Domain Liquidations

Every system can be abused by bad actors, so we need to try to mitigate that behavior. Because the protocol doesn't charge any fees at this moment, someone could just register a bunch of domains and impersonate them.

We use two tools to prevent this behavior: Collateral and liquidations. We already explained why the a need for collateral here, so in this section, we will focus on liquidations.

A reward to flag impersonators

We understand the importance of brands and how bad actors could use their names to cause harm to their users, so the protocol incentivizes users to flag impersonators with the chance of earning the collateral used to register the domain as a reward.

For example, currently registering sdf.xlm requires locking a collateral of 1,892.16 XLMs and let's imagine it was registered by a bad actor. Any user can come and notify us about it, if there is proof it's an impersonator we will burn the domain and give the one who notified the collateral which translates to a profit of 1,892.16 XLMs for just notifying.

At this early stage this process is manual, but the goal is that once the protocol is big enough we could have a "committee" who takes care of it.

What if there is a mistake?

There is also the possibility that the one who notified us was wrong and the domain was actually bought by the brand who should own it, currently because the process is completely manual we would take care of verifying before liquidating the domain... But once the process is more automatic, those flagging other domains will also be required to put a collateral so in case there is an error (or if it was just a bad actor flagging other domains) the collateral is charged as a penalty.

What's the requirement?

There are limits to what can be liquidated and what not, for now we will focus on only allowing liquidating impersonators of brands and "famous" users (for example workers in projects or those with a large audience) on Stellar, because they are the ones a bad actor could use to take advantage of others.

You can not use liquidations to claim a domain that was created before your brand, for example, if you're creating a new project called "coffeechain" and someone registered a domain with that name before you started it, you can not liquidate it.

Also, if let's say your username on Discord is "duck" and someone registered that domain, you can not claim it because is a common word (an animal in this case) unless you have proof they are impersonating you.