.  Anyway.. I agree about disagreeing.  I do think with the current system there will be a lot of squatting.  Although squatting has lost a lot of value with the proliferation of top level domains.. so.. lots of things to consider.

[Agent86]

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ?

Perhaps we need to agree to disagree.  My feeling is your interpretation of how it plays out is way off base.  I suspect if you experienced this model you'd quickly see it different.  Why are all these "well capitalized opponents" in such a rush to give you all this money and waste their own?  Everyone who has shares is invested in the system and profits from its success.  I don't think there will be all these people running around trying to harass people and renting domains they have no use for and which are of no value to them.  I think the "well capitalized" people will run out of money quickly with that strategy.
If someone offers you more for your domain than it's worth to you, you can take the profit and invest it in your business or use it for your non-profit objectives.  They can follow you around buying from you any domain you use, and you'll collect the profit and they'll end up with a giant pile of domains they paid tons of money for that are worthless.  You'll probably be able to go back and scoop up your original domain for cheap once they're bankrupt and you're newly wealthy.  More likely, wealthy people will be smart enough not to do this to themselves in the first place.

[gamey]

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

I think this thinking is a relic of being used to the current system.  In my proposal there is an incentive to put your roots down early and hold on to a domain you care about long term.  The longer you've held a domain (more established you are), the longer it takes to uproot you, it's more expensive and risky for them to do it, and the more you get paid if you decide to accept an offer to move.   The value of most domains in not transferrable; the real value is in the company and people running the site behind the domain.  It unlikely your domain will be worth more to someone else than it is to you; if someone bids on it they would need a legitimate long term interest that goes beyond putting up a spoof site to be worth it.  You will also have plenty of time to tell your customers that you're moving away from "furniture.com" and moving to "joesfurniture.com" because "furniture.com" got some bids from a national chain while you just have a small local shop.  Customers would understand this and it wouldn't ruin your business.  You don't get to monopolize a generic name like furniture.com in perpetuity just because you happened to win an auction before anyone else had heard of ".p2p".  It's better for everyone if domains can find themselves in the hands of the people that maximize their value in the long run. 

It's also sooo much better than the alternative.  You won't find that every domain you're interested is taken and parked with some place holding site and you have to get ahold of some DB trying to figure out how much it's worth to you and play games.  You'll be able to easily get sites you like for a fair market value.

If someone wins a site with the intent to flip it, they will be out there making sales calls to get it sold because once their lease is up they just lost that money.  People trying to make money from investing in .p2p domains could become our most aggressive sales force trying to promote .p2p so they can sell the domains quick; holding them loses money.

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ? 

[Agent86]

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

I think this thinking is a relic of being used to the current system.  In my proposal there is an incentive to put your roots down early and hold on to a domain you care about long term.  The longer you've held a domain (more established you are), the longer it takes to uproot you, it's more expensive and risky for them to do it, and the more you get paid if you decide to accept an offer to move.   The value of most domains in not transferrable; the real value is in the company and people running the site behind the domain.  It unlikely your domain will be worth more to someone else than it is to you; if someone bids on it they would need a legitimate long term interest that goes beyond putting up a spoof site to be worth it.  You will also have plenty of time to tell your customers that you're moving away from "furniture.com" and moving to "joesfurniture.com" because "furniture.com" got some bids from a national chain while you just have a small local shop.  Customers would understand this and it wouldn't ruin your business.  You don't get to monopolize a generic name like furniture.com in perpetuity just because you happened to win an auction before anyone else had heard of ".p2p".  It's better for everyone if domains can find themselves in the hands of the people that maximize their value in the long run. 

It's also sooo much better than the alternative.  You won't find that every domain you're interested is taken and parked with some place holding site and you have to get ahold of some DB trying to figure out how much it's worth to you and play games.  You'll be able to easily get sites you like for a fair market value.

If someone wins a site with the intent to flip it, they will be out there making sales calls to get it sold because once their lease is up they just lost that money.  People trying to make money from investing in .p2p domains could become our most aggressive sales force trying to promote .p2p so they can sell the domains quick; holding them loses money.

[mf-tzo]

I think that when biding for a domain ti should be for at least 3 years lease maybe more... There should be some simplicity for the first 5 of years and real benefits to early adopters..

