Analysis
The market for domain trading is a very illiquid market with high barriers:
- The pricing is not transparent.
- High referral fees are due (platform fees/escrow)
- Domains are offered which are not available at all.
- Domains are offered for sale, but the seller is difficult or impossible to reach.
- The purchase has to be handled through a trustee and the domain transfer is relatively simple, but difficult for laymen to manage.
- Since sometimes considerable sums are involved and the selling parties do not know each other, there is a high risk of fraud.
- Purchases are often international and therefore a legal protection is difficult / expensive / complex.
Solution
The goal is a trading platform where domains are sold at fixed prices and as soon as a payment is received via the Smart Contract, the domain transfer can be initiated without the seller's intervention. The Smart-Contract keeps the purchase amount in escrow until the buyer has completed the domain transfer. The buyer himself must pay the purchase amount plus a deposit. The deposit will be returned to the buyer after completion of the domain transfer and the purchase via the platform.
If the buyer does not lodge an objection after a time limit, the seller receives his money back and the buyer his deposit. If the buyer confirms the completion of the purchase and does not carry out the transfer, his deposit expires and he gets his purchase amount back.
Challenges
- The domain transfer must be confirmed by a DNS entry after completion. It must be possible to read the DNS entry unambiguously into the Smart Contract using an oracle. This interface must be fraud-proof.
- The transfer (Unlock/Transfercode/AK/DNS entry) must still be handled by the buyer - but could be done against a fee from outside.
- The market may not be interested in price transparency.
- Even stolen domains can be sold this way.
- Expansion: Domain auctions are also well feasible via Smart Contracts