Domain Name Stock Market

[Frank Michlick]

Fusu introduces Domain Stock Exchange in private beta

Fusu - The Domain Stock Exchange. The world’s first Domain Stock Exchange provides a secondary market trading platform for domain names.

Many times the concept of owning shares of of a premium domain name has been discussed, but now someone has stepped up to the plate and developed a service that allows domain owners to sell ownership of part of their domains. This allows them to gain immediate liquidity, without loosing control of their names. Investors can participate in the growth of domain values buy acquiring shares of domains.

More at DomainNameNews

 

[tobiasr]

I'm sorry, I totally missed this thread. I guess we also have been too busy prepping for launch!

Just reading up on this, you all bring up valid points regarding the security of the exchange. I think if it was easier to do it, someone else would have done it a while ago!

Indeed, our first fulltime hire was a Slovak lawyer.

Just a few points:
- We are not issuing actual securities or shares; we have a contract about future rights (such as the right to participate on revenue on a sale of the domain), and as such, we are not regulated by securities laws in Slovakia.
- ICANN is not involved in this; since we don't change the majority ownership of domains, the registrant and admin-c never change.
- How do prevent that a domain is sold or moved bypassing investors? We require domains to be at specific registrars that will notify us *before* key domain events (owner change, transfer requests, etc).
- How do we determine a domain's value? We don't; either the domain is listed on the Exchange using the owner's valuation, or it goes through an auction process to determine the demand. Either way, the market determines the value.

We are currently preparing for opening up our limited Closed Beta (which had 100 domainers as participants; we had a domainer make $5,000 listing his name, and an investor make $4,000 in investment gains). We will also announce a strategic partner from the domain industry at Domainfest; and finally we plan to launch the whole thing at the Traffic conference in Las Vegas.

On this path, I am sure we will still learn many things, but I think the benefits this could bring to the domain industry are significant enough to go for it.

I'd be happy to answer other questions and I appreciate all the interest!

-Tobias

 

[labrocca]

Thanks for response sir.

Can you elaborate on the list of registrars you have partnered with?

- How do prevent that a domain is sold or moved bypassing investors? We require domains to be at specific registrars that will notify us *before* key domain events (owner change, transfer requests, etc).

 

[tobiasr]

Labrocca, so far we have EuroDNS and Easyspace, after we launch the public beta we will make it a priority to add more.

-Tobias

 

[gorilla_bob]

I'd love to SHORT FUSU.com ... can I do that? :P

JK,

From the looks at it FUSU does have some good strong points and all this is still in pioneering phase. Will one day the idea work? I most likely guarantee it will ... whenever there is a large sum of money involved, there will always be people to look to make it work.

This idea will steer the domain industry in the right direction and may skyrocket. One concern I do see is what do the domain owners do with the funds they receive? Do they develop them? What prevents them from funneling that money away? For instance, if I owned, BIGINVESTMENT.com, then people pour 1 million dollars to me, then I funnel the money in investment to my other corporations saying that I tried to develop BIGINVESTMENT.com, then even if the shares go down, since I still own the domain, there is still value to it. All I have to do is rebuy the shares at a very low rate (since there is no more worth to the name) and then take it out of the exchange and sell it in the aftermarket.

How will this be prevented?



- Bob

 

[tobiasr]

In Fusu's case I'd hope for LONG

This is prevented by this rule:

If you as domain owner get a BuyOut offer for a domain (somebody wants to buy the whole domain), then you can decide to accept or deny it. If the you accept, and the value of the BuyOut offer is higher than 150% of the current market value of the domain on Fusu, then the shareholders will be paid out. If the offer is for less than 150%, then you need approval of 90% of the shareholders (handled by Fusu).

-Tobias

 

[tobiasr]

I just wanted to let you know a bit early that we will announce public beta very soon. Please have a look at http://www.fusu.com.www.fusu.com

We have the T&C online now, so I will be happy to hear your feedback and criticism.

-Tobias

 

[nmr86]

im not putting my money in this !

 

[onewordonly]

Great idea but needs some credential & well trusted companies backing it and it could be the next big thing in domaining!

 

[smashfactory]

i read your rules- but if the domain remains in the hands of the owner, then how do you actually prevent them from just selling the name and not paying the shareholders?
if this was to happen, then it is now the responsibility of the shareholders to go after them for their money?

 

[tobiasr]

Smashfactory -

We require domains to be at certain registrars, which notify us and get our approval before a domain can be sold (transferred, owner changed).

You are right that this is one of the key points.

