P-013 DRAFT: Changing Tezos Domains Pricing Structure

[Primate]

Voting period:

14 days

Categories:

Social Proposal

Request for Action

Constitution Amendment

Abstract:

This proposal aims to establish consensus on the subject of changing the pricing structure of Tezos Domains.

It further outlines the plan for further changes via future proposals that:

• Change the price structure of Tezos Domains
• Establish month-long sale window

This proposal is meant to dovetail with P-014, which opens up registration of 1 character (1D) and 2 character (2D) names. This proposal is not required to pass for P-014 to proceed.

Rationale:

Community feedback has expressed that renewing 3D and 4D names is too costly during the current market conditions, where the XTZ token price is not high (sub $1). Considering that some parts of the current price structure is not working for the community, we have to also think about the cost of domains during a potentially high performing XTZ token. If that condition should ever come, we will also probably observe that the cost of 3D and 4D names is also not attractive.

The solution is to change the price of 3D/4D names (currently 100/25 tez) by lowering them and by doubling the price of 5D names (currently 1 tez). 5D+ names have always been the main income source of the project.

The change of the pricing structure should also dovetail with the release of the 1D/2D names, as proposed in P-014. This will ensure that more people engage with the project, boosting DAU metrics, due to a succession of project releases and changes with vested user interest.

Once this proposal passes, a further proposal will be presented which will have the top 2 or top 3 most popular price structure proposed changes, to make effective going forward.

Details:

The TzC.tez delegate working on this proposal suggests the following permanent price structure for consideration by the Tezos Domains community:

Suggested Price Structure

• 1 Character: 1000 tez (if P-014 passes)
• 2 Characters: 500 tez (if P-014 passes)
• 3 Characters: 50 tez
• 4 Characters: 10 tez
• 5 Characters+: 3 tez

This structure ensures that 5D+ names can’t be hoarded as easily as before, while still providing an affordable option for all regular users who have and use 1-5 names.

This structure also ensures that 3D and 4D (and 1D/2D if P-014 passes) names are more affordable to register and to renew. The better affordability will allow domain name sellers on the secondary market to perform more activity

Price Structure Future Proofing

The Dev team would like to reserve the right to change the suggested price structure above, if approved, to follow the current XTZ/USD exchange rate. In other words, currently 1 XTZ = ~0.7 USD; the USD cost of the domains would be as follows:

• 1 Character: 700 USD
• 2 Characters: 350 USD
• 3 Characters: 35 USD
• 4 Characters: 7 USD
• 5 Characters+: ~1.5 USD

In the event that the price of XTZ goes up by at least 200% and holds that level for a few months, the Dev team will put out an announcement across all mediums that the Tezos Domains price structure will be changed in accordance with the formula above in 30 days time. If there is any substantial dissent to this change at the time, all delegates reserve the right to put in a 7 day proposal designed to block the change via simple majority (assuming quorum is met).

Example

The price of XTZ goes up to 3 USD in a relatively short amount of time, around 2-3 months, and holds steady for 3 months. The Dev team puts out the announcement that the Price Structure will be changed in accordance to the formula, 30 days from the time of the announcement. The announcement will make sure to seek feedback from the community and instruct delegates on how to block the change.

The price structure is changed to:

• 1 Character: 333 tez
• 2 Characters: 167 tez
• 3 Characters: 17 tez
• 4 Characters: 3 tez
• 5 Characters+: 1 tez

The price structure for each type of domain will either be rounded up or down to the nearest whole number.

Desirable Domains

Here’s a summary of how many domains that are desired can be purchased of each length:

1-Letter Domains

• Letters: 26 (A to Z)
• Numbers: 10 (0 to 9)
• Total: 36

2-Letter Domains

• Scrabble Words: 107
• Nicknames/Handles: ~20
• Total: ~127

3-Letter Domains

• Scrabble Words: ~1,065
• Actual Names: ~100
• Nicknames/Handles: ~300
• Special Numbers: ~15
• Total: ~1,480

4-Letter Domains

• Scrabble Words: ~3,985
• Actual Names: ~500
• Nicknames/Handles: ~1,000
• Special Numbers: ~30
• Total: ~5,515

5-Letter Domains

• Scrabble Words: ~8,996
• Actual Names: ~1,500
• Nicknames/Handles: ~2,000
• Special Numbers: ~50
• Total: ~12,546

6-Letter Domains

• Scrabble Words: ~15,000
• Actual Names: ~3,000
• Nicknames/Handles: ~4,000
• Special Numbers: ~100
• Total: ~22,100

7-Letter Domains

• Scrabble Words: ~25,000
• Actual Names: ~5,000
• Nicknames/Handles: ~6,000
• Special Numbers: ~200
• Total: ~36,200

8-Letter Domains

• Scrabble Words: ~40,000
• Actual Names: ~8,000
• Nicknames/Handles: ~10,000
• Special Numbers: ~300
• Total: ~58,300

Projected DAO Income

If half of all the desirable names of just 1D/2D/3D/4D length sell out, that will give the DAO a yearly income of ~114,000 tez. The rest of the DAO income will come from 5D+ names, which currently represents around 50% of the overall income.

Current DAO Income

Shown below is the Tezos Domains quarterly income for all years based on domain length.

