Introduction：

Handshake is a protocol that offers a decentralized solution for top-level domains in the DNS. This article introduces its features, tokens, minting processes, and ways of accessing domain names, along with some basic information. It also offers an analysis of its adoption data and prospects.

Decentralized Solution for Domain Name System: Handshake ($HNS)

What is Handshake ($HNS)?

Handshake is a blockchain protocol for managing the registration, renewal, and transfer of top-level domains (TLDs) in the Domain Name System (DNS).

How Does the Traditional DNS Work?

The DNS is a hierarchical naming system that maps human-readable domain names (like www.example.com) to machine-readable IP addresses. When you enter a domain name into your browser, the DNS server resolves that domain name to the corresponding IP address, and your browser can then connect to the server hosting that website. This process involves multiple levels of DNS servers, starting with the root domain server and progressively querying and resolving subdomains.

How does domain name service verification and management of the root DNS namespace work? To use an analogy, the entire domain name system is like a “dictionary” or “index.” The root domain name service maintains the top-level domain zones (.com, .org, etc.) and records of their corresponding authoritative DNS servers. In other words, this dictionary records “who has the authority to provide DNS resolution services for a particular top-level domain.”

What are the Features of Handshake?

Handshake focuses exclusively on top-level domains, such as .com, .org, and .net. The Internet Corporation previously reviewed and certified these top-level domains for Assigned Names and Numbers (ICANN). Handshake offers a decentralized solution.

ICANN was founded in 1998 as a non-profit partnership of people worldwide to improve Internet security. In other words, it is an organization born to better internationalize the Internet. However, a closer look at history reveals that in the early days of the Internet, the main regulatory body was IANA (and above that, the U.S. Department of Commerce). With the rapid development of the Internet, the U.S. Department of Commerce began to seek to establish a newer, more international regulatory body to replace IANA’s function, and thus, ICANN was born.

Today, 10 of the 13 servers operating worldwide are in the United States, and other parts of the world provide network services (ISPs) by mirroring the nearest server. This is relatively centralized and controlled by a particular national government. Therefore, if you read the Handshake white paper and see “peer-to-peer,” you will understand what it is trying to do. Handshake’s solution mainly aims to reduce reliance on ICANN.

However, Handshake does not intend to decentralize the entire DNS. This is because, except for the root zone, which is currently centralized, DNS as a whole is already decentralized. It focuses only on the data storage and control of the top-level DNS root zone. As its white paper states, “The Handshake naming protocol differs from its predecessors in that it has no concept of a consensus layer namespace or subdomains. It is not intended to replace all DNS, but rather the root zone file and servers.” In the long term, Handshake hopes to replace the CA (certificate authority).

Handshake and ENS (Ethereum naming services)

The official ENS documentation states that ENS is an extension and supplement to the existing DNS, making it better suited for resolving blockchain addresses and associating them with usernames. Handshake, on the other hand, provides a decentralized solution to replace some of the existing DNS.

How is Handshake Secured?

Handshake uses the Unspent Transaction Output (UTXO) of the blockchain for protection and uses the Proof of Work (PoW) principle similar to Bitcoin. Users can run a full node daemon (hsd) written in JavaScript, which is a fork of bcoin. By running a full node using this program, users can participate in protecting the security of the Handshake network.

How to Obtain and Access Handshake Domains?

Handshake domains are minted through on-chain auctions. Any user can bid on any unminted domain using $HNS. The bidding period is about five days. You can bid any amount and choose to add a blind bid so that others cannot know your actual bid. Bid + Blind bid = Total locked amount. Others can only see the total locked amount.

After the reveal period ends, users who lose the bid can get back the entire locked amount, while the winner only needs to pay the second highest bid amount (i.e., Vickrey auction). The winner will be refunded the difference between their bid and the second-highest bid. If only one user bids, the domain can be obtained for free (since the second highest bid is zero). The amount paid by the winner will be burned directly from the blockchain, which deflates the $HNS price.

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Source: On-chain auction minting process from the Handshake official website

If a domain has already been minted, it can be purchased by bidding on a secondary market. Currently, the largest marketplace for Handshake domains is namebase.

Source: Namebase official website

How to Access Websites With Handshake Domains

Ideally, most browsers should support Handshake natively in the future (currently, the only well-known case of support is the Opera browser). Without native browser support, there are many ways to access websites with Handshake domains, with varying levels of security.

