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How Estonia Tamed Domain Dropcatchers: The Story of Domain Auctions

The first domain auctions were launched in 2019, and since then, the service has been operating on the simple but fair principle of the envelope method. Several dozen auctions are held every day, and anyone can participate. Despite initial resistance from some registrars, the auctions have gradually established themselves as a reliable and transparent tool. Access to released domains is no longer the privilege of a few technically savvy players but an opportunity for everyone.

In an interview with Timo Võhmar, Head of Development at the Estonian Internet Foundation, you’ll learn what led to the launch of the service, how it works in practice, what obstacles the team had to overcome, what the service brought to the Estonian internet, and where domain auctions could develop further

This interview was created on the occasion of the first anniversary of the Domain Auction service, which has been operated by the CZ.NIC association since May 2025. It’s a blog post by the Technical Director of CZ.NIC, Zdeněk Brůna, who in his contribution looked back on the first 12 months of service as the administrator of the Czech national domain.

Where did you get your inspiration?

Timo: We spent years looking for a solution to the domain dropcatching problem. We tried various options that other registries were using, and nothing worked – these dropcatchers still had a technical advantage over regular domain buyers. So in the end, an auction turned out to be the best option to eliminate this unfair advantage. There was no inspiration, no one else was doing it, but domain auctions as such were by no means new. Our innovation was to use an auction model. And we still stand by that decision proudly.

How and when did the domain auction service in Estonia start operating? How long did its development take?

Timo: The first auctions were launched in March 2019. The journey from the decision (2016) to their launch took approximately 2.5 years.

What was the main reason for introducing the domain auction service and why did you want to change the market for expired domains?

Timo: Dropcatchers, their unfair technical advantage, and dissatisfied or, let's say, disillusioned (potential) ordinary internet domain buyers.

Can you briefly describe the process of your service? We know that you started with the envelope method of auctions. Do you still use it?

Timo: Our preparation was flawless :-). We still use the same model that we started with, and we believe that it is the best and fairest option for ordinary users. Meaning that we use blind auction principles. All domain names go through this process. Auctions are held daily, last 24 hours (from midnight to midnight), and auction participants bid to reserve the name. The winner knows the result the next day and has 7 days to pay and then 30 days to contact the registrar and register the domain.

Who can participate in domain auctions?

Timo: All registered users, except employees of the Estonian Internet Foundation, can participate.

What were the main problems and obstacles you encountered when implementing domain auctions and how did you overcome them?

Timo: When we announced that we would be launching a domain auction service, we encountered resistance from registrars. We tried to solve it through discussion—we gathered registrars, explained the reasons and the expected results, and involved them in the decision-making process on the details of creating the service.

How much have you changed the auction system since its launch? How much have you adapted to its daily operation or the needs of bidders?

Timo: The technical solution is the same, we just adjusted the rules a little, i.e., we extended the registration period from 14 to 30 days. So nothing big really. We also improved the payment methods, allowing payments in multiple installments, which helps with large amounts. Most of the work was done on the UI/UX. But overall, we are satisfied with the whole process.

Do you have a dedicated team for developing and running auctions? If so, how big is that team?

Timo: We are a small registry where no one can afford the luxury of spending too much time on anything. Our development team has two developers who do everything, including auction development. We have used outside help for UI/UX.

What successes have you achieved with this service and what have you not achieved? After years of operation, are there any significant shortcomings that you are still addressing? Did the service meet your original expectations?

Timo: We are very satisfied with the solution—we achieved everything we wanted to and even more. The aim of the auctions was never to make money. In the end, however, the service is also financially successful. We use the proceeds from the auctions to support technical and IT education for Estonian youth.

What key rules and criteria have you set for domain auctions to make them as fair as possible? Have you ever dealt with complaints about unfairness?

Timo: The biggest problem is the auction format—people are unfamiliar with the concept of a blind auction. Complaints have decreased over the years, but we still get occasional comments. People are greedy and don’t want to bid a cent more than necessary. Some believe domain name traders have an advantage, which may be true from experience. However, we don’t publish winning bids or other information, so the loser only knows that their bid wasn’t enough. We must be very transparent and ensure everything is auditable and verifiable from start to finish.

Have you used or are you using advertising to promote domain auctions?

Timo: We post the most interesting names from current auctions on our Twitter account. We’ve run several campaigns on Facebook and Google, mainly to increase awareness. We’re lucky that some large registrars promote the auctions themselves to attract winners to register domains with them.

Do you have any public statistics about domain auctions?

Timo: Due to the format, we don’t publish much. But generally: ~10% of domain auctions get bids. ~10% of those aren’t paid in time and are auctioned again. We hold 50–100 auctions per day.

Profits are rising as more domains become available and more people join.

What is the current demand for domains in auctions? Can we say that domains with certain characteristics are significantly more in demand than others?

Timo: We haven’t done major analysis yet. But short names, Estonian and English words are more valuable. Chinese users like numbers and repeating characters. So far, results have matched our expectations.

What was the most interesting or expensive domain you have ever auctioned?

Timo: Last year we auctioned previously reserved domains in open/English auctions. These included single-character names. The most expensive one—e.ee—sold for €220,000. Envelope auctions haven’t reached six figures yet.

Do you collect feedback from bidders regarding their reasons for participating or ideas for improvement? Have user requirements changed?

Timo: Not formally. But people send ideas and complaints to support, and we try to address them.

Do you think domain auctions in Estonia have improved access to quality domains for businesses or legitimate users? Or are they mostly used for investment and speculation?

Timo: I think the .ee zone is better thanks to the auctions. The dropcatching problem is gone, and everyone has fair access. Traders are the most active, but only because they participate more. They also lose often, to one-time bidders. We monitor closely to ensure fairness.

What do you personally consider the biggest benefit of domain auctions?

Timo: Fair access to domains.

How do you approach ethical issues like speculation or domains with a past?

Timo: Auctions bring more attention to released domains, but that’s not a bad thing. Before, only a few knew which domains were expiring. Now, everyone does. Some users dislike that domains are later used for ads or resale, but that’s part of an open and free market—“first come, first served.”

What advice would you give to other registries considering domain auctions? And how many do you know that run them?

Timo: If dropcatching is a problem and fairness matters, start auctions now. Public and registrar opinions are the biggest barriers, but it’s possible—we did it, you did it. So far, I know .ee, .cz, and .kz run expired domain auctions. Others have auctioned reserved or premium domains.

How much do you follow global domain auction trends? Do they affect Estonia’s plans?

Timo: We used to follow more closely but weren’t always successful in breaking through. We were very happy when you started auctions—we’ve always looked up to you and the .se domain. Sadly, .se hasn’t yet convinced its registrars.

What major changes do you plan for Estonia’s domain auction system?

Timo: We want to introduce secondary market auctions—letting current domain holders put their domains up for sale.

Author: Barbora Zlámalová, the interview was originally published on https://blog.nic.cz/2025/06/10/jak-estonsko-zkrotilo-lovce-domen-pribeh-aukci-domen/