Handshake Exchange Sees $10M in Token Trades as Race for Censorship-Resistant Websites Heats Up
The coronavirus crisis may have given one censorship-resistance project a small boost.
There are several startups trying to decentralize the internet’s domain-name infrastructure, including Ethereum Name Service (ENS) and Unstoppable Domains. So far, ENS director of operations Brantly Millegan said the ENS ecosystem has roughly 30,000 Ethereum accounts that own .eth domains, a total of 350,000 unique web names. Unstoppable Domains co-founder Brad Kam said his project has 220,000 registered domains since January 2019, with 8,000 live websites.
Kam said Unstoppable domains generally sold to companies like MyCrypto and the Kyber Network for between $40 and $10,000 each, which even modest estimates indicate as income worth more than $8.8 million. This startup’s business model bets that crypto exchanges and wallets will need censorship-resistant domain options for regulatory arbitrage. Kam said he is passionate about freedom of speech and businesses being able to resist dictators.
Meanwhile, the comparable and highly anticipated web domain project Handshake, which airdropped an estimated $100 million worth of HNS tokens to developers with active GitHub pages, has attracted thousands of participants since it launched in February 2020.
Read more: Handshake Revealed: VCs Back Plan to Give Away $100 Million in Crypto
Tieshun Roquerre, CEO of the Handshake-centric Namebase exchange, said users traded $10 million worth of HNS tokens so far, while claiming web domains through 80,000 auctions in four months. Community members estimate only a few million dollars worth of HNS was spent on domains – with most of that activity coming from people trading airdropped HNS for other assets like bitcoin.
Roquerre estimated 4,373 people claimed their tokens out of roughly 150,000 eligible recipients, and “some of our users have reached out about coronavirus-related names.”
Although this represents a small portion of the airdropped tokens, the domain name service (DNS) provider NextDNS also offers support for Handshake name resolution.
“More people are using it than we thought, and from what we’ve seen a few cool handshake-only mini-sites are starting to pop up,” NextDNS CEO Romain Cointepas said.
This year the plan is for NextDNS to run its own HNS nodes, Cointepas said, comparable to running a Simplified Payment Verification bitcoin node. This would let customers use Handshake for top-level domains (TLDs) like .com and .net, “effectively replacing the root servers completely,” Cointepas said.
So far, this primarily appeals to developers with hobby projects who like the idea of completely owning their own website without trusting service providers. Beyond hobbyists, some crypto companies like Brave have claimed their corresponding Handshake web domains as well.
“With Handshake you own it directly with a private key, the way you own bitcoin with a private key,” said HNS user Matthew Zipkin, who built the reference site easyhandshake.com. “As long as you keep that key secure, no one is taking that name from you. … There’s a lot of money and corruption and centralization. The namespace is dominated by ICANN.”
Many believe the current system is relatively public and well-managed. The central body that governs domain space, ICANN, recently rejected an attempt to sell .org domains to the private firm Ethos Capital. Yet, Zipkin said ICANN’s dominance is still problematic because the organization is based in the United States and other tech organizations, like the Microsoft-owned GitHub, stopped offering full services in 2019 to some jurisdictions for fear of American sanctions.
Read more: Planned $1.1B Sale of .Org Angers Many Open Source Crypto Developers
“Handshake doesn’t replace DNS, it extends it,” Zipkin said. “When I’m using a Handshake resolver, that means my internet service provider (ISP) doesn’t know where I’m browsing because I’m not asking them. … Anyone can run a resolver on their computer. They can verify Handshake names trustlessly with minimal data downloads and bandwidth.”
Zipkin said Handshake can also be used with a privacy-enhancing Tor browser, in addition to regular VPN services. Yet some DNS veterans remain skeptical about the prospect that Handshake could achieve commercial traction, beyond hobbyists and crypto startups.
Too fringe
Farsight CEO Paul Vixie, who helped scale DNS and build the system we use today, said that “no one wants to splinter the namespace because that will fragment the market.”
He added at least a dozen startups have tried to achieve Handshake’s same goal – to decentralize DNS infrastructure options – but none have achieved both significant and sustainable traction. Plus, the Handshake community is already being faced with its first legal conundrum over whether it can offer “.music,” another version of which is run by ICANN.
Read more: The Domain Startups Building an Uncensorable Internet on Top of Ethereum
“The commercial community, outside of that [tech bubble] … they are happy with the namespace as is,” Vixie said. “There is no endgame for multiple namespaces. … You can certainly waste a lot of investor money but in the end there’s got to be one that works.”
Speaking to that point, Namebase’s Roquerre said he expects it will take a long time for developers to buy or trade TLDs for business, not pleasure.“In the long term there’s going to be more commercial activity,” Roquerre agreed. “I think the main theme of censorship resistance is generally why people are interested in Handshake, it’s been like that for a long time and it’s continuing.”
Update (May 28, 20:11 UTC): The headline and body of this article have been edited to clarify there were reportedly $10 million worth of HNS trades on Namebase since the token launched, but only a fraction of those users bought domain names.