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  • Writer's pictureColibri

AZERO Domains AMA - The Future of Web Addresses

Get ready for the future of domains with insights from the AZERO Domains.

1. Can you kindly give us a little brief about yourself and AZERO Domains?

AZERO Domains is the official domain service for the Aleph Zero ecosystem and the first name service built in ink! 4.0 for the future of WASM-based Smart Contracts. We believe that on-chain domains can tremendously improve the user experience in web3. Instead of struggling with non-intuitive alphanumerical wallet addresses, users can use human-readable domains, such as alice.azero, to send and receive assets. Additionally, a domain allows you to create your own recognizable on-chain identity, enabling many interesting use cases in the areas of on-chain governance, social networks, and communication.

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2. Given the landscape where numerous L1s are coming up, why did you decide to build on AZERO?

There are many reasons why we chose to work with the Aleph Zero team. First, we have been following their project since early 2021 and were impressed by their technical vision. They have identified key challenges facing DLTs today and have a clear and pragmatic plan to address them, including on-chain privacy. We are currently exploring different ways to enable privacy-preserving domains, and most of these can only be achieved with privacy incorporated in the base layer. This will enable us to provide a unique product that can solve various problems users face when interacting with other on-chain domain services.

In addition, the low latency of Aleph Zero enables a web3-like user experience on the application layer and makes it easier to onboard new users. Another significant advantage of building on Aleph Zero is the extensive support that ecosystem projects receive from the Aleph Zero foundation. This support ranges from R&D and design to legal and security considerations. Soon, the Aleph Zero foundation will launch an ecosystem accelerator program that includes a grant & ecosystem fund to provide even better support for new projects building on Aleph Zero.

3. What is the main problem that AZNS is trying to solve?

The main problem is user experience (UX). Alphanumeric wallet addresses are cumbersome to use and make blockchain interactions error-prone. Users have to check their addresses multiple times before making a transaction. In addition, sophisticated phishing attacks are on the rise. The Metamask team recently warned users of "Address poisoning," a process in which scammers use vanity generators to create similar-looking addresses and then send a zero-value transaction to a user, poisoning the transaction history and increasing the likelihood that users will copy/paste the wrong address from the transaction history when making a new transaction.

Furthermore, we are working on solving the problem of domains exposing your entire on-chain activities. Once someone has created a brand around their name, they currently have to use several unlinked wallets to hide on-chain activities that are not meant to be publicly connected to the on-chain brand via the domain. We will leverage Aleph Zero's Liminal to obfuscate the connection between the address and domain

4. Congratulations on setting up a validator, its success and your effort to achieve decentralise AZERO network-congratulations especially on achieving TVS to >3 million which is not an easy feat, all the nominators would get a whitelist for a 5+ character domain to register, is there going to be any incentive for the nominators after the mint?

Thank you! We are very happy that more than 4.1 Mio in AZERO is staked with our validator. We believe that the combination of industrial-grade security together with our partner Swiss Staking AG and the direct support for ecosystem builders is really attractive for many nominators. When it comes to rewards after the launch of our project, we have several ideas to ensure that nominators who are supporting us will receive interesting rewards. But we also believe that the main argument to choose a specific validator should be its performance in the network.

5. Did the team raise any funds via seed or private sales? Are you planning to do any and if so how much are you planning to raise? Can you shed some light on tokenomics for AZNS?

We were the first project to receive a larger monetary grant for developing a production-ready application for the Aleph Zero mainnet. This was after we successfully attended the ETHWarsaw hackathon, where the idea and development of the project kicked off. Regarding long-term funding, we are exploring different ways to ensure the continued development of AZERO Domains is secured and that we have the resources to deliver our vision.

6. How do you plan on making AZNS decentralised? Is there a DAO mechanism in the roadmap?

From the outset, we recognized the importance of community governance for a core primitive like an on-chain name and identity service. The community is the primary driver of value creation for the project, based on shared social consensus to support the name service. Therefore, transitioning to decentralized governance with efficient DAO structures is a goal on our roadmap, and we will gradually work towards achieving it. Our team has prior experience with DAOs and their design in the Ethereum ecosystem, and we aim to promote the value of decentralization in the Aleph Zero ecosystem as well.

7. Could you tell us about the registration process for domains? Is the pricing going to be based on the number of characters and the duration of ownership?

We are currently working on innovative ideas for domain pricing. Upon launch, users will be able to register 5+ character domains at a fixed base fee, which will be in a similar price range as other domain services like ENS (between $5-$10). However, we will later introduce a demand-based pricing mechanism for renewal fees to prevent heavy domain squatting. This will result in an increased renewal fee for domains that attract high demand. To provide domain owners with strong ownership guarantees, it will be up to the user to either register a domain for one year at the base fee and then pay the demand-based pricing fee for the second year, or register the domain directly for up to three years and pay a premium for the additional years on top of the base fee upfront.