Current Project Costs

To keep the project running and to maintain all the software, including middleware, in lockstep with Tezos protocol upgrades (3X year), a professional team of developers and server operators is needed. Maintaining dozens of servers with various housekeeping needs across Mainnet and Ghostnet requires time and vigilance from the Dev team.

Common sense infrastructure optimizations and operational cuts will be made where possible over the coming months to ensure the long term viability of the project.

The operation of the Tezos Domains service has been uninterrupted for years, so the goal is to cut where possible but ensure that the quality and stability of the Dapp is preserved.

Specification:

Confirm commitment by DAO vote for the plan to change the price structure in some way.

[Kevin]

We should hold off on this. There’s no reason to do this all in one proposal — and doing so would prevent us from measuring the success/failure of it because we’d have no control group, whilst having a a dozen variables changed all at once.

In particular becuase we’re talking about PRICE. Elasticity of price is such a sensitive science, that we need to be very careful and measured about it. It can’t be done all at once.

The only value of this is that it could [potentially] bring in more money short term.

1. There are better/other ways of bringing in more money short term without doing this proposal
2. This proposal if implemented would alienate past registrees that paid more, and deter future registrations out of anticipation of future changes.
3. Diminish the brand as desperate for cash and not

Yes we need more money coming in to cover expenses, spending slightly more time doing some small controlled measured burns, can help us do that while avoiding what will hurt is in the mid-run and long-run.

A better way is to start by doing a single auction for a 1 character domain (e.g. a.tez) and let the result of that auction:

1. inform our ability to set a standard registration/renewal price (if that’s the route to go). and all other pricing to some degree
2. Inform whether we should then move on to auction b.tez or release the rest of the single letters all at once.
3. Inform us to whether this is the optimal route to cover our expenses without radically shaking the market-wide pricing structure
4. Maintain and even improve the eliteness of Tezos Domains as something special that will continue to rise in value.

Let’s please not do this (draft-13) at all, and let’s please move on to just doing a single hyped up auction for a.tez as that could solve everything. And if not, then we can always go back to this. But if we do draft-14 first, there’s a huge danger that we’re going to screw up our ability to correct from our mistake.

[Snorlax.tez]

Thanks for the feedback.

Doing 1 auction for a.tez will not solve anything.

The proof is in the stats, the project is bleeding reg/renewals due to lack of activity on Tezos & cost per domain, even when there was alot of people interacting with Tezos 3 characters were still too expensive for the common folk to buy or renew.

You say that this is only a short-term solution, but if anything, this helps users in the future when/if XTZ increases in value & would give the Core Team enough funds to shift to a solid USD value per domain rather than relying on XTZ price, which in my opinion would be better for everyone and the project as a whole.

[Kevin]

I think you’re missing both why I am suggesting this, as well as the context of what this “1 auction” means.

1. First of all focusing and marketing 1 auction can and will bring a value to it that it wouldn’t achieve if released along with 35 other characters
2. Whatever number it lands on for sale, will inform us and the market as to how valuable these 1 character domains on Tezos Domains are — at which point they’ll align budgets with expectations
3. It is possible that this sale will do so well, that we may opt to then continue auctions one-at-a-time in this manner so to maximize returns, or release the rest of th 1Ds all at once — whichever will produce more revenue. But we won’t know that until we run this experiment.

Secondly, although I agree with your assessment of the data showing a reduction in registrations, I do not agree with your assessment as to what you are suggesting are the exclusive cause of this occurrence (e.g. lack of activity, too expensive)—those are assumptions and should not be our operating assumption. Let alone I certainly do not believe that this course of action you’re suggestion is a remedy for the occurrence nor even as a remedy to your purported causes.

No I did not say this is a ‘short term solution’ nor did I say that is ‘only a short term solution’ That is a complete misconstrument of my words and suggestions. I suggest reading my posts far more carefully.

[Snorlax.tez]

You wouldn’t be able to correlate value off 1 name vs 35 others, someone may pay more for K.tez than Y.tez due to each letter will hold more of a value to other people. Such as those with K as their initial etc. Same with numbers, it will all depend on who wants what and how much they’re willing to put down to secure that name. Given the current ecosystem as mentioned before giving a value to something current vs when its popular isnt realistic.

Whilst you are correct not saying ‘short term solution’ you was indicating this given the choice of words when saying that the only value of this is that it could potentially bring in more money short-term and speaking about solving everything with single worded auctions.

I get what you’re hinting at, its something the team have thought about doing however me personally, I think its unrealistic & pretty much putting the project on more of a string of hope rather than structure. Auctioning off all desirable words is 1, unfair on everyone without a fat wallet and 2, given the current Ecosystem for Tezos, I doubt 35 characters would solve the issues that the project is trying to tackle in a fair way. The current proposals (in my opinion) are the best options to go with without magicking up the funds needed for future development and to stay above water for another year.

You haven’t really given any realistic objections to why this proposal is a bad idea and a mistake other than the fact people paid more… 3-4 future registrations would be cheaper so if anything its less to upkeep & in terms of being desperate for cash isn’t really true

Have you got any other suggestions to increase revenue so that the project can operate on bare-bones after 2025? The naming service popularity is heavily reliant on Tezos as a whole, if Tezos can’t get traction, the domains wont. Even if this doesn’t work out the way its planned, you can’t really say it was a mistake when all the team is doing is trying to keep it going, there is no real right or wrong way of doing this imo, pricing is a popular change from the active community prior to these proposals.