I also think that squatting existing names is not a bad thing. The known names are the ones that will create most value in the auctions and it is fair for everyone to bet on those names with the possibility to sell it to their rightful owner in the future realising profits. If I bid and get for example Mercedez and make a site with Mercedez cars crashing and Mercedez finds out (probably I will let them know) they will want to buy that domain. This  will make profits for me (not very ethical), profits for the DAC (not very ethical), big companies will be forced to learn about .p2p and use it (not very ethical but we will achieve our purpose)

Any thoughts on my unethical tactics?

[gamey]

I don't understand how your incentives stop squatting; you're still letting people buy a domain and then renew it indefinitely for a transaction fee.

The way I would do it: the domains are owned by the DAC, we rent/lease them for use.

People can bid on a 1 year lease.  You don't have to do this complicated stuff where half the difference goes to the DAC etc.  You just have an auction for a 1 year lease and whoever wins pays the DAC up front for 1 year.  They can extend the lease at the same rate whenever they like to keep the lease expiration date up to one year into the future.

If someone else has their eye on the domain, they can put in a bid with an upfront payment for a 1 year lease at a higher rate.  At that point, the current owner has options.  They can sublease the domain to the higher bidder and collect the difference until the date that their lease is up.  Or they can continue to extend their lease at a rate that matches the higher offer.  If they ignore the bid then they can no longer extend their lease at their old rate and the new bidder takes over when their lease expires.

I would also say people who have held domains for a long time have the option to extend their lease further into the future (up to the length of time they've held the domain)  So if you've rented it for 3 years you can prepay your lease for 3 years into the future so you know you won't be priced out of your domain without lots of warning.  Even if they prepay for 3 years they have to complete at least 1 transaction per year like everyone else to verify they haven't lost their key.

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

[Agent86]

Looking at my prior proposal with respect to your goals:

High level goals:
1) Make it more profitable to hold shares than names

Done

2) Make it profitable to participate in price discovery

No need to pay people to "participate in price discovery"  with my proposal price discovery happens on its own from people getting domains that they have a real interest in using.

3) Make it profitable to bid high early

If no one else wants the domain or has expressed interest, I should be able to get it very cheap regardless of how much I personally like it,  I shouldn't have to bid unnecessarily high.

the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.
...Lease rate remains fixed until name is re-auctioned

Are you saying that once someone leases a domain they can continue to lease it at that rate for as long as they like?

Names remain available from the squatters who always have the names for sale. 

What makes you sure that the squatters will "always have the names for sale"?  I think my proposal ensures this much better and basically makes squatting a complete waste of time in the first place.

Lastly, allow someone to exit their lease early and recover the balance of their term.  Otherwise squatters have no incentive to give up a name prior to the end of their lease.   

If people can just "exit their lease early and recover balance" then they can bid on whatever auction they want and if they "accidentally win" they can just "exit early" with no loss.  Am I missing something?
I feel like you are redefining lease if there is no commitment.

My proposal already offers a big incentive to give up the name prior to the end of lease:  Giving it up quickly is the only way to profit from the sublease.  If they wait till their lease is up, they get no profit.

As far as bidding rules go you want to achieve the following:

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

2) because there is no way to tell the difference between this "fake initial bid" and a legitimate bid the best we can do to prevent this kind of attack is to make all bids costly.   If you get outbid then you only get 95% of your bid back.  This will encourage individuals to bid the winning bid first, rather than risk being outbid.

I think my proposal does away with the need for this complexity

[toast]

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

The goal is that people *only* bid the max price they are willing from the start, the only people it causes to lose money are people who don't want the name but bid on it anyway hoping to profit. That is fine, they are who pay the people who get genuinely outbid.

[toast]

Based upon the value proposition of squatting, it becomes clear that PricePaid * Holding Period becomes the biggest deterrent to squatters.   We must also factor in that if the DAC is successful the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.

1) Bid on lease rate
2) Lease rate remains fixed until name is re-auctioned
3) Lease payments go to shareholders
4) You can transfer your lease, but not change the rate.

We don't have BitUSD on this chain so this is simply not feasible. These shares could grow in value 10x.

This also goes against the philosophy of actually being able to own your name.. I completely disagree with the idea of domains being "the commons" and I am surprised BM made this reversal as well.

Not sold on it, at all. The existing mechanism accomplishes all three high level goals as well.