Rare domains, such as 3- and 4-character domains, will be sold via an auction mechanism that we aim to release together with our own native domain marketplace sometime after the initial launch.

8. Assuming that I minted a .azero domain, apart from the mint, am I contributing any value to the ecosystem?

The more users in the Aleph Zero ecosystem make use of domains, the easier the overall ecosystem experience will be. Additionally, the domains themselves are only the starting point for our broader product strategy. We plan to expand into the field of private identity and explore different use cases enabled by this powerful identity primitive. We hope that external developers and projects will make use of this technology and integrate it into their products to further advance the ecosystem.

9. What is the first short-term goal (once gone live) and long-term vision for AZNS and what would your solution or strategy be to scale it beyond crypto and have real-world adoption?

Our short-term goal is to achieve a high level of adoption within the Aleph Zero ecosystem. To this end, we are in contact with all ecosystem projects to promote integrations and partnerships. We believe that this will significantly improve the user experience on Aleph Zero. In the mid-term, we aim to release the very first version of privacy-preserving domains powered by Aleph Zero's Liminal. Additionally, we plan to expand beyond Aleph Zero and push towards the wider Substrate/WASM ecosystem.

Regarding real-world adoption, we will tackle this gradually by starting with on-chain use cases such as on-chain identity aggregation. From there, we will push step-by-step into real-world adoption by addressing existing problems and use cases. Privacy will play a crucial role in this, as most real-world use cases involve sensitive information and are not possible without strong privacy guarantees.

10. Variable demand-based pricing algorithm approach has been taken for the adjustment of the renewal fee for a specific domain and its respective value. Can you kindly explain the variable demand-based pricing algorithm for the uninitiated using an example and what your approach towards it was?

The basic idea behind demand-based pricing is to move from fixed pricing to a flexible pricing approach that is more efficient in pricing domains closer to their fair value. However, implementing such a system can be challenging, as it requires balancing the need for strong ownership guarantees with the ability to disincentivize domain squatting.

Consider the example of Bob, who owns the domain amazon.azero. He believes this domain will become valuable once Amazon launches on Aleph Zero. When Amazon decides to join Aleph Zero and aims to purchase amazon.azero, Bob declines their offer of $10,000 and asks for $1,000,000 instead. He has no costs other than the initial yearly base fee of $5.

By not selling the domain and just paying the base fee, Bob is extracting value from AZERO Domains and the community, as he is paying a price much lower than the fair value of the asset. Furthermore, he is blocking Amazon from using the domain.

To address this issue, we will implement a simple demand-based pricing strategy. The price of the renewal fee could for example increase by 1% of the highest bid for the specific domain. In the case of amazon.azero, the $10,000 bid would increase the renewal fee from $5 to $105. This would create 21 times the value for AZERO Domains and increase the cost of holding the domain for Bob, disincentivizing squatting. Bear in mind that this is just an example and the actual implementation might look different.

11. You mentioned that you reserved some names for ecosystem projects and advocates. While these are agreed upon for most, how are you determining the value to who it should be reserved? e.g., jump capital is well known in the space, let's say I want to reserve jump as a nominator in the $AZERO ecosystem and would you reserve 'jump.azero' for them or me? What determines the procedure for reservation by the team?

We are aware of the complexity surrounding domain reservation. Our current methodology includes reserving domains for ecosystem projects that are verified with Aleph Zero, as well as for community-facing foundation members and community validators. Our goal is to reduce the risk of impersonations within the Aleph Zero ecosystem. Furthermore, we will try to reserve the name of any existing project that is vetted by the community. However, we will not reserve names for projects that are solely created to reserve a domain that already has high value. Additionally, we will not reserve brands or names for projects that are not yet on Aleph Zero. We believe in an open and free domain market, and our demand-based pricing will enable an efficient secondary domain market in the future, leading to fair domain allocation and value creation for the ecosystem.

12. Can you share with us any information on steps taken towards security and audits of AZNS?

We have just started to prepare the auditing process with Kudelski Security, one of the most prominent security companies in the world. They recently announced a strategic partnership with Aleph Zero to audit and support ecosystem projects with security advice. Further, we are in close contact with the ink! development team at Parity and already received code feedback from the security company that is auditing ink! itself.

13. Could you share a few words with the community?

I can already state that our vision expands far beyond being a simple domain service. We believe in the power of on-chain identities and want to leverage these for crypto-native but also real-world use cases. We will soon provide more information on our vision and how we plan to become one of the key identity providers in the Substrate ecosystem.


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