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07 May 2018
For anyone that has never heard about NNS before, you are at the right place to get all you need to know about this domain name service system. It is an open source, decentralised domain name service system that can be seen at the ending of “.neo” domain. NNS is also a domain name service system that is powered by the NEO blockchain.
What you might not know about domain name is that it is actually an exquisite and rare resource. When a domain name service system is being designed the number one thing that should be considered is how to optimise the domain name value. The erroneous impression expressed by most people is that the value of a domain name is judged by its price.
The belief is that the greater the domain name price, the better the domain should be. The determination of the value of a domain name and the decision to use that domain should follow a logical process. The economic model of the domain name service system has some salient issues that need addressing. The number one issue on ground is the problem of realising the breakeven point of the service. Which involves the realisation of both the initial domain name registration as well as the distribution of the domain names.
There are two methods of registration of blockchain domain names. On one hand you have a ENS auction where bids for domain names are entertained. The bids are placed in a sealed envelope after the sealed bidding registration. The second method of registration of blockchain domain names is basically done on a first-come, first-served basis. One typical example of the use of this type of method is Bitshares.
The primary method of DNS domain registration is the First-come, First-served method. In this method of domain name registration service, the providers of the service will fix different prices for the available domain names. This method of domain name registration offers simplistic pricing because blockchain is a decentralised platform. The registration can either be free or the providers can charge a universal registration fee.
The First-come, First-served domain name registration method is easy to implement. However, there are no multi-participation and market pricing procedure in place during the initial distribution. As a result the value of the domain name is ultimately uncovered in the secondary market.
The First-come, First-served blockchain domain name registration process is ideal in a handful of use cases. In a situation where the blockchain domain name demand is on the high side – the First-come, First-served method will not reflect the rise in demand and as a result it will not optimise the true value of the domain names.
ENS is an Ethereum domain name service system that makes use of a sealed auction registration procedure. This method is characterised by open bidding, bid placement, revealing of bids and the winning of revealed bids. The ENS domain name process may take seven days to accomplish with the most vital aspects of the bidding being the placement of bids and the revealing of bids.
The seal bidding process is achieved when the bid of users comprise of the real bid and the confusion money. The real bid of users is not revealed to other bidders to avoid the unfair advantage of later bids. During the bid revealing period of the sealed bidding process users dan reveal their real bid by sending their stored ciphertext to the smart contract. The winner of the bid will be determined at the end of the bid revealing stage.
Information leaks are still possible in the sealed bidding process since the actual bids cannot be greater than the total price. Secondly, users are more likely to have bad experiences during this bidding process. They have to save their ciphertext and reveal their bids during the bid revealing stage and this is done within a specific period. The strictness of this process results in a higher loss of bid funds due to disqualifications. ENS offers poor user experience and bids are not entirely sealed during the bidding process. NNS domain name registration mechanism seems set to provide a much better auction process by resolving these key issues.
NNS will make use of a transparent bidding process rather than the sealed bidding adopted by the ENS registration mechanism. One major advantage of this transparent domain name registration mechanism is that there is a lesser chance of user disqualifications as storage of the ciphertext is not necessary. There is also no bid revealing duration. Once the bidding has ended the results are revealed instantaneously.
However, transparent bidding has its own issues and one major one is the disadvantage of early bidding. Where some users can be manipulated by being offered financial incentives for out bidding other users during the closing period of the auction. As the bidding duration is fixed, users would decide to make last minute bids in order to have a better chance of a successful bid. NNS solves this issue by providing randomness at the closing period of the auction.
NNS domain name registration mechanism comprises of two stages. The first stage is the fixed period which is basically a defined number of days. Bids made within the fixed period are considered as valid. Where bids are made on the last day of the defined fixed period, an extra two-day randomised duration will be given. Alternatively the auction comes to an end on the fixed period. However, if the random period is in place the auction can come to and end at anytime. The random auction ending is done to deter users from making late bids.
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