A lot of domains have been auctioned off for Ethereum Naming System (ENS), including most famous brands, companies as well as generic words, some of them for hundreds and thousands of ETH. That money is locked in smart contracts for a minimum of 1 year. So far only domains of 7 characters of longer have been offered. The ownership of a certain domain is assured by the winning deed (in an auction) , which is owned by 1 wallet (of the winner). There is a secondary market already operating where people can sell the domains. There have been also rumours (or maybe it also already exists) about the solution to get a loan with contract on ENS serving as collateral.
What I am interested to propose is as follows:
Someone owns a domain, of say facebook.eth or similar (which has 500 ETH locked in it), but speculatively the public believes that Facebook may pay equivalent to 1’200 ETH for this contract, thus increasing its value to 1’000 ETH (500 ETH in underlying assets locked in contract + 700 ETH speculative value -200 ETH for future discount); then imagine the owner of the winning deed for facebook.eth (and thus manager / owner of this domain), decides to tokenise the contract/deed itself, splitting it into say 1000 tokens, each worth 1 ETH (each of the tokens claims 0.1% of the value of the winning deed, thus at the very least it should be worth 0.1% of ether locked up there, but possibly worth more if the speculators / markets believe the company will pay more); then these tokens are actually traded on some sort of ERC20 compatible exchange platform, where people can buy and sell these tokens based on the expectation of the money that a certain company would be ready to pay to buy off the domain in question.
I guess that the actual management of the contract is in the hands of the owner, but claim to winnings is distributed between all the tokens attached to the winning deed. So for example if wallet A owns deed to Domain D, and actual company D pays 1200 ETH (for 500 ETH locked + 700 ETH of extra value the company D has in it); the actual distribution of winnings equals to 1.2 ETH per token (whereas initially a token may have been traded at say 0.75ETH or 1ETH or similar; thus the holder of the token can grow their ETH invested by 20-40% in this case).
In other cases, there may be a multibillion dollar company, whose domain was bought for mere 5-10 ETH, but the company offers to pay out 1000 ETH, then distribution to token-holders will be orders of magnitude higher than the underlying assets value locked in contract.
Maybe there could actually be a small DAO for every such ENS domain, the DAO would have ownership of the domain, and companies buying domains would deposit money into the DAO, which would release the ownership of domain to the buyer, whereas all shareholders of the DAO can then cash out their ETH with profits based on the ownership of shares in the DAO. The shares could also have possibly voting rights to approve or reject the offer to sell the domain from DAO to the bidding company for the amount offered by the company.
What potential benefit/value this could bring: Imagine I have a contract for somecompany.eth, for which i locked up 50 ether; then a few months later, somecompany offers 250 ether for the domain. By that time, I have split my domain claim into 100 shares; 3 investors in total bought 49 out of 100 shares: 20, 19 and 10 shares; I keep 51 share; –> in order to approve transfer of domain from myself to Company, money has to go into DAO account, to which share-owners have access; 250 ether is paid in to the account, which only token holders can have access to; if I have 51 shares out of 100, I can withdraw a maximum of 127.5 ETH from the account; the rest has to be claimed by other tokenholders; in the end, I originally invested 50 ether; then I tokenised the contract into 100 tokens and sold them for 1 ether each (thus the value of token is 50% underlying assets and 50% speculation of future higher offer from company); by selling 49 shares for 1 ether each, I get 49 ether; later on when the domain is sold for 250 ether, I get another 127.5 ether (thus my total return is 176.5 ether on 50 ether originally invested; additionally the guy who owns 10 shares for which he originally paid 10 ether, can now get 10% of 250 ether, which gives him 25 ether, on his original investment of 10 ether) –> I am happy because i recovered nearly all of my original 50 ether invested (49 ether) before getting an offer from company; the rest of the money received is pure profit; investors are happy because they have increased the amount of ether from a bigger offer from company. Traders can also be happy because now they can also have another asset class to trade
There may be also some possibilities to sell shares back to the DAO itself, allowing the DAO to later on resell the share to someone else at a higher price.
Some possible issues:
- The owner may wish to simply sell their domain and use the shares to do it (short term)
- The share-holders wish to hold out to get a good offer for their investment
- The majority shareholder’s interests may not be aligned with minority shareholders
I am wondering: 1) Is there an interesting case here? (trading tokens representing a share of the deed for a domain) 2) Is it possible/feasible to code this correctly? This needs to be governed by a solid smart contract 3) Is this very different from a classical exchange platform? (in the end the processes are the same, only initial linking of deeds to tokens are an extra task) 4) There is obviously the element that many of those domains are kind of squatted; this would be illegal in .com domain, as letter from the court could be sent to owner of domain; with ethereum domains, obviously you don’t know who the owner is and where they live, so cannot send such an order 5) This could be a possibility for people to monetise on the domains they bought before they actually start being used in practice ( currently 150’000+ ETH locked in such contracts).