-Tobias

 

[smashfactory]

ok so the name must be at one of these registrars, and the owner agrees that he will not be able to move the name, because the registrar will not allow it to, unless he fulfills his obligation- right?

 

[tobiasr]

That's correct! Point 6.1 of the user agreement.

-Tobias

 

[smashfactory]

neat idea

but the thing to keep in mind is- this is a stock market, correct? even if the owner never sold or did anything- if the value of the name went down for some reason, and the owner did not try and sell the name- he got the original cash influx, but the shareholders are out of luck- like the real stockmarket- yes? or is the owner required to pay the shareholders back should the name drop in value?

sorry- just questions i have

 

[Mike]

Smashfactory -

We require domains to be at certain registrars, which notify us and get our approval before a domain can be sold (transferred, owner changed).

You are right that this is one of the key points.

-Tobias

There is no legal body on this planet that will enforce this rule.
There are no assurances, guarantees, insurances that can be provided to the investor other than the character of the domain owner, and that's a bit impossible to detect via a screen....
A simple notification from a registrar is not going to prevent domain transfers.
Who's liable? Under which laws and standards? How will this be administered and followed through? Who's going to pay for any resulting legal expenses? Who's regulating the exchange?
Unless you find a way to provide GLOBALLY valid assurances for investors, and regulations for domain owners you're open to a wide variety of scams, dubious activities in terms of funds exchanging hands, artificially inflated domain values, a new version of "insider trading", etc.

M.

 

[bradocconor]

The only way it would even come close to working were if they were to have the domain in escrow and not be removed unless it is sold. then what benifit do you as an investor get to owning it unless it is sold? They said somewhere in this thread that it was the owners decision to pay a "dividend" to shareholders of revenue but wasnt mandatory. Also what if someone decides to pull a "Whitehouse.com" and ruin debt.com or some other great domain again SOL (SH*T Out of Luck)

 

[tobiasr]

Mike, Brad,

keeping the domain at a Fusu Certified Registrar is in fact like having it in escrow. By listing the domain you agree that the domain cannot be sold bypassing Fusu; this policy is implemented by having the domain at a supported registrar, where it is technically required to get Fusu's approval before registrant changes or transfers.

We actually thought of being ICANN accredited ourselves but came to the conclusion that it's much more trustworthy to have the domain at recognized registrars who agree to our policy.

-Tobias

 

[Mike]

... where it is technically required to get Fusu's approval before registrant changes or transfers.

We actually thought of being ICANN accredited ourselves but came to the conclusion that it's much more trustworthy to have the domain at recognized registrars who agree to our policy.

-Tobias

In other words, in a perfect world, the domain owner will be forced by Fusu, in combination with the registrar to seek approval before selling his domain or perform any value changing activity on his/her domain. Best of luck enforcing that. Bottom line, just in my personal/professional opinion, this is not going to work as it is not secured, flawed and not regulated.

Let's cut back to some finance technical questions: Where are the answers regarding artificial inflation or deflation for that matter, "insider trading", scams of various nature (money laundering), etc. What about applicable taxation, splitting shares, ... I'm sure that many people on NP can outline a multitude of scenarios that apply to any of these categories and quite some that would create new pitfalls.

M.

 

[tobiasr]

Mike,

by "technically" I mean that the registrar implements a Fusu systems API to actually, programatically enforce this.

I appreciate your honest opinion, and I can just say that we are aware that we will have to learn and keep improving on all sides, including the regulatory. We are convinced that if we can make this work efficiently, it will be worth it.

To address some points:
- Our general counsel is working right now with a US lawyer to work out the taxation implications for US citizens.
- Money laundering laws are very clear in the European Union; for example, we are required to collect proof of identity on all investments of over $4,000.

-Tobias

 

[Ronald Regging]

Mike, Brad,

keeping the domain at a Fusu Certified Registrar is in fact like having it in escrow. By listing the domain you agree that the domain cannot be sold bypassing Fusu; this policy is implemented by having the domain at a supported registrar, where it is technically required to get Fusu's approval before registrant changes or transfers.

What about ICANN policy? Registrars are not allowed to block transfer requests... All it will take is a blocked transfer request and a letter to ICANN from the owner of the domain and it's on it's way to another registrar...

 

[duceman]

What about ICANN policy? Registrars are not allowed to block transfer requests... All it will take is a blocked transfer request and a letter to ICANN from the owner of the domain and it's on it's way to another registrar...

Wouldn't they nail this down before offering the domain?


If you sign an agreement with ICANN and FUSU then this point would be moot IMO