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Navigating the Future of Handshake: Key Points on the Proposed Hard Fork

Community Debates Proposal to Reallocate Unclaimed Airdrop Coins

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Proposed Handshake Hard Fork: Unlocking Unclaimed Developer Airdrops

Handshake Space

On Thursday, July 26th, 2024, an X Space discussion [1] focused on proposing a Handshake Hard Fork to unlock unclaimed developer airdrops. The main proposal, put forward by Paul Webb, gained significant attention within the Handshake community.

Background

Handshake is a decentralized naming protocol aiming to revolutionize the traditional domain name system. Currently, approximately 1 billion $HNS (Handshake’s native cryptocurrency) remains locked in unclaimed developer airdrops. This situation has sparked intense debate about how to effectively utilize these funds for the benefit of the Handshake ecosystem.

As highlighted by the X user @neuenet:

The Proposal

The primary proposal, as discussed by Paul Webb [2], suggests reallocating the unclaimed funds to a community-controlled fund. This would potentially unlock resources for builders and creators within the Handshake ecosystem.

Proposed Distribution

A key aspect of the proposal is the distribution of funds, with a focus on incentivizing the use of Second-Level Domains (SLDs).

Second-Level Domains (SLDs)

Arguments in favor:

  1. Incentivizing Usage: Allocate funding to encourage desirable community behaviors, including SLD registrations, issuances, and community building.
  2. Supporting Builders: Reward people actively building businesses and applications on Handshake, fostering development and utilization beyond speculation.
  3. Revenue-Based Distribution: Implement a system where rewards are proportionate to revenue earned by TLD owners, preventing spam and ensuring fair distribution.

Arguments against:

  1. Current Usage Issues: Critics argue that very few SLDs are currently used for meaningful purposes, making it impractical to reward their sale.
  2. Speculation Concerns: Many SLD sellers may be profiting from speculation without contributing to the platform’s real utility.
  3. Disagreement on Spending: Some community members believe resources could be better allocated to initiatives with more tangible benefits for the Handshake ecosystem.

Multi-Signature Mechanism

To manage the reallocated funds securely, a multi-signature (multi-sig) mechanism was proposed.

Advantages:

  1. Security and Redundancy: Multi-sig provides a safeguard against single points of failure by requiring multiple signers to authorize transactions.
  2. Community Trust: Multi-sig holders are chosen based on trust and long-standing involvement with Handshake, acting as executors of the community’s will.
  3. Flexibility in Administration: The structure allows for changes in signers, providing adaptability to evolving community needs.

Challenges:

  1. Administrative Complexity: Managing a large number of signers can become challenging, potentially causing delays and complications.
  2. Potential Exclusion: Some community members fear being excluded from the multi-sig, especially if they are less vocal or recognized.
  3. Non-Decision-Making Role: The role of multi-sig holders needs clear definition to prevent misunderstandings about their responsibilities and powers.

Arguments For and Against the Hard Fork

In Favor of the Hard Fork

  1. Unclaimed Developer Airdrop: 99% of the original developer airdrop remains unclaimed, suggesting the current mechanism is ineffective.
  2. Funding for Development: Reallocating unclaimed coins could provide much-needed funds for ongoing development and adoption.
  3. Marketing and Awareness: A reallocation could improve awareness and engagement through better marketing efforts.
  4. Economic Models and Best Practices: Implementing new distribution models similar to successful projects like Cardano could lead to more sustainable development.
  5. Flexibility and Innovation: Reallocation could allow for more flexible approaches, such as continually updating the airdrop mechanism.
  6. Preventing Misallocation: A phased approach with a soft fork followed by a hard fork could prevent sudden market impacts and misallocation of resources.

Against the Hard Fork

  1. Concerns About Mismanagement: Fears that reallocated coins might be misused or end up in the wrong hands.
  2. Consensus and Community Agreement: Achieving broad consensus within the community is challenging, with some arguing for near-unanimity (90%).
  3. Market Impact and Liquidity: Concerns about potential negative impacts on the coin’s price and market stability.
  4. Alternative Perspectives: Some community members, like Anthony, Steven McKie, and HNSBroker, among others, have expressed doubts about the proposed reallocation, believing the current system should remain unchanged.
  5. Historical Precedents: Previous attempts in other projects, such as Stellar Lumens’ coin burn [3], have shown mixed results.
  6. Technical and Legal Considerations: Implementing the hard fork involves complex technical steps and potential legal and tax implications.

Economic Models and Best Practices

The proposal suggests implementing a new distribution model similar to those used by other successful projects. For example, Cardano has a detailed proposal process and releases funds quarterly [4], which has proven effective in supporting sustainable development.

Phased Approach

To mitigate risks, a phased approach has been suggested:

  1. Implement a Soft Fork to end current developer claims
  2. Follow with a Hard Fork to reallocate the coins into block rewards

This approach aims to prevent sudden market impacts and ensure a more controlled distribution of resources.

Next Steps

Following the X Space discussion, the community agreed on several action items:

  1. Hold a second discussion on the Handshake DNS Discord server
  2. Conduct a community vote, potentially using the @HNS X account for broader visibility
  3. Gather additional proposals on GitHub

Conclusion

The proposed Handshake hard fork to reallocate unclaimed developer airdrops has generated significant debate within the community. Proponents argue for better resource utilization to drive development and adoption, while opponents express concerns about mismanagement, market impact, and consensus challenges.

The discussion reflects a balanced debate with valid points on both sides. Moving forward, it is crucial for the Handshake community to carefully consider all perspectives and engage in thorough discussions. Any decision on the hard fork will require a well-crafted proposal that addresses the technical, economic, and governance aspects of the change.

The upcoming Discord discussion and community vote will be critical in determining the path forward for Handshake and its ecosystem. A carefully crafted proposal considering all these factors and involving extensive community engagement will be crucial for any decision on the hard fork.

References

[1] SkyInclude X Space
[2] Handshake HIP Discussion
[3] What is the Effect of Stellar’s Token Burn?
[4] Cardano Roadmap