The simplest access method, such as HNS.to, is very insecure because it is just a proxy channel and can occasionally fail. The most complex configuration is for developers who do not want to rely on any third-party software and pursue absolute security. It has a high learning curve and is not suitable for ordinary users.

Therefore, the most suitable option for ordinary users should be an option that has a security and learning curve between the two, such as the open-source third-party software Fingertip: Fingertip is an all-in-one open-source resolver created by Impervious that allows browsers to resolve Handshake trustlessly.

Can I still Access Regular Websites Using Handshake’s Solution?

Yes, because the Handshake blockchain soft-forked the ICANN root zone, ensuring it is backward compatible. Generally, it will automatically switch between ICANN and Handshake DNS services based on the top-level domain. If you encounter a conflict between the two services, you can also choose from many community tools to automatically switch to ICANN or Handshake when a conflict occurs.

The Handshake Team

Andrew Lee and Joseph Poon are the two principal co-founders of Handshake. Other co-founders include Boyma Fahnbulleh and Christopher Jeffrey.

According to public interviews, Andrew Lee moved to San Francisco in 2013 to work on payments-related research at an investment bank. In early 2014, he left Merrill Lynch to found Purse (one of the largest Bitcoin marketplaces). They then decided to invest in the protocol or infrastructure layer, trying to build a smart contract library on top of Bitcoin called bcoin, a full node implementation. It is not a token but more like Chrome or Internet Explorer.

Poon has a background in finance and accounting, and is interested in how different ledgers work together. He initially worked at a Big Four accounting and consulting firm; later, he co-published the Lightning Network whitepaper with Thaddeus Dryja and co-authored a paper on Plasma with Vitalik Buterin. His main interests are research on scalability and coordination mechanisms.

Who are Handshake’s Investors?

According to the limited public information and news, Handshake’s data in 2018 showed that it had raised a total of $10.2 million. The investors include well-known Andreessen Horowitz (a16z crypto), Founders Fund, Sequoia Capital, Polychain, etc.

The $HNS Tokenomic Model

The genesis block has 1.36 billion $HNS, and another 680 million are available for mining, for a fully diluted supply of 2.04 billion. The first halving of the mining reward will occur after 3.25 years - after five years, about 430k (60%) of the mineable coins will be mined, and it will be mined out in about 100 years. From the description of the token economic model in the white paper, we can summarize several characteristics of $HNS, which are complementary to each other:

• Altruism
• Developer Friendly
• Focus on Incentives and Virtuous Cycles

Altruism

The Handshake team does not have any token allocation. The $10.2M in funding came from investors buying 7.5% of the total token supply for $0.10 per $HNS, for a total of $10.2M, which was then donated to the open source community.

Developer Friendly

Handshake has a large airdrop for developers. Of the initial 1.36 billion coins, it is theoretically possible to claim 952 million HNS (70% of the initial supply, 47% of the fully diluted supply) in airdrops. Another 7.5% of the initial supply was given to early contributors.

Focus on Incentives and Virtuous Cycles

The 15% of tokens allocated to these investors and early contributors went to 1356 different addresses, with no single entity controlling more than 1.5% of the initial supply. In addition to investors and early contributors, a large proportion of $HNS tokens were also distributed to pillars of the open source software community, such as the Apache Foundation, LibreSSL, EFF, Mozilla Foundation, Arch Linux, etc., to incentivize and virtuous cycles.

Source: $HNS Token Distribution

Conclusion

It can be seen that the growth rate of Handshake domain name minting was the fastest in 2022, slowed down in 2023, and returned to the level of 2021. The number of these domain names used has been growing slowly from April 2021 to June 2023. It began to be widely adopted in the four months from July to November 2023, and then returned to normal levels. This may be because the approval of Bitcoin ETF and the market recovery positively affect the price of $HNS, increasing the adoption cost of $HNS.

Source: The adoption of Handshake domain names as shown on namebase

After Vitalik said that ENS is important to the Ethereum ecosystem, ENS has skyrocketed. However, unlike ENS, Handshake is still in its early adoption stage. If you are optimistic about the decentralized solution it provides and believe that it will be widely adopted sooner or later, considering the minting logic of Handshake, the more $HNS tokens are adopted, the tighter it will be. Then, it is a good choice to allocate appropriately when $HNS is at a relatively low price point.