[bytemaster]

High level goals:

1) Make it more profitable to hold shares than names
2) Make it profitable to participate in price discovery
3) Make it profitable to bid high early

Philosophy:
1) Price fixing results in scarcity or over abundance
2) Price fixing below market value results in all names being bought up by squatters who keep the profit potential between the market price and the fixed price.
3) There is nothing wrong with squatting in the absence of price fixing, from the perspective of a DAC the squatters are taking on the risk and the DAC keeps guaranteed profits. 
4) DACs should attempt to maximize profits     

Look at value proposition of squatting on a name:
1)  Resale Price * Probability of Resale - Price Paid - Holding Period * maintenance fees ==> some rate of return.
         - factor in the 'birthday paradox' of holding 1000's of names with a 1:1000 chance of getting 1000x return.
2) Make the rate of return on shares greater than the rate of return on squatting
         - require maintenance fees that make holding a large number of names expensive
         - make the maintenance fees proportional

Solution:
Based upon the value proposition of squatting, it becomes clear that PricePaid * Holding Period becomes the biggest deterrent to squatters.   We must also factor in that if the DAC is successful the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.

1) Bid on lease rate
2) Lease rate remains fixed until name is re-auctioned
3) Lease payments go to shareholders
4) You can transfer your lease, but not change the rate.

Conclusion:
1) squatting on names early on is a good way to lock in a high lease rate if the system ever becomes popular
2) DAC share holders retain a revenue stream rather than a one-time lump payment
3) squatting on many names becomes costly

Once this basic system is in place then squatters are no longer an issue.  They will be competing with each other for the right to lease names at the highest price possible and thus the network constantly gets the best stream.  Names remain available from the squatters who always have the names for sale. 

We should not aim to make all sails from the chain, but instead aim for proper price discovery that maximizes value for shareholders.   

Lastly, allow someone to exit their lease early and recover the balance of their term.  Otherwise squatters have no incentive to give up a name prior to the end of their lease.   

As far as bidding rules go you want to achieve the following:

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

2) because there is no way to tell the difference between this "fake initial bid" and a legitimate bid the best we can do to prevent this kind of attack is to make all bids costly.   If you get outbid then you only get 95% of your bid back.  This will encourage individuals to bid the winning bid first, rather than risk being outbid.

I recognize this is a significant change from earlier designs, but I think it addresses some major issues.

[Agent86]

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

Yes, it's probably a good idea to regulate the flow of auctions to some extent, especially early on. This would help prevent the problem whereby quality names fall through the cracks, are scooped up for dirt cheap, and then squatted on. After all, people are boundedly rational, and they have limited attention and search capabilities.

Or you could just do it the way I've suggested and all these problems are eliminated.  AmatoB what are your thoughts on my proposal?  Are there downsides that you have in mind?

[amatoB]

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

Yes, it's probably a good idea to regulate the flow of auctions to some extent, especially early on. This would help prevent the problem whereby quality names fall through the cracks, are scooped up for dirt cheap, and then squatted on. After all, people are boundedly rational, and they have limited attention and search capabilities.

[toast]

You're missing the fact that you can sell the names off-chain for any price. Since that is possible you mught as well let them do it on-chain for the chance of getting at least something for the network.

Sent from my SCH-I535 using Tapatalk

Is this true? There's really no way to prevent or deter off-chain sales?Then why would a holder ever sell on-chain and give up a fraction of profit to shareholders? Why not run a private off-chain sale or auction and capture all of the rents?

He doesn't give up a fraction, he always gets *at least* what he put it up for. But this way he also has a chance that others will bid more than he intended and he will get *even more*, and also the network could get some too.

He could run an off-chain auction if it will be as visible as it is on the built in market.

The only way to deter off-chain sales is to make domains non-transferrable. So you can't do anything if your keys are compromised or need to transfer ownership. Well actually you could still transfer ownership but not in a way where the new owner would know it is safe.

[amatoB]

You're missing the fact that you can sell the names off-chain for any price. Since that is possible you mught as well let them do it on-chain for the chance of getting at least something for the network.

Sent from my SCH-I535 using Tapatalk

Is this true? There's really no way to prevent or deter off-chain sales?Then why would a holder ever sell on-chain and give up a fraction of profit to shareholders? Why not run a private off-chain sale or auction and capture all of the rents?